How AirAsia is redefining the position of an airline in a post-COVID world
- Under the leadership of Tony Fernandes, low-cost carrier AirAsia accelerated the rollout of its off-airline offerings this year
- The key to transforming the company was the introduction of a digital travel and lifestyle platform and a super app
- New digital products and services include e-commerce, last mile delivery, digital payments and an expanded rewards program
- Fernandes believes that non-airline revenues will ultimately match and exceed airline revenues
- Because of his work, Business Insider has added Fernandes to our annual list of the Top 10 Companies Transforming the Supply Chain in Asia.
- You can find more stories on Business Insider’s Transforming Business home page.
Under the leadership of its co-founder and CEO, low-cost airline AirAsia has disrupted the Asian aviation industry since it began operating in 2001. The Malaysian company was named the world’s best low-cost airline at the Skytrax World Airline Awards last year. This was the 11th year in a row that the award was received.
Despite its groundbreaking success, AirAsia has implemented strategies in recent years to move to a unified digital all-in-one platform for digital travel and lifestyle. Business Insider explores how Fernandes and AirAsia plan to redefine the role of an airline in a post-COVID world.
Transition from the low-cost airline to the digital travel and lifestyle platform
AirAsia has placed digital and innovation at the heart of its business from the start. For example, it was the first airline in the region to focus on selling tickets directly online through their own website, and today around 85% of their customers book directly through their website.
As of 2018, the company recognized the potential to unlock new sources of income by building an ecosystem of companies that are all anchored in travel and mutually beneficial. The arrival of COVID-19 and subsequent flight downtime gave the company an opportunity to accelerate this digital transformation strategy.
“As I always say, you have to move on or you die in this industry,” said Tony Fernandes. “The decision to move to a digital travel and lifestyle platform began in 2018, long before COVID-19 hit. One silver lining of the pandemic was that we could focus on our digital transformation and accelerate it by changing our non-platform Airlines that not only open up new sources of income, but also create new job opportunities for our employees to further their education and to take on new roles within the company. “
The airline saw natural progress in digital transformation. Prior to COVID-19, the company’s website had 60 million monthly visitors, resulting in a powerful database of loyal customers.
“I’ve always been a firm believer in the digital revolution,” adds Fernandes. “Today data is king and we realized that we had a great opportunity to grow our own fortunes and leverage our strong brand in Southeast Asia with our own big and big data.”
Expansion of the AirAsia product range
To facilitate the company’s digital transformation, the AirAsia Group divided its business operations into two main departments – the airline itself and the digital business under AirAsia Digital. Under the digital banner, the company now has four main offerings:
- airasia.com In October, AirAsia launched the airasia.com brand to enable customers to fly, stay, shop and eat on a single platform. 17 business areas are now available in the app, including Airasia Food (food delivery), Airasia Fresh (grocery) and Airasia Shop (retail), which are operated by AirAsia’s logistics department Teleport. In addition, there is airasia Health, which promotes medical tourism, the Islamic compliant service IKHLAS, SNAP (flight and hotel packages) and more.
- Teleport AirAsia’s freight and logistics division has grown into a major Southeast Asian e-commerce transportation company. The company initially focused on a cross-border e-commerce delivery service and leveraged AirAsia’s flight networks to enable businesses to conduct cross-border trade anywhere in Southeast Asia within 24 hours. Teleport adapted to the post-COVID reality and recognized customers’ preference for home delivery orders. He focused again on last mile deliveries, moving packages, restaurant orders and fresh produce from Airasia Shop, Airasia Food and Airasia Fresh. Teleport now has over 5,000 delivery partners with deliveries in 70 cities.
- BigPay AirAsia’s digital payment service was originally a simple debit product but now offers money transfers. Transfers are available in 10 countries, including Malaysia and Singapore. The company says credit, marketplaces, insurance and wealth products are in the pipeline, and BigPay is well on its way to becoming Southeast Asia’s first virtual bank. BigPay has been granted a temporary lending license, and users will soon be able to apply for quick loans at low interest rates. BigPay is also targeting major digital licenses in the Philippines and Thailand. The payment service currently has 1.2 million users.
- GREAT rewards Already one of the largest travel and lifestyle rewards platforms in Southeast Asia with over 35 million members, BIG Rewards has grown from an airline loyalty program to a more comprehensive lifestyle rewards service that involves redeeming points for a range of dining, shopping and entertainment options offers. The platform includes BIG Xchange, the first airline point exchange platform that allows BIG members to convert credit card loyalty points from participating banks into BIG points.
The digital transformation is already beginning to pay off
As a result of its accelerated digital transformation, According to AirAsia, the customer base as well as revenue and other key metrics for all business areas outside of the airline increased significantly in 2020. Non-airline subsidiaries grew 182% according to Q3 2020 results, and almost all non-airline businesses are now profitable.
The company expects non-airline revenues to account for up to 50% of total AirAsia Group revenues over the next three to five years and will gradually overtake the airline’s revenues over the long term.
“As I always say, never waste a crisis,” says Fernandes. “We have seen many, and it will be no different. We will take the opportunity to grow our fortunes and tap into our big and extensive data and visit places we have never been before. For AirAsia is nothing more off the table. We will consider every opportunity that is commercial and feasible. We are already selling flights for other airlines, including our competitors on airasia.com, and delivering last mile delivery. “
As for the future, AirAsia says the demand for travel is still great and that people still want to fly. Given the pent-up demand for travel, the company already sees strong demand for domestic flights in key markets of Thailand, Indonesia, the Philippines, Malaysia and India.
Given that low cost airlines are generally more popular during an economic downturn, AirAsia believes AirAsia is in a strong position to bounce back faster than many of its competitors. The company notes that 50% of its traffic is domestic short haul, while the majority of its customers travel for leisure rather than business, which is beneficial for a quick recovery. In addition, many of the major international markets are located in the COVID-19 Green Zones, areas that are expected to reopen first.
“Air travel is here to stay and it will bounce back,” says Fernandes. “I think we weathered the storm. The worst is over. Our comeback is the best part of history and I see this as a never-ending story. No virus will kill the spirit of AirAsia. We will continue to innovate and adapt . ” , relax and come back stronger. “