17 November 2012
It was near to impossible to get an interview with Rusdi Kirana, the president director of Lion Air, but when the call came through late on Thursday night that the interview was fixed for Friday 10am, the only fear was it would be cancelled because Rusdi rarely meets the press. But B.K. Sidhu had a breakfast interview with him and here are excerpts of the interview:
Forbes in 2011 listed you and your brother Kusnan as being worth US$580mil and the 34th richest men in Indonesia. Your comment?
I don’t know how they value me (and Kusnan) and I don’t even know how much money we have. We don’t take dividends and we do not get a salary. We just buy and the company reimburses us for what we need.
It is not so much about personal money but how we can grow the company and how we can do good for the company, its staff and society.
Today we have 15,000 staff and are building 1,500 houses for some of them. This is the first stage and we will subsidise them for 10 years and after that they will own the homes. The facility comes with a school, religious facilities, hospital, swimming pool and a cinema. The housing is for general staff.
A large number of our staff live out of Jakarta as the cost of living in a big city is high. They need to travel to work and they will be nearer to work with this facility.
Why did you chose the airline business?
I will not be in the airline business if I get a second chance. I was once interviewed by an airline magazine and I said only stupid people run an airline. I rather build a hotel or food business but since I do not have a choice, and since I was a travel agent and only knew about the travel industry, I am in it. Now that I am in it, I have an obligation to our lenders, bankers, and our staff. The airline business is tough business; it is a 24/7 business and I appreciate and admire (Tan Sri) Tony (Fernandes) that he is involved in the airline business.
Why are you publicity shy?
I don’t like to be interviewed because I don’t want to be famous. It limits me. But I do give talks at universities without media coverage. I also try to do some social work that makes me feel real in life. I clean the HDB flats for some old people in Singapore and do some things for the poor in Batam. I am happier doing this kind of things rather than gaining publicity.
When is Lion Air’s IPO?
We have not considered that seriously. What we want to do is let it stay private since we are doing a lot for the staff. Since it is private, we do not need shareholder’s approval. Once we have done all of that and when we have 65% of the domestic air passenger market share, we will then consider. Lion Grup is also making money and it has a good relationship with our bankers and lenders. We are not in a rush to look for money.
Your Prime Minister asked me the same question. I told him I have a few choices, either Singapore or Malaysia but I (still) think this is the best route I would like to get. The main purpose is to make either Singapore or Malaysia a gateway to carry Indonesian passengers onward. We are not only looking for Malaysian travellers. With due respect, Indonesia has a population of over 200 million (which is many times larger than) Malaysia’s 28 million people. If we only base (our market) on Malaysia, there is already AirAsia and Malaysia Airlines which are big and good airlines and the cake would be quite small to share between the three of us.
But since we are looking at onward (traffic), we think it is good to do it in Malaysia. If we combine the (travelling) Indonesians and the population of places we will travel to, say Canton or Shenzhen and Indonesia and via Malaysia, then the travelling population would be big.
Last year, 35 million Indonesians joined the middle income group and these people will first visit Asean countries like Singapore or Malaysia. This group will later think of Hong Kong or even Canton and when they have more money and they will want to travel to Japan, Korea, North China or Australia. So we have that segment (of the market to cater to).
How much are you spending to set up Malindo?
We are a private company and we do not tell. What we saw was an opportunity to do business in Malaysia. As a private company we do not have any loans, not even US$1, but we have aircraft financing. Ours is a family business and we see Malaysia as an expansion for the Lion Grup and we will invest in 100 aircraft over 10 years for Malindo.
What’s the plan on destinations and aircraft usage?
We start in mid-March and will begin with two aircraft to fly domestic routes. In April we will fly to India, most likely to Trichy and in May to China, either Canton or Shenzhen.
We are flying international because we want to better utilise our aircraft instead of parking them in KL overnight. We can fly to India at night because it is accepted to arrive in India at 1am but we cannot do the same in China because people are not used to a 4am landing.
When the aircraft is not parked uselessly, we are then making better use of them and that is why we can sell our tickets cheaper because our fixed cost is covered.
Why Nadi? They do not have the expertise and how did you meet them?
We do not need people who understand the airline business because we understand the business. We met each other at an event. I always wanted to do business in Malaysia or Singapore because of the gateway.
Does Malindo have the rights to fly to destinations like Trichy?
Malaysia is giving us the spare rights to Trichy which is not taken by other airlines. The rights to Chennai, Mumbai and New Dehli are all taken. However, rights are negotiated periodically and for India, we will for now go to secondary points. For China, we will go to Canton, Shenzhen and even Beijing. That would be Malaysia’s rights.
Are you still meeting Fernandes for dinner?
For me it is like this I am impressed for what he has done. He asked for an appointment and he said we don’t need to become enemies. I am a businessman and I never want to treat people or competitors as enemies. If we have a chance to sit down for dinner or lunch, it is fine. But I am not going to talk about business. I don’t want to give the impression that we are going to form a cartel. But it is fine to meet my competitor and to have fun together.