A Test of Southeast Asian Leadership: Cebu Pacific, Air Asia, Lion Air
By N Mark Castro
This post focuses on Low Cost Carriers (LCCs) and their recent crises that have put forward crucial things in Brand Management, Crisis | Issues Management (Communications), and Leadership.
Here are the facts according to the dates they happened:
1. CEBU PACIFIC AIR (Philippines)
Between December 23 to 26, 2014, at the height of the Christmas season in the Philippines, Cebu Pacific Airlines suffered massive flight delays and cancellations, affecting at least 10,400 passengers.
It did not help that there was an absence of immediate announcement from Cebu Pacific officials and, worse, the carrier said that the delays and cancellations were also caused by congestion and bad weather.
Indeed, Ninoy Aquino International Airport — despite its four terminals, has long been considered as the worst airport in the world for three consecutive years, until it lost such notorious title to Pakistan recently. According to most reports, NAIA’s domestic and international passengers reached 32 million passengers as of last year.
NAIA’s capacity for all its four terminals is just 30 million.
And on December 23, the perfect logistics storm happened when Cebu Pacific suffered flight delays and cancellations.
What compounded Cebu Pacific’s woes were the passengers’ — and relatives’ — taking to social media to vent their immediate frustration and displeasure, coupled with the absence of urgent communications management plan from Cebu Pacific officials. Indeed, there may have been operational lapses and customer service mismanagement but with a narrative that had already gone haywire, it was easy for the government to pass solely the blame to Cebu Pacific, which it did, penalizing the airline for US$ 1.17 million.
Amidst an angry stream of passengers, their relatives, and friends, with politicians taking up the cudgels, the Cebu Pacific Holiday Nightmare has become a national conversation.
A congressional hearing was called and — aside from money — blood wanted to be drawn. Critics lambasted Cebu Pacific and listed various grievances and complaints,netizens were drawn to online judgments, while some cynics wanted to find out how this would be spun by PR machineries.
Cebu Pacific could have easily retained lobbyists to delay or suppress the congressional hearings, PR machineries could have been deployed to counter public sentiment, payments could have been made while backroom deals could have been done.
None of that happened as Cebu Pacific’s president and CEO Lance Gokongwei personally appeared before the hearing and contritely spoke to the entire nation:
“I’m profoundly sorry that we failed them…”
Cebu Pacific has since vowed to improve its services with a complete action plan and transition phase while the Philippine government, to this day, still lags behind in its improvement plans for one of the worst airports in the world.
2. AIR ASIA (Malaysia)
On December 28, 2014, Flight QZ8501 vanished from radar screens over the northern Java Sea less than half-way into a two-hour flight from Indonesia’s second-biggest city of Surabaya to Singapore. It was a dramatic and tragic scene reminiscent of two recent Malaysian airlines tragedies: the still-missing MH370 Malaysia Airlines and the MH17 Malaysia Airlines that was shot in Ukraine.
And here it was, another Malaysian airline that had previously and consistently performed well.
People waited. People feared. People prayed. People hoped.
Social media was ablaze: Facebook, Twitter, Instagram. And the international media that followed every search and rescue efforts became fodder for speculations while local media would be reshaped by public standards as it entered a new phase of reporting.
Tony Fernandes, CEO of Air Asia, flew right away to Surabaya, Indonesia to address the public, the families of the passengers, coordinate with the government, as soon as the news of Air Asia’s Flight QZ8501 was reported. Being a tech-savvy person adept in the use of social media, he reached out to the public with a series of tweets.
The hours turned into days, days into weeks, and weeks into months. Search and rescue teams came from different countries while investigations continued. The full management team of Air Asia, led by Tony Fernandes, never hid their faces for one moment, always providing access both to media and government investigators, personally appearing to provide calm and comfort to the bereaved families and friends of those onboard the missing airline.
Meanwhile, Minister Ignasius Jonan of the Transportation Ministry of Indonesia has banned the sale of cheap tickets for domestic flights to ensure that airlines do not cut corners on safety.
Of course, the entire world knows the safety record of Indonesian airlines, pushing the European Commission in 2007 to ban all Indonesia-based airlines from flying to the European Union after a series of accidents. Exemptions have recently been granted to Garuda Airlines and Air Asia.
But part of what made Tony Fernandes successful in managing the crisis was his authenticity in prioritising the focus of the airline’s attention — the families. Under his leadership, he pushed to send that message again and again using all available communications channels, whether online or offline. He never wavered to address the public and to face the government. He gave his personal mobile numbers and never hid behind his battery of lawyers.
After weeks of relentless search and rescue, the sad truth finally came that Flight QZ8501 indeed crashed. Some bodies have been recovered while others have yet to be accounted, but what became palpable that disgusted the sensibilities of those watching was the blatant disregard for civility of local TV station TVOne, which shot a close up of the faces of the victims as they were being recovered on one screen while showing the reaction shots of the families, relatives, and friends who were watching the rescue operations.
Quietly, Tony Fernandes continued his outreach to the families of the victims, burying his staff while accompanying families, relatives, and friends of the victims to the funeral, continuously communicating with them.
As of to date, investigations and reports continue to be analysed for Air Asia’s Flight QZ8501, but what has become evident was the leadership displayed by someone known to be flamboyant and was transformed to a hands-on support system that guided the public, the government, and the families of the victims in finding closure. That was the leadership of Tony Fernandes.
3. LION AIR (Indonesia)
On February 18-20, at the peak of Indonesia’s IMLEK (Chinese New Year) celebration, falling on a long-weekend, Lion Air, the largest budget airline in the nation, had massive flight delays and cancellations, displacing at least 3,000 passengers. But what has compounded the woes of the passengers, with some waiting as long as 12 hours for a canceled flight, was that refunds were not made available and there was not enough ground staff to handle the public.
Worse, official statements were not made as events unfolded and it became evident that the airline had no crisis management plan. As passengers sought for the absent duty manager, they stormed the empty office and turned over tables to vent out anger.
To add insult to the wound, no meals, water, ticket refunds, or even reassuring official announcements were provided to the displaced passengers.
It would take several days later before the official reason for the delay could be given by Lion Air officials, which was that 3 of its fleet had foreign objects: gravel, stones or small metal objects affected its aircraft, with bird feathers and bones found in one engine.
Further, it would be state-owned Angkasa Pura that would bail out Lion Air from its financial inadequacy in paying for the ticket refunds of the passengers, which was a mere Rp 526.89 million (US$40,980.92). Quite ironic, considering that Lion Air was quick to seal the purchase of the largest order of Airbus planes worth US$ 24 Billion.
According to technical reports given, Lion Air’s seven planes were suspended from operations at the peak of Chinese New Year travel. At the same time, 10 planes were under scheduled maintenance, which exacerbated the shortage, causing what they termed as “domino effect”.
In the succeeding investigations that happened, however, Lion Air’s executives continue to display its hubris by denying responsibility from the mess, as evidenced by the report of Jakarta Globe.
Airline executives have been the one facing the government and the public, releasing statements that practically absolve them of wrongdoing. No acts of contrition or display of humility.
All this time, the president of Lion Air, Rusdi Kirana, had been absent from public view in addressing the issue, increasing criticisms against the government itself that seemed unwilling or unable to immediately sanction Lion Air. Minister Ignasius Jonan’s own management of the crisis had been strongly juxtaposed against his handling of the Air Asia tragedy.
Rusdi Kirana, the iconic symbol of Lion Air, was until recently a National Awakening Party (PKB) top politician who was appointed as member of the Presidential Advisory Board (Wantimpres). At the time that his executive director was erroneously addressing the issue, it would have been the perfect time for him to step in to show his wisdom, concern, and general leadership over the airline that he founded.
As of this writing, several sanctions have been proposed to be applied on Lion Air, some are minor while some may impact its financial bottomline. What is palpable, however, was the missed opportunity to display leadership and develop a message to its stakeholders, considering that Lion Air had been notorious for its regular flight delays.
Three leadership styles of airline management from ASEAN neighbours Philippines, Malaysia, and Indonesia.
Posted on February 25, 2015, in General, Politics and tagged airasia, asian low cost carriers, cebupacific, lancegokongwei, lccs, lionair, low cost carriers, ministerignasiusjonan, rusdikirana, tonyfernandes. Bookmark the permalink. Leave a comment.