Tony Fernandes has been involved in Formula 1 for a several years as a sponsor via his Air Asia business, but he is now moving into team ownership as he heads the new Malaysian-backed Lotus project that will join the field in 2010.
At the Motor Sport Business Forum in Monaco, Fernandes discussed the challenges and opportunities arising from entering a new F1 team.
Q. Why get involved in Formula 1, and why now in particular?
Tony Fernandes: I started the airline business from the music business. I signed it three days after 9/11, and everyone said that's a crazy time to start an airline, it's in crisis, etc., etc. But I thought it was a great time, because the incumbents were in a little bit of a state of flux, and it gives a new entrant such as us with very little capital the chance to go in there and try and start something.
Formula 1 is nowhere near the state that the airline business was in after 9/11. But we see opportunities – I think things are going the right way. Costs may be coming down. I still think it's a phenomenally successful sport. There are still lots of ways of making this a really good business, and it's a great business for other businesses to sit on, on a platform. So those are the three main things that got us involved in this.
Q. What is your initial investment going into 2010?
TF: We have a budget of £55 million ($89m) this year to get the team going. That involves a lot of start-up costs. We are obviously the latest entry vis-a-vis a new team, because obviously Sauber has come in – but they've got all the infrastructure in place. We have had to build everything from scratch.
But we took a little bit of a risk – I started investing in the car and people even before we had a grid slot. I told [Mike] Gascoyne, 'If this doesn't work, I'm going to have some very expensive pictures, and not very nice pictures either...' But that paid off, so we're looking confident and we're about a week ahead of schedule for being on the grid.
Q. What about the business opportunities that you see in Formula 1?
TF: We have a great opportunity because Air Asia sits on massive market. We started eight years ago with 200,000 people flying with us. Eight years later, we carry 25 million people and we sit in a playground of 600 million people in south east Asia, and a billion in China and India that we fly to us. So the opportunities to do things together are wonderful, and that's what we're looking at.
I'm not so sure that the traditional form of just sticking the name on car for branding purposes will be enough going forward. I think Formula 1 teams have to look at other revenue streams as well and over the next three or four years we have many ideas.
Q. F1 has been based in Europe so far, but you're moving to Malaysia in time. What opportunities do you think a move outside Europe presents to you and F1 as a whole?
TF: For the sport it is important, even though people think it's a global sport with lots of circuits around the world – you can build stadiums all around the world, but people still come to see the participants – it's still really predominantly European-based. Even Force India is really a British team with Vijay [Mallya] running around.
So, we think it is important for the sport that, for it to be truly global, it needs to have teams outside of Europe. Recently in Malaysia, we sponsored a wild card entry for MotoGP. That created the largest audience ever for a 125cc race in Malaysia and, in fact, for MotoGP because there was a lot of local interest.
I dare say next year with both Singapore and Malaysia there will be a huge amount of additional interest. So, having a circuit is one thing, but having your own team with local involvement will create much more excitement. Hopefully us and US F1 are the start of many more national-based teams, which I think will be great for Formula 1 going forward.
Q. Sponsors like to be in a "peer group" with other prestige brands. How important do you think the loss of manufacturers is? Is it a blow?
TF: No, I don't think so at all. If you look at a lot of those brands, Formula 1 created them as well and I think, in this case, there will be many brands that will become as big as some of these other guys. McLaren is looking at making a [road] car; obviously we have a relationship with Lotus.
But I think Formula 1 is big enough, anyway. With or without manufacturers, people will still come – it's not because of BMW or Toyota or the other manufacturers that people came to Formula 1. They came before the manufacturers, they came after the manufacturers left, and they will come back again. It is the sport that people come to, not the teams. As long as the sport's exciting and there is a lot of interest and personalities in it, people will come. I have no fear about that.