AirAsia tipped to surmount first major crisis

Yahoo – AFP, Satish Cheney, 11 Jan 2015

AirAsia passenger planes are seen parked on the tarmac of the low-cost carrier

 Kuala Lumpur International Airport 2 (KLIA2), in Sepang, on January 10, 2015

(AFP Photo/Mohd Rasfan)

Until Flight QZ8501 went down everything had gone right during a spectacular 13-year run of success for AirAsia, which unlocked a booming market of budget travellers in the region.

But as long as no serious safety lapses emerge, analysts say the robust and media-savvy business built up by the Malaysia-based group should help overcome its first major reversal.

Passengers stand near an AirAsia

information board at the low-cost carrier

Kuala Lumpur International Airport 2

(KLIA2) in Sepang, on January 10,

2015 (AFP Photo/Mohd Rasfan)

Flight QZ8501 operated by Indonesia AirAsia -- the group's Jakarta-based affiliate -- crashed in the Java Sea on December 28 en route to Singapore from Surabaya with 162 aboard. All are believed dead.

From the start, AirAsia's colourful boss Tony Fernandes publicly took responsibility, visited victims' families, and vowed to find out what happened.

Such actions are critical in restoring trust, experts say, and stand in stark contrast to Malaysia Airlines' fumbling, tight-lipped handling of the still-unsolved disappearance of Flight MH370 last March with 239 aboard.

"This is an excellent case of a crisis being handled well, to show your customers that things are being taken care of in a hands-on manner, and that the executives are not just sipping their coffees in a cosy office," said Daniel Tsang, an aerospace analyst with Aspire Aviation.

"While some passengers may avoid taking (AirAsia) flights in the short-term, AirAsia's low-cost proposition will keep drawing in first-time fliers to the airline."

If investigators uncover safety negligence on the airline's part, however, it could deeply undermine confidence.

The cause is not yet known, but the plane's Indonesian pilot had requested a course change from air traffic controllers shortly before the crash to avoid a storm.

Indonesian officials in turn have raised questions about Indonesia AirAsia, saying it did not have a license to fly the route that day, but Fernandes has rejected the claim.

AirAsia advertisements are seen at the

 low-cost carrier Kuala Lumpur International 

Airport 2 (KLIA2) in Sepang, on January

10, 2015 (AFP Photo/Mohd Rasfan)

'Everyone can fly'

Yet even if any safety lapses are pinned on the carrier, aviation analysts said AirAsia could mitigate the impact with an aggressive and public campaign to address shortcomings.

AirAsia would need to "be upfront about safety lapses, own up to error, lay out ways to avoid future (accidents), and move on", said Terence Fan, an aviation expert at Singapore Management University.

"Unless serious lapses at the airline were found, an airline typically bounces back in a few months in terms of traffic."

Taking to Twitter, Fernandes last week vowed all the facts will come out. "We never hide," he declared.

Shukor Yusof, founder of Malaysia-based aviation research firm Endau Analytics, said he would be surprised if a systemic AirAsia safety problem was found.

"AirAsia does well in cost-cutting but not to the extent of foregoing safety," he said.

Knowing the plane's fate also means AirAsia can bring closure to families, so muting long-term criticism. In contrast, the failure to find MH370 has left many victims' kin alleging a cover-up by Malaysia Airlines and Malaysia's government.

AirAsia Group CEO, Tony Fernandes,

 pictured ahead of a press conference at

 Juanda International Airport in Surabaya,

 on December 29, 2014 (AFP Photo/

Manan Vatsyayana)

A former record industry executive, Fernandes, 50, took over heavily indebted AirAsia in December 2001. He turned it into a roaring success with its rock-bottom fares and a playful image embodied by its baseball cap-wearing boss, who has been called Asia's Richard Branson.

With its corporate motto declaring "Now everyone can fly", it has won over tens of millions of travellers in a burgeoning Asian middle class previously confined to more expensive regional flag carriers, snagging several awards as the world's best budget carrier.

"Certainly AirAsia will recover as it is a very good airline and this tragedy will not impact its growth," said AirlineRatings.com editor Geoffrey Thomas.

That said, AirAsia is struggling to maintain growth rates as it matures, as rivals step up competition. In the first blow to its business, Indonesian authorities have halted AirAsia's Surabaya-Singapore flights.

But analysts note that AirAsia has continually proven itself the region's most nimble performer, and that other airlines have bounced back from tragedy to emerge stronger. These include flag carriers Garuda Indonesia and Korean Airlines.