Southeast Asia’s largest low-cost airline pivots through the pandemic

4 min reading time

Published on 23/02/22 - Updated on 17/03/22

Tony Fernandes launch of Super App

Thailand is the latest market to launch the AirAsia Super App, a lifestyle platform offering travel services and deliveries.

Capital A, formerly known as AirAsia Group, the holding company that includes Southeast Asia’s biggest low-cost airlines, didn’t see Covid coming.

When borders began closing in March 2020 in an attempt to contain what was then referred to as the novel coronavirus, air travel ground to a halt. In the following 12 months to March 2021, Southeast Asia’s top five airports reported a staggering 97.9% drop in traffic.

Airlines were left reeling, and AirAsia, which carried 90 million passengers annually before Covid, was no exception. AirAsia’s airline revenue declined by 75% during the same period and the Kuala Lumpur-based group posted an EBITDA loss of 3.2 billion MYR [674 million EUR] for fiscal 2020. “These last [two] years have been really really tough, to state the obvious,” said Capital A CEO Tony Fernandes in his characteristically direct style.

Despite drastic cost-cutting measures, AirAsia needed a plan. In addition to its passenger airline business, the group was already active in aviation maintenance and cargo. In the highly connected tech-savvy region, AirAsia pinned its hopes on a multi-service platform that it has dubbed the airasia Super App, a project that actually went into development before Covid.

To underline the group’s commitment to diversification beyond its airline division, Capital A was unveiled as the holding company’s new name in January 2022.

Thailand this week became the latest market to host the super app. Initially users will be able to order from restaurants, deliver parcels and buy travel services. Ride sharing will be added next month, followed by shopping, e-wallet and other services. The app is now available in five countries: Malaysia, Singapore, Thailand, the Philippines and Indonesia.

Selling travel includes offering flights on 700 non-AirAsia airlines.

A senior minister texted me and asked, ‘How come you’re selling [competitor] Lion Air?’” Fernandes recalled. According to him, with twenty years experience in travel as an airline, aiming to become a leading OTA was a logical move.

The potential for demand in ride sharing is huge as well. In Malaysia, where the app launched in November, rides already total 10,000 a day. He sees data as one of AirAsia’s unique advantages. 

“From the moment you get on an AirAsia plane, I know [if] you need a taxi. [If] I know your address is in Bangkok, you may not,” he commented. But a visitor will be reminded of the services he or she needs, on the plane and via the app. “Once he’s in his hotel, and he wants to go somewhere else, he’ll come to us. So the airport-and tourist-market we should win anyway and then we can build on that.”

Another revenue stream will come from parcel delivery, whether medicine, documents or consumer goods within a city or across borders. “No one can deliver faster than us,” promised Fernandes, highlighting AirAsia’s network of flights and last-kilometre capabilities on the ground.

Fernandes is also using his time in Thailand to campaign for the removal of forms, testing, quarantines and other requirements to enter the country. “A lot of people want to come to Thailand,” he said. “And I hope the government will make it easier for them.” While travel has resumed more quickly in other parts of the globe, countries in Southeast Asia have only recently started to ease restrictions on international travel, almost two years into the pandemic."

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