Malaysian budget carrier AirAsia has launched its food delivery service in Singapore, as it continues to seek alternative sources of income outside of the battered aviation sector.
Its airasia food platform will initially feature about 80 restaurants, including Swee Choon Tim Sum Restaurant and No Signboard Seafood. About 300 others are in the midst of joining the platform, AirAsia said yesterday.
The platform will charge restaurants 15 per cent commission per delivery. The rate is lower than those offered by the three major food delivery operators - GrabFood, Foodpanda and Deliveroo.
AirAsia also said it has recruited about 500 delivery riders, and aims to double that number by the third quarter of the year. Riders will deliver to a maximum distance of 20km away from listed restaurants. The delivery fee normally ranged between $2.99 and $20, AirAsia added.
Chief executive Tony Fernandes said yesterday, during a virtual press conference, that the airline would seek to give better value in food delivery, with reducing costs being one key aspect.
"Just like (how) AirAsia doesn't have all the frills of Singapore Airlines, airasia food, for instance, we don't have maps. We don't think you really need to know where your driver is because that costs us," said Mr Fernandes.
He said AirAsia is aware of the stiff competition it will face from the current food delivery players.
The airasia platform is offering unlimited free delivery for distances under 8km, till March 16. It has committed to delivering all orders within 60 minutes, and will let customers earn reward points.
Mr Lim Ben-Jie, airasia super app head of e-commerce, said businesses will be able to get onto the airasia food platform for free within 48 hours of registration.
Marketing executive Tan Kwang Yu, 27, who uses food delivery services for the convenience, said he will use the airasia food app if it can offer a variety of options at a lower price.
Research firm Statista has said that online food delivery was a US$464 million (S$616 million) business in Singapore last year.
Nanyang Business School Adjunct Associate Professor Zafar Momin said AirAsia has the advantage of being a well-known company. But he cautioned: "Profitability has been elusive for most incumbents in the food delivery business in Singapore and around the world."
Associate Professor Lawrence Loh of the National University of Singapore Business School said AirAsia's move would help the company generate income amid the prolonged downturn in air travel.
He added: "There are many companies that have totally changed from their original model... I think this is maybe the start of the move towards a super app and who knows, they might pivot themselves out of the aviation business."
