AirAsia adding services in super app

AirAsia Group CEO Tony Fernandes reacts during an interview with Reuters in Kuala Lumpur Malaysia Sept 7, 2020. (Reuters photo)
AirAsia Group CEO Tony Fernandes reacts during an interview with Reuters in Kuala Lumpur Malaysia Sept 7, 2020. (Reuters photo)

AirAsia Group announced on Thursday it is building a super app off its existing mobile application and website to provide services such as e-commerce, deliveries and payments that will be available next month in Thailand and Asean.

AirAsia chief executive Tony Fernandes said the idea to build a super app came before the pandemic, but new revenue streams are desperately needed after most of AirAsia’s fleet have been grounded for months because of travel restrictions.

The company suffered losses of US$238 million in the second quarter this year.

“This journey didn’t start during the pandemic — this journey started two years ago — but it was accelerated because of the outbreak,” Mr Fernandes said. “This is not a plan B, this was always our plan A, but we still think aviation will definitely come back.”

The new platform will be accessible through and AirAsia’s mobile app on Oct 8, including digital services under its subsidiary AirAsia Digital.

These services include BigPay, its digital payment application; Teleport, its wholly-owned logistics, e-commerce and delivery business; and Santan, the food and beverage franchise.

Mr Fernandes said these services are already earning revenue for AirAsia except for BigPay, which is in negotiations with regulators to set its rates.

Teleport came to Thailand in 2019 through a joint venture, while BigPay is available in Thailand and can transfer money to Thai bank accounts.

Santan is only available in Malaysia or on AirAsia flights.

“AirAsia’s roots are from moving people from A to B and moving cargo from A to B and that is the basis of AirAsia Digital and the basis for our platform,” he said.

The app will also allow users to book hotels and flights (from airlines other than AirAsia) and offers a travel and lifestyle rewards programme. The company ended its partnership with Expedia and is offering its own travel booking service.

David vs Goliath

AirAsia’s new venture will face stiff competition from existing super apps Grab and GoJek, which are both spending billions in venture capital to expand their presence in Southeast Asia. Grab and GoJek are in talks for a merger, which if completed would create a virtual monopoly for ride hailing and food delivery in Asean.

Grab is valued at about $14 billion, while GoJek was valued last year at almost $10 billion — neither company is publicly traded.

AirAsia, which is listed on the Kuala Lumpur Stock Exchange, has a market capitalisation of $624 million.

“We are nowhere near the size of Grab or GoJek, but AirAsia’s not about being dominant in one country but providing an Asean product,” Mr Fernandes said.

The AirAsia app hopes to differentiate itself by leveraging the data it has collected from millions of passengers, but also stress its cross-country appeal for cross-border travellers in Asean.

“I don’t believe we are here to compete, but here to compliment,” Mr Fernandes said

“Airlines always see us as competitors but we complemented the full service and created a new market that was not there — before only a few people could fly, now everyone can fly, and in the same way we will complement the market.”

He says the platform will also be open to new partners and services, not just those owned directly by AirAsia Digital.

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