Asia’s leading low-cost carrier AirAsia will spread its wings to fully embrace ecommerce soon, saying it’s an internet company after all.
AirAsia’s chief and co-founder Tony Fernandes told a recent conference sponsored by Digital News Asia in Malaysia that the airline was forming an ecommerce arm, whose core areas would include online shopping and social gaming.
“We aim to be the largest and most profitable interactive commerce company in Asia, by building a diversified portfolio of leading, specialized, and global ecommerce brands,” he was quoted as saying.
Tony didn’t say much about this plan, but promised to “reveal more when the time is right.”
This shouldn’t come as a surprise as AirAsia really considers itself an internet company, he said.
Essentially, we are an internet company. We have a tremendous amount of internet potential.
AirAsia was the first airline that introduced online ticket booking in Malaysia and is largely credited with breaking down ecommerce barriers, such as mistrust in online transactions, in the country.
Selling tickets directly through websites is one way airlines are able to bring down their costs because it gets rid of expensive traditional distribution channels.
Today, Tony says more than 20 percent of their group’s business comes from ancillary goods and services, which are also sold online. Ancillary is the airline industry’s lingo for any charge that’s not airfare. This includes everything – from checked baggage, preferred seating, in-flight meals and WiFi, to hotel and rental car bookings and redemption of miles.
That’s proving to be a lifeline for low-cost carriers amid stiff competition in the region. Airlines across Asia have increased their capacity in recent years as economies grew at a fast pace. They’re fighting to fill that capacity after passenger growth failed to keep up with expectations.
Once in full swing, AirAsia’s non-airline related ecommerce business will provide another revenue stream for the company.