It’s finally happened. AirAsia.com is selling other airlines on its website and app. Powered by Kiwi.com, it's a start. Getting direct contracts with airlines is next. Should online travel agencies continue to doubt AirAsia's foray into their turf? “Believe the unbelievable,” CEO Tony Fernandes said.
AirAsia.com on Friday added the flights of other carriers through a partnership with travel tech company Kiwi.com.
In a white label arrangement, Kiwi.com supplies the content and technology to enable AirAsia.com’s users to book travel on more than 100 airlines to destinations currently not served by AirAsia in Europe, Australia, New Zealand, the Middle East, and the Americas.
For starters, the destinations include London, Dubai, Abu Dhabi, Doha, Madrid, and Auckland.
This marks the first time that an airline group is selling the fares of other carriers and is part of co-founder and CEO Tony Fernandes’ goal to transform the company beyond an airline business to an e-commerce player. AirAsia Group now describes itself as “a leading travel and financial platform company in Asia-Pacific, providing air transport, travel and lifestyle services, as well as financial services.”
The ambition raised the eyebrows of major online travel agencies.
“Today is an unbelievable day,” said Fernandes, who is also CEO of AirAsia.com. “When we started AirAsia as a low-cost airline back in 2001, I never thought one day we would be selling our competitors. But if there’s one thing I’ve learned, it’s never say never. Never say never and believe the unbelievable. Today, with the help of Kiwi.com, we are reinventing ourselves as more than just an airline, bringing to life our vision for AirAsia.com to be the region’s one-stop travel shop.”
AirAsia.com will also eventually have direct contracts with airlines and hotels. In a quick phone interview due to time constraints, Fernandes said it would be signing up three airlines directly in the next three to four months.
“Our model will be both direct and consolidators,” he said. “It’s white label at the moment but we’ll have direct relationships with many airlines as well, I’m optimistic.”
According to Fernandes, other airlines “love the vision of AirAsia selling them and airlines working together rather than let the middleman benefit the whole time.” That said, he admitted the biggest challenge is “they have to mentally get round the fact we’re not looking for an interline arrangement, that we’re just a platform like Expedia — this for them is complicated and something that will never happen.”
So it’s a question of changing the mindset.
Fernandes would not reveal gross bookings expectation or give guidance on AirAsia.com’s fourth quarter earnings as a result of the flights expansion. “I don’t know. I’m excited, today is a massive day for us — after 18 years, we are selling other airlines,” he said.
Even without flights of others, AirAsia.com generated sales totaling $1.3 billion (RM5.4 billion) in the second quarter, while gross profits grew 232 percent to $439,000 (RM1.85 million). It claims 50 million unique monthly users.
Peas in a Pod
AirAsia.com picked another disrupter for its journey towards becoming a travel and lifestyle platform. Prague-based Kiwi.com’s signature service is “virtual interlining,” or connecting airlines which do not cooperate. It also lets shoppers mix-and-match transport — both air and ground — into a single itinerary that it backs with its own customer service.
Last month, it launched a new service that enables customers to choose their most preferred fare, of three available, with different conditions for cancellation, rebooking and level of customer service.
Last year, Kiwi.com processed $1.21 billion (€1.1 billion) in gross bookings. The company has more than 2,900 workers.
“We partner with them because they want to work with us; they are young, aggressive, a bit adventurous, and they have the product and the pricing we want,” said Fernandes. “They also have the same culture and style as us.”
Kiwi.com’s CEO Oliver Dlouhy, speaking to Skift from Kuala Lumpur, said the company is in talks with many partners to expand in Asia.
The AirAsia partnership “is the most important at this point.”
“This is unique,” said Dlouhy. “AirAsia is really ahead of other airlines in thinking how to add value to its customers. Which other airlines will be willing to sell competitors’ flights on their website or app?
“I’m really happy that we’re part of its transformation. I think, and hope, that more airlines will follow because providing competitors’ flights where you cannot possibly cover all routes and destinations is the best thing you can do for customers. Why not give them a chance to find air and ground transport to every destination worldwide easily — this is exactly what AirAsia is doing.”
Kiwi.com recently expanded its search to include trains and buses, which it can usually combine with flights, in line with its goal of becoming the ultimate booking tool for travel between any point A and any point B.
Dlouhy said the white label solution is easy to integrate. “We did it in a couple of weeks,” he said of AirAsia.
Each white label can be customized to provide the partner with the content it wants to sell. An airline could choose, for example, to show only results that include its routes, or sell all of Kiwi.com’s content, which focuses on air and ground transport.
According to Kiwi.com’s website, the prices which returned by its search include partner commission, guarantee costs, payment fees, customer support fees, infrastructure and content fees, and Kiwi.com’s commission. Kiwi.com acts as the merchant of record.
Its markup is dynamically calculated and varies from 5-20 per cent, depending on factors such as complexity of itinerary, modes of transportation, and types of airlines.
Meanwhile, Fernandes told Skift the hunt for a CEO of AirAsia.com to replace him is continuing and an appointment might be made within a month or two.
Fernandes stepped in as CEO as part of a restructuring that separates AirAsia.com from the airline operations in August.
“Now that the strategy for AirAsia.com is fixed, I can hand it over to the new CEO,” he said.
“Changing the culture within AirAsia is not easy. Separating air and non-air takes time. As well the website has served only our airline — we have some staff wondering why are we selling other airline tickets,” Fernandes said.
Subscribe to Skift Pro
Subscribe to Skift Pro to get unlimited access to stories like these ($30/month)Subscribe Now
Photo credit: To mark the partnership with Kiwi.com, an all-in return fare to Madrid from Kuala Lumpur, Bangkok, Jakarta and Sydney from just $25 (RM99) is offered. AirAsia Group