Monday, July 28, 2008

Asian carriers' wings clipped

Budget airlines are taking off across Asia, but their future is under a cloud from soaring crude prices.

The best Asian budget airline story I've heard was in 2006, while taking a short walk in Pakistan's Hindu Kush visiting the old princely state of Chitral, a Shangri-la where Osama bin Laden is said to be enjoying the alpine air and hospitality.

It seems that in 2004, a Pakistan International Airlines Fokker Friendship had overshot the runway on landing and, two years on, was still bogged in the wheatfields that surrounded the airfield.

Of course, few Chitrali had ever been inside a plane, airborne or otherwise, with ticket prices being what they - are or perhaps with PIA's ropey reputation, as evidenced right there in the bog.

So an enterprising local claimed the abandoned hulk, hired a local beauty to play stewardess and set up a travel agency by the plane's door, issuing entry tickets to the cab at 25 rupees, about 60c - or double that if "passengers" wanted an "in-flight" pakora.

The local nabob, Siraj ul-Mulk, who told me this tale, himself a retired PIA chief pilot, mused that the would-be aviation baron had probably turned more profit from the Fokker than PIA ever had, and without maintenance overheads. Such has been the rush into Asia's skies in recent years by the region's entrepreneurs that I'm betting my Chitrali hero parlayed his windfall into launching a real budget carrier. But such has also been the recent flight of oil prices that his and the other new carriers don't need Fokker Friendship, they sorely need, well, Fokker help.

Inspired by the success of Ryanair, easyJet and America's Southwest Airlines - and often with refugee executives from those airlines sitting on their boards - "low-cost carriers" have boomed from Japan to Iran.

The most successful of these, Malaysia's Air Asia, is as faithful a facsimile of Richard Branson's Virgin as are the bodgy Rolexes and DVDs of Asia's lawless bazaars. Indeed, Air Asia's youthful Eurasian chief executive, Tony Fernandes, seems to have closely followed Branson, right down to his airline's fire-engine red livery and uniforms, funky PR "attitude" and even a monolithic flag-carrying state carrier as primary competitor. Fernandes was even a record industry executive in a former life at - you guessed it - Virgin.

Also a self-promoter like Branson, Fernandes launched Air Asia just two months after the attacks of September 11, 2001, when few wanted to fly. Seven years and myriad 1 ringgit (32c) fare offers later, it's grown to be about three-quarters the size of state-owned Malaysia Airlines System and is much more fun to fly. Air Asia is expected to best Kuala Lumpur's lumbering MAS by 2010 in every industry measure; destinations served, profit and size of fleet. The best thing going for Air Asia is what it is not, a tool of government. Malaysian leaders liked to carry MAS in their diplomatic goodie bag, handing out routes willy-nilly for the photo opportunity when visiting fellow potentates in, say, Tunisia. MAS bosses were left with profitless schedules while Fernandes's fleet scoots off to places Malaysians actually want to visit.

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