As of today, budget airline AirAsia has the majority of its fleet sitting on the ground. In fact, the airline’s founder and CEO Tony Fernandes says that an astounding 96% of its fleet is grounded. Furthermore, Fernandes adds, “we still have significant ongoing financial commitments such as fuel suppliers and leasing agents”. The head of the airline paints a fairly bleak picture for his company. It all seems to build up to one key point…
Written in email-form, Fernandes addresses AirAsia customers and the wider public. He begins by saying the following:
“It’s an uncertain time. Never could I have imagined it, no one could have predicted it and yet everyone has been touched by it. So I want to be open and transparent with you in this time of uncertainty.”
All staff remain employed
Fernandes continues by saying that the airline is doing everything possible to reduce costs in order to “come back fighting as fast as possible.” However, a big portion of any airline’s costs is its workforce. On this front, AirAsia is one of the few airlines that has kept all of its staff, affectionately called Allstars, in employment. A fairly noble thing to do considering the great expense.
On the topic of workforce and employee expenditures, Fernandes lays out the sacrifices the entire company has had to make:
“AirAsia is a family and there are tens of thousands of Allstars who depend on the business for their livelihoods and the wellbeing of their own families. [The company’s chairman] and I will not be taking a salary during this period and Allstars from across the business have accepted temporary pay reductions of anywhere between 15-75%, depending on seniority, to share the impact this is having on our business. I thank them for their sacrifice and in keeping the big picture in mind as we navigate this together.”
Refunds and credits
In a very honest and upfront portion of his letter, Fernandes addresses the topic of refunds and credits. He acknowledges that there has been much frustration from AirAsia’s customers regarding the lack of refunds for canceled flights.
He encourages these travelers to “accept a credit as a good alternative”, saying that more than 80% have accepted the airline’s credit offer. “We truly appreciate this” Fernandes says. “We have ensured that we adhere to all regulations and requirements of respective governments and consumer authorities and believe this is the best solution.”
With that being said, AirAsia does accept requests for refund on a case by case basis. This, however, may take a long time to process. Fernandes estimates between 12 to 16 weeks.
Reading the letter over, it seems as if the key point of the email was to encourage customers to accept travel credit instead of demanding a refund. Indeed, statements on the high percentage of groundings and its position on employment and salaries, all build up to the request – made twice – for customers to accept credit.
From an airline point of view this makes sense – especially if the airline’s entire workforce is staying employed. Even with pay cuts, this would be an expensive endeavor which would be made more difficult if every customer demanded a refund.
What do you think of Fernandes’ letter? Would it convince you to accept credit instead of demanding a refund? Let us know in the comments.