AirAsia’s Expansion Into Online Travel Draws Skepticism From Potential Competitors

Go ahead. Give it a try. But, good luck with that.

This may summarize the skepticism among Asia-based online travel agency executives when it comes to AirAsia’s foray beyond its own flights and into selling flights from other airlines, as well as hotels, tours and activities, and other e-commerce services.

Asked if she was ready to give AirAsia any advice about entering the online travel agency arena, Marsha Ma, vice president and managing director, China, for Booking.com, cautioned that “the OTA business, especially the accommodations business, is a pretty heavy business model in terms of supply chain management.”

“It takes years of effort, it takes offices in more than 192 country locations in the world for Booking to build up our supply chain capability,” Ma said. “We’ll keep our eyes on that. We’ll see how things go with time.”

Speaking on a panel entitled “Deep Dive: OTAs Face Off in Asia” at Skift Forum Asia in Singapore last week, Ma advised AirAsia to focus on the customer and changing consumer behavior to build its strategy.

Fellow panelist Greg Schulze, senior vice president, commercial strategy, and services for Expedia Group, said he would never underestimate AirAsia.

However, Schulze, who’s based in Singapore and was a member of a now-lapsed AirAsia-Expedia joint venture for several years, said his “advice would be to know that what makes you great running an airline doesn’t make you necessarily great at being an OTA.”

The Expedia Group executive, who focuses on transport strategy, including as it pertains to airline partners, said AirAsia has strong digital skills, which is important for its core business.

But the prospect of offering flights from competing airlines on AirAsia sites “could be a distraction,” Schulze said. “I will say this again: It’s a giant industry. There can be many winners.”

But Schulze quipped, “I’m happy to see them negotiate with other airlines.”

Meanwhile, Yoshiyuki Takano, head of travel for Japan-based Rakuten, agreed that it wouldn’t be easy for AirAsia to provide online travel agency services by itself. In fact, AirAsia is partnering with Expedia on hotels, for now at least, but likely will develop other services on its own.

AirAsia CEO Tony Fernandes drew a lot of attention in April when he detailed plans for the airline to disrupt online travel.

At Skift Forum Asia, Aireen Omar, deputy group CEO, technology and digital, expressed confidence that the airline could use its vast amount of data and knowledge about customer behavior to turn itself into an Amazon of travel.

The executives from Rakuten, Booking, and Expedia also addressed the issue of whether it was important to create one-stop-shopping super apps such as WeChat and Grab to capture the travel market of the future.

Takano of Rakuten said he didn’t think creating a superapp is important.

“The important thing is connecting the dots, connecting the services,” said Takano, whose company provides more than 70 e-commerce services beyond travel. “We are connecting services within our ecosystem so users can access all services within our system by using a single login ID, and the same loyalty program so the user can our service seamlessly.”

Ma of Booking noted that her company is creating a China-specific app, but didn’t call it a superapp. She said Booking is committed to creating a global marketplace of experiences, noting that company data show that 70 percent of travelers seek a one-stop shop for experiences.

Rather than focusing on creating a superapp for the sake of touting one, Schulze of Expedia said the focus should be on improving the customer experience.

“I don’t think that everything will combine together and you call it a superapp, do a press release and magically it’s great,” Schulze said. “You have to actually make it easier or better for the customer. Certainly, in China, some of the connecting features of that, like WeChat payments, are critical.”

All three executives said that understanding changing consumer behavior and personalizing recommendations are essential.

Ma said consumers are no longer just browsing for travel options on a desktop when they are drinking coffee, but are shopping via handsets “while we are waiting for someone or laying in bed before we go to sleep.”

Providing a variety of mobile payment options to Chinese travelers is vital, as well as finding ways to engage with them with relevant content, Ma said.

“Chinese consumers spend more time socializing with their friends through the fragmented times they have,” Ma said. “How we can use content and leverage different touch points to actually engage with customers and drive new sales opportunities. That’s where we started putting in innovations for our China-specific app.”

Takano said using artificial intelligence and Big Data could make for effective personalization.

“If you buy dog food on the e-commerce platform, we can recommend a hotel where you can stay with your dog,” Takano said. “If your address is in Singapore and you use our credit card in Tokyo, we can recommend a last-minute sale of a hotel room to you in Tokyo.”

But understanding consumer behavior is a never-ending task, said Schulze, adding that Expedia Group has access to 2.3 billion interactions per day between customers and supply partners.

It’s vital to understand how to interpret data and have the technology to adapt rapidly “because as soon as you think you have the customer figured out, you are probably in a bad place because the customer is always changing,” Schulze said.