I am an investor of Airasia. This deal in fact should have called the Airasia - MAS deal as who knows after 10 years, Airasia can be valued at 2x MAS. How much things have changed. While I like Airasia as a business and how well the company has executed in turning itself into a respectable airline, I do not like the deal at all. Let's see what are the differences between MAS and Airasia.
- Airasia is a privately owned company and MAS is a government controlled company although it is listed. It is much easier to run a privately controlled company while there are too many hands trying to reach at the cookie jar of a government controlled. Imagine what will happen if there are changes in the group of people running the government. Will Tony Fernandez have much say in the running of MAS with his group's 20% stake?
- Airasia again is a privately owned airline while MAS is a national airline. For a private airline, you can do a Thai Airasia deal. You can also do a Indonesia Airasia deal. So is doing a Japan Airasia deal. Can MAS do that? Little chance. A national airline will have to compete against SIA, Cathay Pacific, Emirates Air. These airlines are definitely financially stronger competing in a similar space as MAS. While Airasia is a competing airline as well, it is different as it reaches out to a different group of consumer group.
- Analysts say that the MAS - Airasia deal will lower costs as MAS and Airasia can possibly share spare parts etc., i.e. some of the costs. That theoretically sounds good as in an investment bankers pitch but executing it is very difficult. Airasia only operates Airbus 320 and 330 (for Airasia X). MAS on the other hand has much more variety in their fleet. How is that costs sharing helping?
- The deal could potentially reduce competition. I do not like anti-competition deal. It is bad for consumers. I like companies which are competitive as that DNA will make them more competitive naturally. Look at MAS, you think it will ever be successful? The mindset of the people behind the company was totally wrong from day 1 and it will be a tough task to change that. Not even Tony.
- To me Airasia should just go ahead and do more international deals like what they have done in different countries as the expertise and strength in negotiating financial and airplane deal could have brought them into those positions. With the deal with MAS, I do not know how other government could have viewed that.
- You think Tony could change MAS? Today if you ask around, private corporations are beginning to warm to getting their employees to take Airasia or any budget airlines. Reducing costs will help companies to be competitive. Who are the ones who still insists on taking business class of a national airline? People behind the government. Can Tony introduce no frills or reduce the service level on those flights?
- If you look at the Tune group, they thrive on providing value - meaning if anyone is willing to accept a reduced service by paying less, they are able to provide that to you. Hence with these kind of expertise, they will not be able to bring that same model to MAS, a premium service provider. In short, running a low cost airline is very different from running a national airline. I do not think Tony is able to execute well in that space.