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Trying time for pioneering AirAsia chief

Tony Fernandes filled the need for low-cost regional air travel. Now, "We are very devastated."

KUALA LUMPUR, Malaysia - His airline empire began, Tony Fernandes likes to say, with the purchase of a bankrupt company for less than a dollar. Now, after years of growth that made him the king of Asian budget travel, the flamboyant Malaysian businessman is facing the horror of the disappearance of an AirAsia jet with 162 people on board.

Fernandes, who built AirAsia's regional network on cheap fares, a love of the spotlight, and occasionally provocative advertising ("There's a new girl in town. She's twice the fun and half the price."), was clearly exhausted by the time he met reporters late Sunday at the airport in Surabaya, Indonesia, where the flight had taken off.

"We are very devastated by what has happened. It is unbelievable," he said. In an earlier tweet to his employees, Fernandes said, "This is my worst nightmare."

Fernandes pioneered regional low-cost air travel by launching AirAsia in January 2002, growing it from two planes to more than 180 by breaking the dominance of national airlines and making flying affordable for the millions of Asians entering the middle class. Today, he has an estimated net worth of $650 million.

A massive air and sea search has so far turned up no confirmed sign of AirAsia Flight 8501, which vanished from radar Sunday morning about 42 minutes after taking off from Surabaya en route to Singapore.

The missing jet was the third major airline incident this year involving Malaysia. But this marks the first tragedy for Malaysia-based AirAsia, which has a strong safety record. Flight 8501 was operated by AirAsia Indonesia, a subsidiary that is 49 percent owned by AirAsia Malaysia.

AirAsia had boasted in its in-flight magazine this year that its well-trained pilots would never lose a plane. The airline withdrew the magazine and Fernandes apologized for the article, which was written before Flight 370 disappeared. Fernandes also courted controversy on the day that flight lost contact. An active Twitter user with more than a million followers, he tweeted that the plane's radio had failed and that all on board were safe. He later deleted the tweet.

Shukor Yusof, an aviation analyst with Endau Analytics in Malaysia, said Fernandes had reacted well so far to the latest crisis, communicating properly and quickly traveling to Surabaya.

"There will be some adverse knee-jerk reaction, but I don't think it will cripple the airline," Shukor said. "AirAsia has sound fundamentals in terms of its business model and management, and this crisis should not suppress its growth."

Last year, AirAsia flew 42.6 million people across the region.

Fernandes, 50, a serious music buff who plays keyboards and the drums, earned a finance degree in the United Kingdom and rose quickly in the music industry, first at Virgin Group and later at Warner Music International. He was appointed Warner's chief in Malaysia in 1992 at age 28, the youngest person to hold that post. Warner CD sales jumped during his tenure, but he left after Time-Warner's merger with AOL to enter the airline business, a longtime dream.

Fernandes got together with three other investors, mortgaged his house, and withdrew his savings to buy the floundering AirAsia on Sept. 8, 2001, paying a symbolic 1 ringgit, or about 25 U.S. cents. It was three days before 9/11. But AirAsia coasted through the crisis. With its tagline "Now Everyone Can Fly," it revolutionized cheap air travel in the region and repaid its 40 million ringgit ($11.4 million) debt in less than two years.

Today, it has more than 8,000 employees and flies to 132 destinations in Asia. AirAsia is now a major competitor to full-service carriers such as Singapore Airlines and Thai Airways, which have since set up budget offshoots to vie for a bigger share of passengers.

From short routes of up to four hours, AirAsia has expanded into long-haul flying through its sister airline, AirAsia X. Through his Tune Group, which owns AirAsia, Fernandes also started a hotel chain and offers car rental, insurance, and credit cards in tie-ins with banks.

He was, in many ways, ahead of the industry curve, sensing a need for low-cost flights in what is now the world's fastest-growing region for airlines.

"Air travel is made for Asia," Fernandes told the Associated Press in 2002. "You can generally drive from one end of Europe to another or take a train, but that's not the case here. You want to try driving from Kuala Lumpur to Bangkok? Good luck, mate!"

Since the disappearance of Flight 8501, Fernandes has focused on encouraging his staff not to buckle under the pressure. "Be strong," he told his staff in a Twitter message. "Continue to be the best. Pray hard."