Air Asia has been a seemingly never-ending success story since Tony Fernandes took over the airline in 2001. But not every undertaking the ambitious CEO and his Air Asia Group have undertaken has been an unalloyed success. And now, the fast-growing airline conglomerate is facing its most serious crisis in the apparent crash of AirAsia Indonesia Flight 8501.

“This is my worst nightmare,” Fernandes wrote in one of his early tweets about QZ8501. His comment was clearly directed toward the loss of life of passengers and crew.

Safety is a paramount objective at all airlines, but low-cost carriers (LCC) arguably face more public scrutiny in the aftermath of an accident or major incident due to suspicions on the part of some potential customers that they keep costs down by cutting corners in the wrong places. On the first day of trading after the loss of QZ8501, AirAsia shares dropped by more than 7%.

Even before the loss of QZ8501, the group was facing enormous challenges in spite of its steep rise. Fernandes had taken control of AirAsia—initially a loss-making Malaysian government-owned operation—in 2001 and quickly turned it into a low-cost carrier, a concept he had studied during his time living and working in the U.K., where he witnessed the early phase of the rise of Ryanair and EasyJet. He managed to firmly establish AirAsia as a highly successful operator in Malaysia against a government-protected national carrier and in a heavily regulated market that did not lend itself for the establishment of new competitors.

But in Fernandes’s vision, Malaysia was only going to be the base for a much bigger initiative, one to establish Air Asia as the leading low-cost brand in the entire region. The company agreed to tie-ups with local investors in several Asian countries including Thailand, India, the Philippines, Indonesia and Japan.

Not all of them have gone well, however. The ventures in the Philippines and Thailand are not profitable, AirAsia Indonesia is facing the massive competitive force of Lion Air and Garuda and has, unlike the Malaysian parent, not been able to establish a market-leading position. Air Asia was even forced to terminate a joint venture deal with All Nippon Airways (ANA) covering AirAsia Japan. That brand is to be relaunched with new investors in 2015. AirAsia India is the latest initiative that is to cover one of the region’s most promising air transport markets.

But the biggest business challenge must be in an affiliated airline launched in 2007—AirAsia X. The carrier has been working hard to establish the low-cost concept on long-haul routes, but has incurred hefty losses since its inception. That airline has also made several strategic U-turns, pulling out of Europe is most prominent among them; and it recently deferred deliveries of several Airbus A330s that were due in the coming years. However, AirAsia X is a launch customer of the A330neo and on Dec. 15 the carrier firmed up an order for 55 aircraft.

The short-haul airline also has massive orders in place with Airbus. AirAsia as a group currently operates 169 A320s. A further 27 A320s and 291 A320neos are on firm order. AirAsia is therefore committed to massive growth that it needs to meld organizationally and logistically, with special attention paid to integrating staff training.

The commitments are ambitious, but more conservative than what its biggest rival in key markets, Lion Air, has in store. Lion Air has 279 Boeing 737s (-800s, -900ERs and MAX), 164 A320s (ceos and neos) and 65 A321neos on firm order, illustrating the pressure that even AirAsia is facing when trying to keep up with the competitive forces in the region.

Following the April 13, 2013, non-fatal crash of a Lion Air Boeing 737-800 300 meters (984 ft.) short of the threshold of Denpasar, Indonesia, airport’s Runway 09, Indonesia’s National Transportation Safety Committee recommended in its final report that Lion Air ensure “all pilots are competent in hand flying” and pilot-monitoring skills are embedded in training. The safety agency also said Lion Air should review and ensure the effectiveness of cockpit resource management training. The crew had lost situational awareness during the final moments of the approach in bad weather.

Before QZ8501, AirAsia’s only serious incident was a Jan. 11 runway excursion of an A320 upon landing in Kuching, Malaysia.

QZ8501, a flight operated by Indonesia AirAsia, was en route from Surabaya, Indonesia, to Singapore early in the morning of Dec. 28. The aircraft, an Airbus A320-200, was flying around 120 nm southeast of Belitung Island when the crew requested to climb from Flight Level 320 (32,000 ft.) to FL380 and deviate from its planned track to avoid severe weather. AirNav Indonesia approved the request, at least partially, but is reported to have cleared the aircraft only to FL340 initially to avoid traffic. When air traffic control cleared the aircraft to the new altitude, at 6:14 a.m. local time, QZ8501 did not respond. The aircraft disappeared from radar at 6:18 a.m.

A vast search-and-rescue effort has since been launched, but as of the evening of Dec. 29, no sign of the aircraft had been found. Seven search sectors have been established, mainly east and north of Belitung; six of them were over water and one touches part of the island.

The aircraft involved was an A320 delivered to AirAsia in 2008. It was registered as PK-AXC. There were 155 passengers, two pilots, four flight attendants and one aircraft engineer on board.

The captain had accumulated 20,537 flight hours, 6,100 of which were with Air Asia Indonesia on the A320 fleet. The first officer had 2,275 flight hours with the airline.

According to the International Air Transport Association, the 2014 hull loss rate (not including QZ8501) was 0.22 per million sectors flown. That compares to 0.21 in 2012, the safest of the past five years and 0.42 last year. However, because of the disappearance of Malaysia Airlines 777, Flight 370 (MH370) bound from Kuala Lumpur to Beijing and the shoot-down over Ukraine of another of that carrier’s 777s (MH17), the number of fatalities could reach 669 this year if there are no survivors from QZ8501. According to the Aviation Safety Network, there were only 265 fatalities in 2013.

While there is no direct evidence that weather was a factor in the disappearance of the AirAsia flight, there have been two accidents in recent years in which pilots tried to fly around bad weather and lost control of their aircraft. On June 1, 2009, an Air France Airbus A330-200 en route from Rio de Janeiro to Paris was trying to circumnavigate severe weather in the Atlantic Ocean off the Brazil coast. The aircraft, flying as AF447, went into an aerodynamic stall before the crash. Investigators determined that pitot tubes froze, making inputs to the autoflight system unreliable and causing pilot confusion.

This year, on July 24, a Swiftair MD-83 operating on behalf of Air Algerie (AH5017) crashed in Mali on a scheduled flight from Ouagadougou, Burkina Faso, to Algiers shortly after the crew confirmed that it was changing course to avoid severe weather. Information retrieved later from the flight data recorder appears to show data consistent with a loss-of-control accident.

As in the case of the Air France crash, QZ8501 was not the only aircraft in the area at the time of disappearance and all the others passed through without reporting any issues.


aviationweek.com