This blog post is adapted from The Edge Malaysia (the week of January 28, 2008) exclusively for ErnSheong.com.
AirAsia
AirAsia X is a new long haul budget airline operated by Air Asia X Sdn. Bhd. It has a company culture very similar to that of AirAsia. Both share the same ticketing website, livery, uniforms, and management style. (Wikipedia)
The Edge correspondent Ooi Ying Nee interviewed AirAsia X’s CEO Azran Osman-Rani, a man who is very much hands on in his approach of management. He is one who does not believe in depending on reports to do business in this day and age. He is not afraid of getting his hands dirty on the ground. At times he can be found manning the company’s check-in counter at the Low Cost Carrier Terminal in Sepang, standing on the tarmac loading luggage, or even inspecting the plane with his technicians on a late night shift. With that Azran says that he is able to be in close touch with how his airline operates.
Manager@Work front cover, The Edge
A bit of background: Azran Osman Rani has a Bachelor’s degree in Electrical Engineering and a Master’s degree in Management Science from Stanford University in the United States (what a coincidence, if I were to go to Stanford I would have picked the same combination to graduate with!). More on his career path later.
I will report the article in the following format:
Question
Summary of what he said in first person format.
Here goes:
Does AirAsia X have a culture distinct from AirAsia’s? How do you differentiate the two brands?
Ultimately, we are gearing towards a single unified culture, be it AirAsia, AirAsia X, AirAsia Indonesia or Thai AirAsia. Despite having different shareholders, Tony Fernandes (group CEO of AirAsia) emphasizes that it is all one unique culture. In essence, the underlying brand is AirAsia. What we at AirAsia have been trying to do is to create an upbeat atmosphere and a hype place to work in. At times, I receive feedback from others in many informal ways, be it the guy on the ramp or at parties. Formal hierarchy or structure cannot be depended on sometimes. These informal chats allows information to travel faster and more importantly encourages the freedom to voice out.
So the culture is the same although it is two different companies?
Of course, it is imperative that the balance sheet is remains separate. AirAsia X has the advantage in the sense that it is still a private company and thus we can do private fundraising first. Had we been a public listed company, we would not have been able to let Virgin and two other private equity firms to come on board. However, being a single big unified company allows AirAsia X to enjoy economies of scale by pooling with AirAsia. Pilots and the crew can switch to AirAsia X since the planes we are using (A330) is just a longer version of that which AirAsia uses (A320).
Richard Branson and Tony Fernandes announcing their partnership in AirAsia X
AirAsia hires its staff from a pool operated by AirAsia. How many people are actually AirAsia X employees?
We have 60 people working only for AirAsia X and more than half of that are in the engineering team because AirAsia X uses a different aircraft type. We have small finance, marketing and HR teams. However, although we have senior people in security and in-flight operations, the actual staff is from AirAsia. It is a model that has benefited us. I am not so definitive about having a distinct organization for the sake of it. As for AirAsia X, it only makes sense to pool with AirAsia.
How sustainable is the long term as the airline expands? Does AirAsia X intend to hire its own staff in the future?
I would rather hire new people as part of the AirAsia pool. The AirAsia Academy gives us a large competitive advantage. We need not worry about acute pilot shortages because we have a steady pipeline via the academy. We need not go out and poach from other airlines and pay ridiculously high wages. We also open up opportunities to Malaysian pilots who left to fly for Middle East airlines, but want to return home to fly.
What did you think of the AirAsia culture when you first joined, coming from Bursa Malaysia, Astro and McKinsey?
Though I come from a corporate background, it has been an easy assimilation on the personality front. I have always been comfortable with jeans without a tie. Astro was a place where, because it dealt with dial media, it was rather open, especially during the days when I started Astro Indonesia from nothing up. Also, there were a lot of young people in Astro, who were less fixed in their methods. Certainly, Bursa was a bit of a challenge.
The Sky is the limit for AirAsia X.
Why did you decide to take on the job? How did Tony Fernandes lure you from Astro?
Tony called me to work in an organization that competes globally in an unprecedented category. At the time, AirAsia X was being featured in many top newspapers and magazines around the world; it will change the industry globally. That’s how we got Richard Branson to come in to invest. Not many Malaysian companies can say that they are not just copying the big global industry leaders but are actually leading the way in the front. Hence, this was a very unique, once-in-a-lifetime opportunity. The airline industry has been doing things for the same way for the past 80 years and we have come to shake things up to do something revolutionary.
What part of the job excites you the most?
The buck stops with me and that’s what is incredibly fascinating about it.
One of AirAsia’s cost cutting measures is training its employees to take on multiple jobs. Does that apply to you as well? What do you do as CEO of AirAsia X?
Let’s be clear about it. I am responsible for the performance of AirAsia X ranging from the revenue we garner, how many people we can fly and how efficient the organization is run. That is the bottom line. I spend most of my time with the customers to know exactly what people are experiencing. Hence I spend a lot of time replying e-mails and taking calls. I also spend a lot of time making sure that everybody knows the vision and breaking down a very complex business into four or five basic objectives. When I came, I told people that there are only two things that will get them the sack. First is not trying at all. Second is not being a team player. If you hide or hoard data or information, if you are not helping someone else out, that’s it.
You mentioned that the company has to have values that are critical for a start-up. AirAsia X has a huge supporter, AirAsia. Does it has the characteristics of a start up still?
Of course. We’re starting very small, with one single plane going against Singapore Airlines that has over 100 planes. We have a small team. We cannot afford divisions. People need to move extremely fast and they need to sustain that intensity. The pace is faster than AirAsia because things are now more institutionalized there given its scale. Also, given our long haul model, we are doing things much more differently from AirAsia.
AirAsia X
How has your background in consultancy and your previous jobs prepared you for this role as CEO of AirAsia X?
My whole professional career, from what I went through in Stanford, to what I did in Bursa, to Astro, to here, is really all about implementing a systems approach to ensure interconnectivity in business. At Stanford, Management Science was about looking at every aspect, not just the engineering aspect, the marketing aspect or the finance aspect. In consulting also (McKinsey), it is also about figuring how all things tie up and what’s the right path to settle problems, as it is never just a sales issue or an administration issue. In Bursa, there were technology issues, people and marketing issues, and challenging regulatory aspects. I was brought in to tie everything together. In Astro, I started Astro Indonesia from a piece of paper. For that, you need the engineering and broadcasting teams to work in tandem with the marketing team and the content production team as well as the sales force and the call center. You’ve got to link everything up so that it interlinks. I am also a firm believer in effective comminication skills.
Tell us about your management style. How different is it to run a no-frills airline as opposed to your job at Astro?
I read a book called ‘Situational Leadership’ and I am is a great believer in ‘different strokes for different folks.’ When it comes to working with people, I am very open. I don’t believe in layers or talking to five direct reports. I go to everyone, even the ramp boys loading the bags. I don’t believe in big fat reports and analysis, I believe in talking if you have got an issue. When a private equity firm asked me for my market research and a report that shows the size of the long-haul future market, I told them flatly, ‘don’t have one.’ I go to the Matta fair and you see these aunties and uncles shoving to grab promotional fares. Evidently, travel is price elastic.
How do you get people to ’snap to it’ without them snapping themselves?
Culture is hence important. You work hard, you play hard. We have fun with each other and thus spending time working hard in the middle of the night becomes fun. If they are used to going home at 5.30pm, they would have been removed already. People here are people who are hungry for more.
What have been the biggest challenges since the launch of the airline’s first flight?
Oil price and the availability of aircraft. Now even with all the money, you cannot get planes because Boeing and Airbus are delayed in their production line and even old planes are thus being held on to by other airlines. I cannot venture further without planes, therefore these are my two main big variables
The rest of the interview touched on delays and how AirAsia X handles them. According to him, AirAsia X will fly to three or four cities in China when they get the chance. Australia, four or five cities. Others are India, South Korea, and Japan. Once they get the A340, they could fly to the UK. That alone takes 25 planes, he says. Once the advanced next generation planes arrive, they could do Europe direct, New Zealand direct and Los Angeles direct. Routes are the easy part. He mentions that getting the planes, confirming the launch, working with the right airport partners and executing the plan is the hard part. In essence, he says that at the end of the day it is all about how well the execution is done.
What a challenging and exhilarating job!
Posted May 5, 2008 
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