Why AirAsia boosts marketing during a crisis

In 2001 Tony Fernandes purchased AirAsia — its two planes, 254 employees, and $11 million debts — for the equivalent of about 25 cents. Today, the low-cost airline based near Kuala Lumpur, Malaysia, has 200 planes, 17,000 employees, and more than $1 billion in revenue.

Going from belly up to the world’s best low-cost airline ten years in a row didn’t happen overnight.

Fernandes, who now serves as AirAsia’s CEO, recently spoke at MIT Sloan to share lessons he’s learned about finding opportunity in adversity, and building a culture around people.

Don’t panic during a crisis. Do advertise.

AirAsia has weathered a variety of catastrophes since Fernandes took the reins. Along with 9/11 — which disrupted the airline industry worldwide — the airline has endured tsunamis, the severe acute respiratory syndrome (SARS) outbreak, bird flu, a 2014 plane crash under affiliate Indonesia AirAsia, high oil prices, and a currency crisis.

That’s because instead of panicking, Fernandes makes a visit to his advertising department.

“Most companies cut marketing during a crisis, which is actually a huge mistake,” he said. “Adversity is a great time to build a business.”

Take the SARS outbreak in 2003. While most airlines were cutting their marketing and flights, Fernandes tripled AirAsia’s advertising. They didn’t completely fill the planes, he said, but the company made enough to cover costs and establish itself in the industry.

Another area where Fernandes has helped the company establish itself is in its branding. When he purchased the company, the logo was a blue and green bird. He decided to change the color to red, and make the logo the company name.

“If I say ‘Nike’ to you, you generally have the swoosh in your mind. If I say ‘Coca Cola,’ you’re all thinking of Coca Cola. If I say ‘Shell’ you’re thinking of Shell the logo,” he said. “There’s generally one image in your mind. There’s never two images.”

The airline sponsored the Manchester United Football Club, which he said changed the perception of AirAsia as a small brand into one that can hold its own alongside the likes of Budweiser and Vodafone.

AirAsia also sponsored Ultimate Fighting Championship matches, which Fernandes said has paid off because the two latest championship knockouts happened on their logo.

“No airline wanted to sponsor [UFC], they didn’t want blood on their logo,” Fernandes said. “We were quite happy for that.”

Get out of your corner office

While taking risks and pushing the creative marketing envelope have helped grow AirAsia, Fernandes said it’s the people who are the key to the company’s success — and he’s worked to create a culture that reflects that.

AirAsia’s 21,000 employees are not unionized. The company has a very flat structure, Fernandes said, and most people have his cell phone number.

“I probably spend 50 percent of my time walking around the office, because I think management by walking around is critical,” he said, adding that he used to work shifts with the cabin crews, carrying bags, and manning the check-in desk.

One example: During a shift helping baggage loaders, a worker asked him if the company could purchase conveyor belts to help load the taller planes. Fernandes said initially he balked at the idea of having to spend money on more equipment, but after working a shift on one of those larger planes — and almost blowing out his back hoisting luggage into the hold — he promised the belts would be ordered the next day.

AirAsia also encourages its employees to branch out within the company, which helps keep staff turnover low. Fernandes said he’s seen ground workers who are now engineers, and cabin crew members who’ve gone on to be pilots.

“Never lose sight that your biggest asset is the people in your organization,” Fernandes said. “It’s not all about you — it's about the whole team.”