AIR ASIA- THE DEATH OF AN AIRLINE?
AIR ASIA QZ 8501- BACKGROUND TO A DISASTER
A recent comment by the editor of this blog, published on Che Det (the Tun Dr. Mahathir’s blog) about a report that Tony Fernandez of AirAsia apologized and issued a statement to the media “accepting (full) responsibility” for the recent Air Asia tragedy drew sharp criticism from sectors of the public. Much of the criticism in our view is misplaced for the perception that we were attacking Tony Fernandez, Air Asia’s CEO. Fernandez is a man whose popularity and folk hero status is only matched by his flamboyance and AirAsia’s commercial successes.
Fernandez knows how to ride the crest of a wave. In his case that wave was amongst other things his association with Sir Richard Branson.
Along with his associations came the idea of cheap no frills flying, a fresh approach to marketing, personalizing his product AirAsia, stamping it with the identities of the people who make it fly (and in this instance those who make it crash as well). Then there is Fernandez’s ownership of English football team Queens Park Rangers. All good so far. A real text book approach as was recently described by Caroline Sapriel, managing director of CS&A, a firm that specializes in advising clients on disaster management.
Nothing it seems could stop the company having $200 million wiped off its value on the stock market in a short time though. We suspect this to be the result of Tony Fernandez’s premature ‘mea culpa’. The shareholders now speak.
WAS AIRASIA OPERATING A PIRATE AIR TAXI?-RED FLAGS, SIRENS AND WHISTLES
Not long after our contribution to Che Det on this matter was published (two days later) Indonesian authorities issued a statement in which it questioned whether the pilot had followed correct weather procedures during the ill fated flight.
Later in the same day the Indonesians issued a further statement about suspending AirAsia’s (Indonesia) Surabaya to Singapore flights, saying ‘the airline’s operating license only permitted flights on Mondays, Tuesdays, Thursdays and Saturdays’.
The question that arises in light of the official statements issued by Indonesian aviation authorities about AirAsia flight QZ 8501 now is this: Was someone operating an unauthorized flight within AirAsia Indonesia? If so how did Surabaya control allow the flight to take off in these circumstances?
Djoko Murdjatmodjo, Indonesia’s acting Director General of Air Transportation, said on Saturday 3 January 2015 that “the Transport Ministry would investigate other routes used by the carrier, which flies from at least 15 Indonesian destinations“.
Is the acting Director General of Air Transportation Indonesia by his statement suggesting that AirAsia is suspected of undertaking unauthorized flights out of other cities it operates in and if so how many and by what means? “We are going to investigate all AirAsia flight schedules. Hopefully we can start on next Monday,” he said. “It is possible AirAsia’s license in Indonesia might be revoked,” he added.
If AirAsia’s license is revoked that may indeed sound the death knell of what was once perceived to be a great airline. “It is without question”, an Indian aviation ministry official when asked and who spoke on condition of anonymity said “that we will be checking with all countries in which AirAsia has been flying to vet their compliance with international aviation practices and with regional laws and procedures”.
SHORT CUTS, DISASTERS AND THE ASIAN WAY OF BUSINESS
Garuda Indonesia and Philippine Airlines for a number of years had restrictions placed on them flying directly into Europe and the US because of their very poor record of maintaining standards and in meeting compliance sufficient to satisfy international aviation guidelines,protocols and benchmarks.
Audits on both Garuda, Philippines Airlines and in fact all Indonesian and Philippines domestic carriers found serious breaches of compliance, flaws in reporting, short cuts in maintenance and fault reporting, falsification of documentation, poor aircraft maintenance (no maintenance in many cases to save on costs) the use of diluted fuel and over worked staff some reported to be doing up to three shifts in a single daily roster.
It is widely believed by aviation experts that, these same malpractices and breaches of international air safety standards AirAsia now, Garuda and Philippine Airlines before it stand accused of, may in fact be far more widespread that is admitted to or acknowledged by aviation authorities in south east Asia.
Airlines regularly flying the same routes in the region flown by AirAsia are going undetected in their breaches. Business models like that of AirAsia’s in allowing full autonomy to regional partners to manage their operations of the AirAsia business, makes monitoring compliance full time by head office difficult if not impossible.
UNAUTHORISED FLIGHTS-UNOFFICIAL SANCTIONS AND THE ASIAN WAY
An aviation expert from the US reinforced comments made by Indonesian authorities in suggesting that the AirAsia flight that crashed QZ 8501 may have been unauthorized. As QZ 8501 carried many Indonesians of ethnic Chinese descent, (a very wealthy and influential minority group in Indonesia), the flight could well have been ‘unofficially sanctioned’ in Surabaya.
Unofficial sanctioning is a common practice in Indonesia and in many Asian countries. It simply involves paying off an official or officials to authorize an unauthorized act.
In the specific case of flight QZ 8501 the Surabaya Singapore flight may have been ‘unofficially sanctioned‘ (out of schedule) for the convenience of wealthy passengers.This would have involved administrative intervention, altering the status of the flight from one of (non) scheduled flight to that of a charter flight.
In unofficially sanctioning the flight this way, the aircraft bearing the AirAsia livery could then fly its passengers to Singapore ( who in a bizarre twist, say the flight was authorised to land in Singapore on a Sunday) as a scheduled AirAsia flight on a date it was not scheduled to fly.
Sunu Widyatmoko, Indonesia AirAsia chief, told reporters the airline, which is 49-percent owned by Malaysia-based AirAsia , would cooperate with the inquiry. “The government has suspended our flights from Surabaya to Singapore and back,” he said. “They are doing the evaluation process. AirAsia will cooperate fully with the evaluation.“
Lets hope that the slogan “now everyone can fly” does not end up being “now everyone is dying to fly” in the wake of what is seen as an avoidable and preventable tragedy involving a first class airline.
The practice of “unofficial sanctioning” according to many, is what governments and businesses in south east Asia term “the Asian way” of doing business.
TONY FERNANDEZ & AIRASIA- WHERE LINES ARE BLURRED
It is widely reported that Tony Fernandez CEO of AirAsia issued an apology “accepting (full) responsibility” for the accident (by implication of what he said and the context in which his statements were reported).
There are many who believe Tony Fernandez owns AirAsia. There those who believe that an apology and ‘accepting (full) responsibility’ for an accident by the CEO of the company is the right thing to do in the circumstances.
It is also a widely held belief by many that an early acknowledgement of responsibility would help to reduce the prospects of the AirAsia tragedy turning into a bigger (PR) disaster for the airline and for its reputation.
With the benefit of hindsight this is not an unreasonable view to adopt, considering the disastrous handling of the public relations and media briefings by government appointed spokespeople in the MH 370 and MH 17 disasters.
There is merit and much to be said for good PR and effective communication with a grieving public delivered by people at the top immediately after the event. Full and frank disclosure helps. Accepting responsibility does not on any view help the Airline or its image so soon after the event without the benefits of the full facts behind the crash.
WHERE TONY FERNANDEZ ENDS- WHERE AIRASIA BEGINS
Tony Fernandez does not own AirAsia. The shareholders of who he is one, own the airline. Fernandez is a major and significant shareholder and founder of the airline. AirAsia is the property of a public corporation.
The airline is indelibly stamped with the identity and persona of Tony Fernandez founder of AirAsia and he with it. And thus far that relationship and public perception of the two in one has endured successfully over a decade and half.
One entity (Fernandez) is indistinguishable from the other (the corporation) in the public’s perception (till now).
Fernandez also enjoys folk hero status amongst not only Malaysians, but also amongst Britons, south east Asians, China and people in the Indian sub-continent where AirAsia operates in one form or the other.
It seemed for a while that nothing could go wrong for him or his airline. And from all accounts he deserves much praise for the airline’s success and for its good public image.
THE CRASH AND ITS CONSEQUENCES FOR THE AIRLINE
On Sunday 28 December 2014 the dream came crashing down over the Java sea in what was perhaps the most dreaded event in the life of any airline operator .
Western journalists went to town reporting that a “Malaysian Airlines AirAsia airbus” had gone missing over the Java sea. Very few amongst them could distinguish between the official flag carrier of Malaysia, Malaysian Airlines (MAS) and the private sector owned AirAsia and it was only a few days later that some bothered to check their facts and get the story right.
“Another Malaysian Airlines plane goes down” screamed the headlines over the airwaves and front pages of western media outlets. There was a careful and deliberate avoidance of any reference to Virgin Airlines or of any mention of Sir Richard Branson and any connection to AirAsia lest the fall out should infect the reputation of Virgin Airlines.
The point seemed lost on many. A friend in need indeed is Virgin and Sir Richard Branson.
WHAT’S IN A WORD (OR WORDS)
The point we sought to raise in Che Det that appears to have escaped the comprehension of many readers is that by “accepting responsibility” for the problem”( i.e. the crash of the airliner AirAsia flight QZ 8501) Fernandez necessarily acknowledges and accepts the burden of legal responsibility for the consequences that flow from his “acceptance of responsibility” as the airline’s CEO.
It was a dangerous and premature acceptance of responsibility on the part of Fernandez speaking for the airline AirAsia. And the market appears to have taken note of that acceptance of responsibility. All $200 million of it.
The reason we say so is this: The cause of the crash has not yet been established. The recovery operations to find the wreckage of the aircraft, its black box and the cockpit voice recorder have not yet been completed let alone located. To have “accepted (full) responsibility” in these circumstances before any other official, forensic and scientific finding is made is simply suicidal. It says something about culpability.
Where was Tony Fernandez’s lawyers, where was his ‘well oiled’ PR machine?
WHY ANY ACCEPTANCE OF RESPONSIBILITY MUST WAIT FOR THE FACTS
The Asian media may forgive Fernandez (as should the rest of us) as his reported statement must have been a spontaneous heartfelt comment by a grieving CEO and an honest slip at that made by the man in the heat and emotion of such a disaster. However to make such an admission (which is what this is) by “accepting (full) responsibility” for something for which responsibility cannot yet be apportioned to, is a statement insurance companies, relatives and lawyers who will inevitably become a part of the gouging process in the aftermath of this tragedy would love to hear.
Many may already have picked up on Fernandez’s acceptance of responsibility statement. Where were his legal advisors? Where was his well oiled media PR machine?
An acceptance of responsibility has the effect of reducing an insurers liability if not partly at least, then wholly.
There are then the relatives of the passengers and the owners of cargo QZ 8501 who have an interest and a right to sue the Airline who will not ignore the acceptance of (full) responsibility by AirAsia’s CEO to consider.
What impacts his words will have on the immediate and long term future of the airline is yet to be determined.
CONTAINMENT AND BIAS IN THE MEDIA vs SELF INFLICTED INJURY
QANTAS has had four aircraft technical failures in the air whereby aircraft had to return to base in a matter of one month in December 2014. Nothing in the international press. That’s PR. That’s containment.
A Greek cruise ship caught fire off the Adriatic coast also in December 2014. The media reported 10 dead. The magistrate conducting the inquiry now in Italy has established 98 not accounted for in addition to the 10 confirmed dead. Thats clever use of language. 98 missing could be 98 dead meaning 108 deaths altogether. But by using the art of containment without lying, the cruise operator’s PR said 10 dead (confirmed) 98 unaccounted for (not dead). The impact on public perceptions of an otherwise disastrous event is obvious.
A ship was deliberately steered onto shallow waters and to rocks and is listing badly in Northern Scotland .4 people confirmed dead. Nothing is said of it. No apology issued no acknowledgement of responsibility as in the case with the Greek cruise ship.
Paying huge sums of money to western based PR companies is never the answer. Common sense is.
AirAsia’s crash of the Surabaya to Singapore flight is yet another example as to what could happen when airlines (MAS) are privatized and short cuts and profit take over as the overriding consideration.