AirAsia isn't backing down from the intense competition of superapps and ridesharing in Southeast Asia. Can an airline really become a digital lifestyle brand powerhouse? AirAsia is going all out to prove the skeptics wrong.
AirAsia Digital is adding a ridesharing service to its AirAsia superapp with the launch this week of AirAsia Ride in Malaysia.
With its launching, AirAsia Ride will give Malaysians another ridehailing option besides Grab, the Singaporean-headquartered superapp with a stronghold in Southeast Asia and Malaysia. Plans are in the works to expand AirAsia Ride’s reach to Thailand soon after AirAsia Digital bought supeapp Gojek’s Thailand operations in July.
As a new entrant in the ridehailing market, will AirAsia Ride give Grab and other superapps a run for their money in the region?
“This isn’t a zero sum game,” said AirAsia Group CEO Tony Fernandes during a press briefing.
He said that AirAsia Ride’s strength is at airports, in the tourism market, and with people who like AirAsia’s ecosystem and will begin using them.
AirAsia Ride is not only about moving people but will also help in moving packages and supplement its riders, Fernandes said.
Acknowledging that ride-hailing gets a bad wrap, Fernandes said its focus is on putting safety measures in place and ensuring all its drivers are fully vaccinated. Customers will be able to choose drivers and favorite ones they like.
“AirAsia is always about democratizing services and giving people the freedom to choose,” said AirAsia superapp CEO Amanda Woo.
She said AirAsia has been championing air mobility by flying over 700 million people worldwide over the past 20 years.
“With AirAsia ride, we aim to empower people to move around more easily, making full use of the AirAsia Super App technology,” Woo said.
She said Airasia Ride introduces value to the highly competitive e-hailing market based on its low-cost model enabling savings to be passed on to guests and striving to offer the lowest fares on the road.
“AirAsia’s strategy of developing a “super app” is brilliant,” said Henry Harteveldt, a travel industry analyst and president of Atmosphere Research Group in San Francisco.
Drivers will provide their own vehicles, adding the signage provided by the company. With last mile delivery capabilities, AirAsia Ride is able to to tap into its pool of drivers for maximum efficiency on resources and cost, the company said.
“This is part of our continuous digital transformation journey to become Asean’s top super app through our regional expansion into Thailand and potentially Indonesia very soon,” Woo said, referring to the Association of Southeast Asian Nations (ASEAN).
Presently the AirAsia Ride e-hailing service is available in the Klang Valley area of Kuala Lumpur with planned expansions to more cities in Malaysia throughout the year and can be booked through the superapp or visiting airasia.com/ride, the company said.
With the ride-hailing service, AirAsia Digital is now the superapp, teleport, and pre-pay, said Fernandes, who took on the additional role of the airline’s website CEO in 2019. He continues to work on his vision to make AirAsia a digital lifestyle brand.
“If AirAsia followed a traditional airline’s approach towards its app, making it a tool for and about the airline journey, then AirAsia would probably have very little engagement with its passengers,” said Harteveldt.
A typical AirAsia passenger flies two to three times a year with the airline, he added.
Woo said its marketing strength derives from leveraging its 20 years of data to make the single superapp platform a total mobility booking experience from the air to the ground for its customers.
Harteveldt said that AirAsia had taken an unusual and creative strategy of turning itself into a true lifestyle brand by offering a suite of services, including ride-hailing, food delivery, and more.
“Several of these services, such as ride-hailing, are mobile-centric, and almost all lend themselves to being incorporated into AirAsia’s mobile app, said Harteveldt.
AirAsia Group CEO Fernandes said the company had consolidated everything into the superapp from various entities. It will be renaming its travel business Go Away, which the company is focusing on for the next six to 12 months, and considers its version of Expedia or Traveloka, he said.
Fernandes said AirAsia is also focusing on its delivery business, including food, groceries, packages, beauty products, and delivery of people in the coming months. Other plans for the superapp include renaming AirAsia money to Big Pay Wealth and offering education and health in the future.
The company is also continuing to ramp up for the launch of its drone deliveries and AirAsia Ride air taxi service, with announcements to be soon forthcoming, Fernandes said.
Is there a concern AirAsia may be spreading itself too thin?
Fernandes jokingly said if there’s any spreading thin, he hopes it’s with him and his quest to lose weight. But in terms of the business, he doesn’t think they’ve spread themselves thin as they’ve been very careful with how they’ve done this, he said.
“So we don’t need hundreds of staffers or loads of advertising dollars because they’re all connected,” said Fernandes. “You come off a flight, grab a ride, you begin to build, have big pay points and can buy a ride, teleport deliveries, LinkedIn, it’s all connected.”
Analyst Harteveldt said a few airlines talk about being lifestyles brands, but AirAsia can legitimately claim it is one.
“The result is that AirAsia will see far more engagement — and thus generate far more revenue, and collect far more actionable data — from its customers than it would based solely on airline-related interactions,” said Harteveldt.
And for Fernandes, what was unthinkable and even laughable three years ago became a possibility for profitability and adding value to the ecosystem as so much has changed with AirAsia and the world, he said.
Part of that change Fernandes believes involves an inevitable split between the airline business and the digital business.
Fernandes said it’s ultimately the board’s decision, but the stock market isn’t giving them any value for their digital products. Still, AirAsia Group continues growing into a multi-company and data-driven tech company, he said.
Photo credit: AirAsia Group chief safety officer and head of AirAsia Ride Captain Ling Liong Tien and AirAsia Ride Malaysia CEO Lim Chiew Shan posing with the newly launched AirAsia Ride vehicles now available for e-hailing. AirAsia / AirAsia