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Engineering Economic Analysis

Posted: December 20th, 2011 | Author: | Filed under: Economy, Entrepreneurship, Experience | 3 Comments »

I have recently finished a project related to economic analysis on an engineering project. It’s done together with Foo Piew and Wong Ning. Among the key takeaways from the project for me are as follows:

  1. Depreciation reduces tax incomes. One day, when I started earning money, I would first find a way to reduce my income tax than any other things.
  2. Software marketing is the hot thing now. It has one of the highest returns of investment. Things that I can relate:
  3. McKinsey, one of the leading consulting companies, has 21 software products. Having said that, McKinsey would be a very profitable company even without their consulting services.

Other related Softwares news, you might relate Deccan Herald.


Interesting Entrepreneur Project – Interview with Azran, CEO of Air Asia X

Posted: November 7th, 2011 | Author: | Filed under: CEO, Entrepreneurship, Experience | 1 Comment »

I’m engaged with a very interesting entrepreneurship project. Guess I will postpone my Silicon Valley workshop experience to 2 posts after this. For this entrepreneurship project, first I interviewed Air Asia X CEO Azran Osman-Rani. Then, we as a group interviewed SAYS.my CEO Khailee Ng and General Manager Sam. In this post, I provide the contents and everything about Air Asia X. The answers in “quoted” form are the answers given by Azran.

1. What motivated you to start AirAsia X?

a.       AirAsia X is not my own business or my original idea. It was Tony’s. He had the vision to set up low-cost long-haul, but his fellow Directors and Shareholders at AirAsia felt it was too risky. So he set up AirAsia X as a separate stand-alone company to pursue the business idea. He was the one who searched for me and convinced me to lead the project and bring the idea to fruition.

b.      Tony wanted someone outside of Aviation and outside of his AirAsia team, because he knew that low-cost long-haul was going to be different. He didn’t want someone to lead it with pre-conceived ideas on how the airline should be run because there is no proven model for low-cost long-haul. He wanted someone to come in fresh, and challenge all the conventional wisdown of aviation and build up a new aviation model from scratch. He was attracted to me because of my (a) start-up experience from starting new media businesses in Astro, and (b) experience in multiple international markets, including living and working in Singapore, Indonesia, Thailand, Korea, India, etc.

c.       I was attracted to join Tony because it was an idea that was completely unproven, yet if we succeeded, we could revolutionise the entire global aviation industry. There aren’t opportunities where Malaysians can work on truly groundbreaking ideas – so I felt this was a once in a lifetime opportunity to try to prove something new. Plus it was my first opportunity to lead an organisation from scratch as CEO – where the buck stops with me, and I had to build a team from scratch and take full responsibility.

2. What are the key challenges you faced when you first proposed the idea to your teammates and to the potential investors?

The biggest challenge to recruit new people and new investors (Virgin, Orix, Manara) is that we didn’t have a track record, and there wasn’t even any proven successful models – all previous attempts at low-cost long-haul were failures. But Tony believed in the vision, and I was determined to find a logical business model to make it work, because fundamentally, i saw the same opportunity from price elasticity – that if you could offer low fares, more people would fly – the trick is to find how we could operate at a radically lower unit cost to support the lower fares.

3. How do you grow the business from a small start-up to what it is now in about just 4 years time?

Tough! Not only did we have to deal with all the typical start-up challenges, but we also had to battle the Global Financial Crisis, high oil spike, H1N1 epidemic and other natural disasters. The main thing is getting the organisation to fully understand and get excited about the mission/purpose of the organisation, and empower the teams to deliver results.

4. As I know, AirAsia X focuses on long-haul flight. How do you attract customers and keep them loyal to AirAsiaX?

1. Lowest Costs; 2. Attractive Destinations; 3. On-Time Performance Reliability; 4. New Planes and comfortable Seats; 5. Responsive Customer service.

5. Who are the competitors in the region and how do you direct your team to outcompete them?

For now competition is full-service airlines: MAS, SIA, Cathay, Thai, Qantas. We beat them on price, and have the same reliability/on-time performance and customer service responsiveness.

6. How’s the culture in AirAsia X? What are the most important qualities that you think an employee should possess?

Culture is one of 1. Openness and Sharing; 2. Boldness and Willingness to Try new Things; 3. Disciplined Execution; 4 Growing and nurturing young talent. Qualities: Must live these culture values.

7. Is that possible if you can share with us your direction for AirAsia X in the future?

To be the dominant low-cost long-haul airline in the world – world’s lowest unit cost, best on-time performance and safety reliability (better than Cathay and SIA), and service responsiveness as good as Cathay and SIA.

 

Besides, Some interesting facts and Business Model that Air Asia X  is using:

1. Air Asia X emphasize very much on cost control, even more intensive than the parent company Air Asia.

2. Air Asia X fully optimize aircraft utilization by planning different times of landing in London on different days.  Over 16 hours/day utilization of each plane.

3. For each flight, the water is not filled to maximum level, but to the level each  journey needs. This decreases the weight and decreases the total fuel needed for combustion.

4. Air Asia X did not revolve from the existing low-cost long-haul model, but they unbundle the full-service long-haul model and figure out which places that can cut cost and make more money. I think this is the reason why Tony (refer to Question 1.b. above) wanted someone fresh in aviation industry. Newcomers are willing to question the tradition and not taking things for granted.

5. Air Asia X charges low and transparent fares. It fills the planes to maximum passenger’s capacity. In short, moving the maximum amount of passengers at the minimum cost.

6. Developing Ancillary Revenues.

7. Frills (IFE, food and drinks, more comfortable seats) available to pre-book or purchase (value added to customers and company earn money)

Latest News:

The latest news (as of 7th November) is the share swap with MAS where Tun Mahathir urges this process to be taken quickly. Another key consideration for Air Asia X would be Singapore’s Airline recent launch ‘Scoot’ with similar models as of Air Asia X.

And next, I will be posting the interview with SAYS.my’s Khailee Ng and Sam!

 

 


One Day Entrepreneur – The Real Business behind the Scene

Posted: October 29th, 2011 | Author: | Filed under: Entrepreneurship, Experience | 1 Comment »

Zac, Calvin, Kitlung, and I made a one-day trip to Capital Square today for an entrepreneurial experience and class.

The speaker was really great, and the way both theories and games were integrated into the presentation made it even more interactive. I would give it a 7.5 out of 10. It’s overall a great experience.

We played a game where we started with 25k and had a bank loan of 100k. The goal of the game was to earn the most money considering stuff like products, factories, employees, salaries, branding (marketing and advertising), RnD, and other costs, such as taxes and bank interests. The lesson from this game: don’t be penny-wise and pound-foolish. Among the key takeaways from this one-day trip are as follows:

  1. Very interesting stuff that I learned today. Many companies’ main revenue streams do not come from what they appear to in public. Air Asia’s main core revenue stream is commodity trading (fuel gas). Dell’s main core revenue is commodity trading too (chip).
  2. These are things that I can relate. McDonald’s core business is real estate investing.
  3. Another thing that I can relate is what Robert Kiyosaki (writer of Rich Dad Poor Dad) wrote in ‘Unfair Advantage,’ which is that the most brilliant way of earning is earning using other people’s money. What AirAsia or Mutal Fund does is to find a way to collect money from the shareholder/public and reinvest them into the market. What happens after that, I will leave to you.
  4. If you have a brilliant idea, share it with as many people as possible. You might afraid of people stealing your idea. Increase your barriers of entry. (This is similar to what I have heard at the ‘Silicon Valley Comes to Malaysia Top 100 Team Camp,’ which I will blog about in my next post.)
  5. The market now demands instant results. Users might not be the ones who pay for it. Both parties have to be well taken care of. Parents and Kids. These are things not written in the presentation slides. I learn and really enjoy learning the real things happening behind, not known by majority. Next post will be my experience selected as one of the Top100 for the ‘Silicon Valley Comes to Malaysia’ program.