How AirAsia is redefining an airline’s role in a post-COVID world
- Led by Tony Fernandes, the low-cost airline AirAsia has stepped up the deployment of its non-airline offers this year
- Key to the company’s transformation has been the launch of a digital travel and lifestyle platform and super app.
- New digital products and services include e-commerce, last mile delivery, digital payments and an expanded rewards program
- Fernandes believes non-airline revenues will eventually match and then exceed airline revenues
- Because of her work, Business Insider named Fernandes to our annual list of the 10 leaders transforming the supply chain in Asia.
- Visit Business Insider’s Transforming Business homepage for more stories.
Under the leadership of the co-founder and CEO, AirAsia has revolutionized the airline industry in Asia since it began operations in 2001. The Malaysian company was named the world’s best low-cost airline last year. Skytrax World Airline Awards. It was the 11th consecutive year that he had won this award.
Despite its pioneering success, AirAsia has implemented strategies in recent years to move towards a unified, all-in-one digital travel and lifestyle platform. Business intern examines how Fernandes and AirAsia seek to redefine an airline’s role in a post-COVID world.
Go from a low-cost airline to a digital travel and lifestyle platform
AirAsia has from the outset placed digital and innovation at the heart of its operations. It was, for example, the first airline in the region to focus on selling tickets directly online through its own website, and today around 85% of its customers book directly through its website.
Starting in 2018, the company saw the potential to generate new revenue streams by creating an ecosystem of businesses, all rooted in travel and all building on each other. The arrival of COVID-19 and the flight downtime that followed allowed the company to accelerate this digital transformation strategy.
“Like I always say, you have to evolve or you die in this industry,” Tony Fernandes said. “The decision to switch to a digital travel and lifestyle platform actually started in 2018, long before COVID-19 hit. One of the positive aspects of the pandemic was that it allowed us to focus on our digital transformation and accelerate its growth by increasing our non-airlines which not only provide new sources of revenue, but also create new job opportunities for our staff to develop and move towards new roles within the company. “
The airline saw digital transformation as a natural progression. Before COVID-19, the company’s website had 60 million monthly visitors, adding to a powerful database of loyal customers.
“I have always believed strongly in the digital revolution,” adds Fernandes. “Today, data reigns supreme and we realized we had a huge opportunity to expand our own assets and leverage our strong brand in Southeast Asia with our own big and rich data. “
Expanding the AirAsia product offering
To facilitate the digital transformation of the company, the AirAsia Group has divided its operations into two main divisions – the airline itself and the digital activities under AirAsia Digital. Under the digital banner, the company now offers four flagship offers:
- airasia.com In October, AirAsia relaunched the airasia.com brand around the central concept of allowing its customers to fly, stay, shop and eat, all from the comfort of a single platform. There are now 17 business lines available on the app, including airasia food (food delivery), airasia fresh (grocery store) and airasia shop (retail), powered by AirAsia’s logistics arm, Teleport. In addition, there is airasia Health, which promotes medical tourism, Islam-compliant service IKHLAS, SNAP (bundled flights and hotels) and more.
- Teleportation AirAsia’s freight and logistics division has grown into a leading e-commerce transportation provider in Southeast Asia. The entity initially focused on a cross-border e-commerce delivery service, leveraging AirAsia’s flight networks to enable companies to conduct cross-border trade anywhere in Southeast Asia within 24 hours. . Adapting to the post-COVID reality and recognizing customer preference for door-to-door delivery orders, Teleport has pivoted once again to focus on last mile deliveries, parcel transport, restaurant orders and fresh produce from airasia store, airasia food and airasia fresh. Teleport now has more than 5,000 delivery partners, with deliveries available in 70 cities.
- BigPay AirAsia’s digital payment service started out as a simple debit product, but now offers money transfers, with remittances available in 10 countries, including Malaysia and Singapore. The company says loans, markets, insurance and wealth products are all in the works, and BigPay is on track to become Southeast Asia’s first virtual bank. BigPay has received a provisional loan license, and users will soon be able to apply for low-interest fast loans. BigPay is also targeting key digital licenses in the Philippines and Thailand. The payment service currently has 1.2 million users.
- BIG awards Already one of Southeast Asia’s largest travel and lifestyle rewards platforms with over 35 million members, BIG Rewards has grown from an airline loyalty program to a rewards service lifestyle, offering the redemption of points on a range of dining, shopping and entertainment offerings. The platform includes BIG Xchange, the first airline points exchange platform, which allows BIG members to convert loyalty points from participating banks’ credit cards into BIG points.
The digital transformation is already starting to bear fruit
Due to its accelerated digital transformation, AirAsia claims to have experienced significant growth in customer base, as well as revenue and other key metrics, for all non-airline business divisions in 2020. According to third quarter 2020 results, non-airline subsidiaries increased by 182% and almost all non-airline business divisions are now profitable.
The company says it expects non-airline revenues to contribute up to 50% of the AirAsia Group’s total revenues over the next three to five years and gradually overtake the revenues of airlines in the longer term.
“As I always say, never lose a fit,” Fernandes says. “We’ve been through a lot before and it will be no different. We will take the opportunity to expand our assets and leverage our big and rich data and go where we’ve never been before. For AirAsia, nothing is wrong. “is more irrelevant. We will consider any commercially sound and viable opportunity. We already sell flights for other airlines, including our competitors on airasia.com and provide last mile deliveries.”
Looking to the future, AirAsia says the demand for travel is still huge and people still want to fly. Noting the pent-up demand for travel, the company says it is already seeing strong demand for our domestic flights in its key markets of Thailand, Indonesia, the Philippines, Malaysia and India.
Given that in times of economic downturn, low-cost airlines are generally more popular, AirAsia believes it is in a good position to recover faster than many of its competitors. The company specifies that 50% of its traffic is domestic short-haul, while the majority of its customers travel for pleasure rather than for business, both beneficial for a rapid recovery. Additionally, many of its major international markets are in COVID-19 green zones, areas likely to reopen first.
“Air travel is here to stay and it will bounce back,” Fernandes said. “I believe we weathered the storm. The worst is over. Our comeback is the best part of the story and I see it as a never-ending story. No virus will kill the spirit of AirAsia. We will continue to innovate, adapt, recover and come back stronger. “