Branson boarded the flight from Perth, Australia, to Kuala Lumpur, Malaysia, with full makeup, shaved and stocking-clad legs, and wearing the AirAsia flight attendant uniform, complete with short skirt, PerthNow.com reported.
Aerosmith's "Dude Looks Like a Lady" boomed over the plane's sound system as the Virgin Australia boss entered the plane.
Branson and Fernandes had bet each other over whose Formula One racing team would finish ahead of the other during the debut season of the 2010 Formula One Grand Prix in Abu Dhabi, United Arab Emirates, the news website said.
The stunt raised money for the Starlight Children's Foundation in Australia.
"I'm a great believer in having fun, throwing yourself into everything you do," Branson said. "If you lose a bet you've got to honor that bet and if you can raise lots of money for charity, which we've done today, so much the better."
AirAsia donated $100 from each ticket sold on the flight of 300 passengers. A party before the event, where bidders chipped in for a chance to shave Branson's legs, raised approximately $200,000.