Less than 24 hours into the disappearance of AirAsia Flight QZ8501 and, already, conspiracy theorists are at work reading into the minutiae of minimal information being released by official sources. That QZ8501 is the third Malaysian aircraft (after Malaysian Airlines MH370 vanished with 239 people in March and, another, MH17 carrying 298 people was shot down over the Ukraine in July) has been noted foremost. There is unlikely to be any relationship between the three accidents.
Flight QZ8501 is owned and operated by AirAsia Indonesia which makes it an Indonesian airline although its parent company which owns a 49 percent stake is Malaysian. AirAsia, until now, has enjoyed a generally trouble-free existence. Indonesia, however, has a less than sterling aviation safety record. A string of crashes over the mid-1990s through to the mid-2000s and later resulted in all Indonesian airlines being banned from flying over European airspace from 2007-2009. Post-2009, Indonesian budget airline Lion Air, however, is still blacklisted by the European Union. It’s had no less than seven accidents since 2002 with its most recent mishap happening in 2013 when one of its brand-new Boeing 737-800s crashed in Bali. Fortunately the 108 people on board survived.
Southeast Asia is home to a rapidly-growing civil aviation industry and a key challenge to this growth has long been the availability of competent pilots, aircraft mechanics and air traffic controllers. Because much of Southeast Asian countries is made up of many islands, its inhabitants have always been dependent on sea and air travel, with services often operated by monopolistic — and often crooked — businesses enterprises until recently. With increasing affluence owing to the region’s famously fast-growing economies, air travel has literally taken off. Indonesia is one of the world’s fastest growing air travel markets according to the International Airt Transport Association (IATA).
The Philippines is also among the world’s fastest-growing air travel markets. AirAsia also operates a subsidiary in the Philippines, AirAsia Philippines and is chaired by Antonio “Tonyboy” Cojuangco, a cousin of current Philippine President Benigno Simeon “BS” Aquino III. In 2011 AirAsia Philippines took delivery of two units of the same Airbus 320 flown as AirAsia Indonesia’s Flight 8501. Budget airlines operating in the Philippines have also had a spotty safety and service track record. In June, 2013, an Airbus 320 of the Philippines’ top budget carrier Cebu Pacific, skidded off the runway at Davao City International Airport shutting down airport operations for more than 3 days and resulted in the cancellation of numerous flights in and out of that city. None of the passengers were harmed. In 1998, Cebu Pacific Flight 387 flying from Manila to Cagayan de Oro crashed killing 104 people on board. In both crashes, there was strong evidence of human error.
Cebu Pacific also figured in a very recent public relations disaster which will likely cost it dearly. The “Great Cebu Pacific Christmapocalypse of 2014” is blamed on shoddy management practices that have come to characterise airline operations in the Philippines. The snafu caused by a string of delayed Cebu Pacific flights resulted in massive chaos at Manila’s Ninoy Aquino International Airport (NAIA) on Christmas Day, 2014 that caused widespread anger and may possibly attract a Congressional inquiry into Cebu Pacific’s management practices.
According Harvard Business Review writer Oliver Segovia, Cebu Pacific is “a horrible airline” because its management team is “not right for the job”. Segovia cites publicly-available information on Cebu Pacific’s business operations to reveal disconnects between its stellar revenue growth and investment in staff and training. Most notably, the Cebu Pacific Board is severely deficient in collective airline experience and its membership is laced with family ties. Segovia notes:
[…] this is a board stacked with lawyers, family members, and insiders. It’s a board designed to preserve control and mitigate risk, rather than to strive for operational excellence and competitiveness.
It’s also a board filled with old people. The average age of the Cebu Pacific Board is 65 (and that is helped by Lance and Frederick. 5 out of 9 Directors – a majority! – are above 73 years old).
Interestingly, Segovia cites AirAsia Malaysia as an example to highlight the misguided investment priorities of Cebu Pacific, highlighting that the Malaysian carrier spends six times more on people than Cebu Pacific. Segovia points out that despite Cebu Pacific’s Revenue Passenger Kilometer (RPK) metric growing 12.1 percent in 2013, its staff cost grew by only 2 percent in the same year. No information is available on how much of that scrimping is copped by maintenance and piloting staff, however. Segovia also notes that the “average age of the [AirAsia Malaysia] board is 53” compared to 73 for Cebu Pacific.
Like AirAsia Philippines, AirAsia Indonesia is also minority held by its Malaysian parent company with 51 percent controlled by “Indonesian Shareholders” according to the AirAsia website.
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