KUALA LUMPUR • AirAsia Group, South-east Asia's largest budget carrier, wants to sell more than cheap flight tickets.
AirAsia is talking to potential partners to build an e-commerce app that it wants to see overtake the size of its airline business, group deputy chief executive Aireen Omar said in an interview. The carrier, which gets about RM1 billion (S$329 million) in revenue a year from its current booking engine, expects to earn 20 times more as it expands into an app that will offer lifestyle goods and services.
"This will be bigger than the airline itself," Ms Aireen said at her office at the Kuala Lumpur International Airport. "There's a lot you can do in just one app and that's what we are trying to do with our travel and lifestyle app."
The budget airline, which carries 100 million passengers annually, is bolstering its digital capability to tap a regional e-commerce market that is set to increase threefold to US$240 billion (S$331 billion) by 2025, chief executive and founder Tony Fernandes said last month. Premium carriers Singapore Airlines (SIA) and Cathay Pacific Airways are already turning to on-board duty-free sales to boost revenue, while AirAsia's app will also offer everything from hotel bookings to beauty products and dinner vouchers.
The digital business is likely to be spun off in the near future, Ms Aireen said, without giving details.
Mr Fernandes has slowly but surely prepared the company to focus on this digital drive. AirAsia has sold aircraft parked in leasing companies and disposed a stake in its ground-handling operations. Mr Fernandes also restructured the company to have an investment holding group as its publicly listed entity and separated the Malaysian airline business.
The moves come as the budget carrier grapples with rising risks to its airline business, including the closing of holiday destination Boracay island and natural disasters in Indonesia last year, as well as Malaysia's clampdown on price surges during high season.
Meanwhile, Brent has gained almost 30 per cent this year, increasing costs for airlines from SIA to Deutsche Lufthansa, which posted lower first-quarter profit partly due to higher oil prices. AirAsia's net income slipped 92 per cent in the three months to March from a year earlier, it said in a filing on Wednesday.
BLOOMBERG
