Tony Fernandes CEO Blog

I received this letter late last week and I thought I’d share it with you. This just goes to show that we’ve come a long way since we first met because when we first met in 2007 it wasn’t in the best of terms and now just a couple of years down, here we are working together to better educate ourselves on the needs of everyone who would fly.

It is amazing and blows me away to have these disabled friends of ours, understanding where we are as a LCC and their unrelenting commitment to make the LCC work for disabled guests and everyone in general, with what we have and mind you which is with limited resources and the airport layout. That itself is humbling indeed and from the bottom of our hearts we thank you BEAT!

Barrier-free Environment and Accessible Transport (BEAT),
c/o No 4, Lorong 1A/71 J,
Jalan Carey, 46000 Petaling Jaya.

15 November 2011

AirAsia Berhad,
LCC Terminal, Jalan KLIA S3,
Southern Support, Zone KLIA,
64000 Sepang, Selangor Darul Ehsan.

Attention : Tan Sri Tony Fernandes, Group CEO AirAsia Berhad,
Mr. Bo Lingam, Head of Operations and Planning, AirAsia Berhad.

Dear Tan Sri Tony and Bo,

We, at BEAT, feel very honoured to be given the opportunity to be involved and to support AirAsia in providing training for your staff. Thank you, AirAsia for giving BEAT the full trust and confidence to develop the cross disability training syllabus and modules and to conduct the training.

We are also thankful to be given the opportunity by AirAsia to introduce Disability Equality Training (“DET”) on top of the Disability Related Service Training (“DRST”). DET gives us a correct understanding of disability issues from the perspective of equality and justice. With DET, DRST will be properly understood, better appreciated and more effective.

BEAT wants to give maximum credit to Tan Sri Tony Fernandes, group CEO of AirAsia, for it was Tan Sri Tony who recognised that the training would be best conducted by and with the involvement of disabled people themselves - the end users of the service. It was Tan Sri Tony who invited BEAT to be involved in the training.

As a gesture of his commitment, Tan Sri presented BEAT the AirAsia cap he was wearing on when he met us on 20th July,2007, with his hand written wordings “To all my BEAT friends”, “You have my 100% commitment", and “Dare to dream”. These words which came directly from Tan Sri himself had given us great motivation to give all our best to support AirAsia in the effort to further improve the service to include disabled passengers. Knowingly or unknowingly, Tan Sri Tony has helped put into practice our very famous slogan “Nothing about us without us”. Thank you, again, Tan Sri !
As part of our mission is to work towards a better and accessible environment and an inclusive society including improved services, we see it as part of our responsibility to offer and share our knowledge, experience and expertise because we know best our own needs and how we want to be served. BEAT is fully committed and proud to be working in partnership with AirAsia in implementing change for better and improved service. We know that the good service will ultimately benefit us and the community at large.

May we also take this opportunity to put on record our special thanks and deepest appreciation to Mr. Bo Lingam, Head of Operations and Planning, who was entrusted by Tan Sri, to work with us for the past 3 ½ years. To mention a few, we found Bo to be friendly, easy going, trusting, understanding, accepting, accommodating, fair, reasonable, open minded, and fun to work with and to be with. In short, we have “fallen in love” with him  More importantly, Bo has been able to work with us not just as a working partner but as a friend.

Over the few years of working together, Bo has been able to better understand our struggle and appreciate us for who we are. On most occasions, Bo would make his time available even after office hours to accommodate our timing as many of us work during day time. He would let us decide on the venue of meeting most accessible to us. At times, when we had more issues to work at, the meetings would be dragged till late nights and Bo would stay put throughout every meeting session. There were also occasions when Bo sacrificed his Saturday mornings to meet us. Thank you, Bo for your full support and commitment!

Through Bo and his team, we have got many changes implemented. Among them - the terms and conditions which were discriminatory and unfair towards disabled passengers have been removed. Disabled people who travel unaccompanied are now able to travel on AirAsia. Online bookings are now made possible. Disabled passengers are no more required to sign Indemnity Forms. RM 12 is no more charged for usage of each wheelchair. Special assistance is given upon request without charge. Aisle chair made available when a disabled passenger is on board. Passenger boarding lift made available at LCCT upon request. Special Assistance Service Counter established at LCCT. Developed DET&DRST cross disability training syllabus and modules and mainstreaming them as part of the overall syllabus conducted at AirAsia Academy. Syabas, Bo and Team!

In the face of alternative training offers by local and international groups, Bo recognized the effort, commitment and past record of BEAT and stood by us. Bo maintained that BEAT would continue with the training in Malaysia and also help to extend the training to Thailand and Indonesia. Hence, Bo was in fact instrumental in realising the recently concluded DET&DRST Training of Trainers involving participants from Thailand and Indonesia. Thank you, Bo!

Now that Bo has “left us” for greater tasks else where in AirAsia, we sincerely wish him the best in all his undertakings. We assure you, Bo, that we will give our full support to Zaman and team as we continue the good work you have laid down.

To Bo, we thank you for all that you have been to us. Please do drop by and visit us as and when your time permits. We know that we are not only going to miss you but we will miss you a whole lot!

Warm regards,
Christine & Team,
B.E.A.T. Malaysia.

Given that the issue of Rural Air Services has been raised again recently in the public, we wish to provide the following clarification:

• Rural Air Services has been an on-going service provided by the Government of Malaysia for the benefit of providing transportation services to the rural communities in East Malaysia. The Government contracts the provision of these services initially to Malaysia Airlines, and then subsequently to Fly Asian Xpress from August 2006 to September 2007, and now to MASWings.

• All three operators receive subsidies from the Government to cover the costs of operations. All the subsidies only cover the cost of operations and no financial benefits are accrued to the main airline operations. Subsidy payments are fully audited by the Auditor-General’s Office, who has confirmed that there were no irregularities in the amounts paid to Fly Asian Xpress.

• During the period when Fly Asian Xpress (FAX) operated the service, it earned a revenue of RM164 million, against operating costs of RM343 million, for a loss of RM179 million. A further RM70 million was incurred in capital expenditure, for a total amount of RM249 million, which was funded by a subsidy from the Malaysian Government.

• When RAS was operated by the other carriers, it also similarly generated significant operating losses which were also fully subsidised by the Malaysian Government. There were no differences in arrangements compared to Fly Asian Xpress.

• A number of factors contributed to the higher subsidy amounts during the FAX tenure:

– RM48 million was paid to MAS Engineering (FAX was charged commercial rates instead of at cost). FAX had to take over the aircraft in August 2006 from MAS on an “as is” basis, without the benefit of historical aircraft maintenance records which were withheld by MAS. Abnormally high number of overhauls and repairs were required, and with MAS as the only licensed engineering provider, no supplier competition was available to extract better rates.

i. Actual overhaul costs were much higher than initial budget prepared without historical MAS records
ii. High aircraft downtime resulted in cancelled flights and less revenue earned versus budget
iii. Aircraft downtime also led to poor customer reliability reputation.

• 4 out of 7 Fokker 50 aircraft required ‘C’ checks (once every 20 months)
• 10 out of 14 Fokker 50 engines overhauled (once every 3 years) and 10 Fokker 50 propellers
• 7 out of 14 Twin Otter engines overhauled (once every 3 years) and 3 Twin Otter propellers
• 6 planes requiring major stabilizer modifications (requiring 9-day downtime)

MASWings benefited from the amount spent by FAX because 80% of the amount spent would not have to be incurred in the 12 months after MASWings took over.

– RM72 million was paid to a third party provider for additional maintenance services not done by MAS because MAS were slow to respond to requests and ultimately wanted to charge higher rates. FAX had not built up its own maintenance capability in the first year.
– MAS also priced other services to FAX using commercial rates with margin mark-ups, compared to a cost-recovery basis when it was the RAS operator previously:

i. Ground handling and other service charges by MAS: RM25 million

ii. Interest charged on loan spares from MAS: RM16 million
(MAS had critical spares and only lent it to FAX with interest, and subsequently sold them to FAX at list price)
iii. Write-down on spares purchased: RM9 million
(At the end of operations, despite tender to 11 parties, no interest to buy back FAX spares except MAS, who only offered RM200k, since planes are not commonly used elsewhere)
iv. Fees paid to MAS for pilot secondments from Aug-06 to Mar-07:RM9 million

– Finally, other contributing factor in the difference in subsidy claims is the higher global fuel price versus prior years under MAS: RM10 million

• Fly Asian Xpress was the sole operator of the Rural Air Services, and not AirAsia Berhad. AirAsia Berhad did not receive any financial benefit arising from the RAS operations.

Although the shareholders of FAX were similar to AirAsia Berhad, they ended up losing almost RM5 million of shareholder capital, because the wind-up costs of FAX, including retrenchment payments, were not covered by the Government subsidy.