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Can AirAsia surmount first major crisis? Yes, analysts think so

Until Flight QZ8501 went down on Dec 28, everything had gone right during a spectacular 13-year run of success for AirAsia.

It had unlocked a booming market of budget travellers in the region.

And as long as no serious safety lapses emerge, analysts say the robust and media-savvy business built up by the Malaysia-based group should help overcome its first major reversal.

Flight QZ8501 operated by Indonesia AirAsia – the group’s Jakarta-based affiliate – crashed in the Java Sea on Dec 28 en route to Singapore from Surabaya with 162 aboard. All are believed dead.

From the start, AirAsia’s colourful boss Tony Fernandes publicly took responsibility, visited victims’ families, and vowed to find out what happened.

His regular tweets gave an insight into what was happening, not just on-the-ground operations but also what he - as chief - was doing.

 

Such actions are critical in restoring trust, experts say, and stand in stark contrast to Malaysia Airlines’ fumbling, tight-lipped handling of the still-unsolved disappearance of Flight MH370 last March with 239 aboard.

Crisis management

Daniel Tsang, an aerospace analyst with Aspire Aviation, said:

“This is an excellent case of a crisis being handled well, to show your customers that things are being taken care of in a hands-on manner, and that the executives are not just sipping their coffees in a cosy office.

“While some passengers may avoid taking (AirAsia) flights in the short-term, AirAsia’s low-cost proposition will keep drawing in first-time fliers to the airline.”

If investigators uncover safety negligence on the airline’s part, however, it could deeply undermine confidence.

The cause is not yet known, but the plane’s Indonesian pilot had requested a course change from air traffic controllers shortly before the crash to avoid a storm.

Indonesian officials in turn have raised questions about Indonesia AirAsia, saying it did not have a license to fly the route that day, but Fernandes has rejected the claim.

'Never hide'

Taking to Twitter, Fernandes last week vowed all the facts will come out. “We never hide,” he declared.

Shukor Yusof, founder of Malaysia-based aviation research firm Endau Analytics, said he would be surprised if a systemic AirAsia safety problem was found: “AirAsia does well in cost-cutting but not to the extent of foregoing safety.”

Knowing the plane’s fate also means AirAsia can bring closure to families, so muting long-term criticism.

Part of the tail of AirAsia QZ8501 floats on the surface after being lifted as Indonesian navy divers search for the black box flight recorders, passengers and crew. Photo: Reuters

Photo: AFP

In contrast, the failure to find MH370 has left many victims’ kin alleging a cover-up by Malaysia Airlines and Malaysia’s government.

AirlineRatings.com editor Geoffrey Thomas said: “Certainly AirAsia will recover as it is a very good airline and this tragedy will not impact its growth.”

That said, AirAsia is struggling to maintain growth rates as it matures, as rivals step up competition. 

In the first blow to its business, Indonesian authorities have halted AirAsia’s Surabaya-Singapore flights.

But analysts note that AirAsia has continually proven itself the region’s most nimble performer, and that other airlines - like flag carriers Garuda Indonesia and Korean Airlines - have bounced back from tragedy to emerge stronger.

Sources: AFP, Twitter

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