For an airline mogul staring down the barrel of a hostile global economy, Tony Fernandes seems strangely optimistic, not just for AirAsia Group, but for his native Malaysia, too.
"It's an exciting and deeply promising moment all around," Fernandes told the Nikkei Asian Review in the airline's frenetic headquarters at Kuala Lumpur International Airport.
Some investors may tell a different story. The carrier he founded in 2001 is losing altitude amid global trade war, high fuel costs and competition lowering fares. The shares are down a third from an all-time high in February 2018.
AirAsia is profitable in Malaysia, but operations in Indonesia, Thailand and elsewhere are either losing money or seeing earnings drop. Net income slipped 92% in the three months through March from a year ago.
Analysts including Raymond Yap of CIMB Research point out that AirAsia faces additional turbulence from volatility in energy costs and the Malaysian ringgit, a currency getting whipsawed by the trade war.
AirAsia has taken its share of knocks in Japan, too. In 2013, it terminated a joint venture with ANA Holdings amid management differences. Investors must wait and see what comes of a proposed collaboration with Japan Airlines.
Not to worry, says Fernandes, 55. He argues that his ambitious plan to morph AirAsia into something other than a budget carrier is about to take flight. He plans to use data amassed from 100 million passengers he transports each year (including 8 million website visitors per month) to create an "Amazon of travel."
AirAsia already offers limited travel packages. It plans to expand into more elaborate packages, e-commerce and payments in a big way, centered on the carrier's BigPay app. The digital wallet went live in Malaysia last year, and the focus now is on rollouts in Singapore, Indonesia, the Philippines, Thailand and beyond.
For 17-plus years, the 55-year old has been Asia's answer to British entrepreneur Richard Branson. Now the billionaire is aiming at a new benchmark: Jeff Bezos, the Amazon founder.
No, Fernandes did not mention Bezos during the interview. But he makes no secret of plans to remake AirAsia into a digital era disrupter that just happens to be an airline.
"We are now the 13th largest airline flying about 100 million passengers annually and collecting piles of data in the process," he explained. "It is not a huge leap to say we are becoming a digital power."
In late 2018, Fernandes took a page from the Bezos dump-the-middlemen playbook by selling his 25% stake in Expedia. More recently, AirAsia partnered with U.S. software giant Oracle to centralize data collection on passenger activity. The carrier is upping investments in artificial intelligence to maximize a "big platform" as it increases website traffic.
Dropping Expedia freed AirAsia to begin creating its own travel, accommodation, excursion and online shopping juggernaut in the world's most vibrant region. AirAsia also plans to offer booking flights with rival airlines. It is now painfully clear to competitors that the 2017 move to grab 50% of Malaysia-based tours and attractions startup Vidi marked a new chapter in regional travel.
The push is causing a stir among online travel giants -- and more than a little skepticism. Color Marsha Ma, who runs China operations for Booking.com, is unimpressed. The online travel agency business, she says, "is a pretty heavy business model in terms of its supply-chain management" and that it "takes years" with operate with the "width and depth" needed to succeed.
Expedia is pushing back, too. What makes one great at running at airline, says Greg Schulze, head of Expedia's commercial strategy told Nikkei, does not ensure success in online travel.
It is also fair to ask whether Fernandes is not biting off more than he can chew. Amazon dwarfs AirAsia with a $917 billion market capitalization 96 times greater.
But while his ambitions seem vast and the risks significant, it would be a mistake to underestimate Fernandes.
Many made that error in late 2001, when Fernandes saw an opportunity. As investors fled airlines following the Sept. 11 attacks on New York and Washington, Fernandes ran the other way. He loaded up on planes on the cheap, negotiated routes other carriers scrambled to dump and confounded the conventional wisdom to open Asia's first budget airline.
That Fernandes did it in Malaysia made the feat all the more surprising. Startups do not tend to get off the ground there, never mind one challenging national carrier Malaysia Airlines. The cozy monopolies and government-linked enterprises have a way of keeping disrupters in line.
But Fernandes found an unlikely ally in Mahathir Mohamad, Malaysia's prime then (and now again). Against all odds, Fernandes, a former music industry executive, talked Mahathir into giving AirAsia a shot. Even more improbably, Mahathir gave the go-ahead to a man of Indian ancestry in an ethnic Malay-dominated nation.
Malaysians tend to hold up Petronas, Maybank and Genting as their true success stories. But no modern corporate case study better demonstrates what is possible in Malaysia than AirAsia. Or, for that matter, where the nation of 32 million people can go now that Mahathir is back at the controls.
Mahathir stepped down in 2003 after 22 years in power. It is almost impossible to think Fernandes would have secured a flight path from Najib Razak, prime minister from 2009 to 2018. Najib's tenure saw Malaysia Inc. tighten its grip on Southeast Asia's third-largest economy. The same with affirmative-action policies advantaging ethnic Malays.
Mahathir's unlikely return to power in May 2018 was born of the corruption and dysfunction of the reform-free Najib years. Now, as Mahathir looks to raise Malaysia's innovative game and put some tech unicorns on the scoreboard, AirAsia may offer a blueprint.
"AirAsia is an example of what can be done in Malaysia -- big things," Fernandes said. "That the environment can and will get better."
Recently, Fernandes ruled out buying ailing Malaysia Airlines, a sign of how far AirAsia has come. He was right. He does not need the extra planes. But whether he is right that he can create an Amazon of the skies is an open question.
Visiting Fernandes, though, offers a glimpse of the ambition. The first thing that hits you walking into the sprawling "RedQuarters" is the unmistakable Silicon Valley vibe. It is 18,000 sq. meters of high open-air ceilings, play areas, child-care centers, grass circles, glitzy food courts -- and even a three-storey spiral slide.
The atmosphere is a metaphor for where Fernandes is taking the airline he conjured up in 2001. Make no doubt that the disrupter is disrupting his company. It is an open question, though, whether investors will climb onboard.
William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades." He was given the 2018 prize for excellence in opinion writing by the Society of Publishers in Asia for his Nikkei Asian Review work.