This article first appeared in The Edge Financial Daily on August 6, 2018
KUALA LUMPUR: In early July, a simple switch of seats by two passengers on an Alaska Airlines flight fuelled a viral story of a blooming romance. Coincidentally, AirAsia Group Bhd was also ready to play matchmaker in the sky at the time. It announced on July 11 that it was partnering dating app Tinder to offer Korean-pop fans in selected Southeast Asian countries the chance to catch South Korean singer Seungri’s first solo concert in August.
The contest may seem like nothing more than a marketing gimmick but to AirAsia, it represents a pilot project that could pave the way for greater collaboration between itself and Tinder, according to AirAsia deputy group chief executive officer (CEO) Aireen Omar.
“Right now, we’re running that contest so that it (Tinder) can see how well placed we are in this part of the world in getting that traction,” she told The Edge Financial Daily in an interview. The group had previously partnered Tinder for its “Meet Malaysia” campaign, which was aimed at attracting visitors from New Zealand and Australia to the country.
Any future partnership between the two parties would be housed under travel.360, an entity that has evolved from an in-flight magazine to what AirAsia wants — a one-stop travel portal, Aireen added.
“It’s about creating a community in travel.360. Tinder could [support us] in terms of knowing like-minded people that want to travel and explore the same places. We provide that platform,” Aireen shared.
While the airline is building travel.360, complement to video-based travelling companion Vidi, it is also in the midst of divesting of its 25% stake in AAE Travel Pte Ltd — the operator of travel booking site Expedia.
“Expedia had that function, but it wasn’t moving in a direction that we would [have] liked,” Aireen said, although she added that its joint venture with US-based Expedia Inc had given the group value for its investment. The group in 2015 divested of 25% of AAE Travel shares in Expedia for US$86.25 million.
“We felt that we’ve optimised what we can do with that. We thought it was about time that we monetised it and built something bigger that we could [use to] create a far better reach and value with,” she said.
‘We don’t need Alibaba’s DFTZ’
travel.360 and Vidi are just two of AirAsia’s many units soon to be housed under the airline’s digital arm, Redbeat Ventures Sdn Bhd, which will also include logistics arm, RedBox Logistics and Red Cargo.
Both these units will leverage on the extra belly space that AirAsia has on its planes, with plans for Red Cargo to manage and sell space to delivery service RedBox as well as other e-commerce agents in the region, Aireen said.
“We have the network, the frequency and we have the scale,” Aireen said, adding that the economies of scale enable the airline to offer better rates to its customers.
She emphasised that roping in former CEO of Pos Malaysia Bhd, Datuk Mohd Shukrie Mohd Salleh, to helm RedBox Logistics was proof of AirAsia’s commitment to making the venture a success.
However, AirAsia is not the only one with big dreams for the logistics industry in Malaysia. In March 2017, Chinese e-commerce giant Alibaba Group and the Malaysian government announced a partnership to develop the Digital Free Trade Zone (DFTZ), which would see the development of not just a digital e-World Trade Platform to boost e-commerce, but also an Alibaba’s logistics hub for the Asean region at KLIA Aeropolis in Sepang.
Asked if AirAsia would be involved in the DFTZ, Aireen said: “I think we’re able to build on our own capabilities. We’re big enough to know what we need [and] how we can build it with the right business plans, leveraging on what we already have.”
Part of this involves ensuring that there is enough logistical space in the airports it flies to, as well as in any low-cost carrier terminal that may potentially be built, she said. Having smooth custom facilitation is also important due to how quickly consumers hope to receive their online purchases.
“That also brings up [the issue of] making sure that Asean integration is actually done at the speed that it should be to facilitate this growth.
“It’s not just about open skies [under] the Asean Single Aviation Market, it’s also about trade facilitation, the Asean single window, that ensures that once goods come into one Asean country, they would be able to move around freely within the region,” she added.
In an increasingly competitive e-commerce and courier services industry, AirAsia believes it can also differentiate itself as a logistics provider when it comes to regional shopping.
“Whether it’s for the masses or the high-end products, whether it’s locally produced from various Asean countries, we get these ideas from seeing what our passengers bring on board, and even our own staff. They come back with a list of things not just for them but for their family or for their neighbours,” said Aireen.
“[What we’re saying is,] you don’t need to carry all of those things, we [can] deliver them straight to your house,” she added.
Better forex rates with BigPay
Another way the airline aims to improve regional shopping experience is with the launch of BigPay, which it wants to build as a “digital bank”. The service is currently equipped with a unique Mastercard and allows users to spend at over 35 million merchants, as well as withdraw cash from ATMs globally.
Consumers are able to not only transfer money and remittances through the application, but also to enjoy better foreign exchange (forex) rates, Aireen said.
“We have obtained necessary licence in each country to be able to provide that facility — so it’s not just a typical transfer of money,” she added.
BigPay group CEO and co-founder, Christopher Davison, explained that the service is fully supported by regulators as it passes “real savings onto its customers”.
As one of Bank Negara Malaysia’s 40 licensed e-money issuers, how can BigPay differentiate itself in a crowded marketplace?
“Competition is good for everyone, including BigPay. More players coming into the market will actually encourage widespread adoption and a move away from cash and traditional financial services,” Davison said.
He added that BigPay is different from other mobile wallets such as GrabPay because it is not based on merchant acquiring or promotions.
“BigPay is a platform that will offer you an everyday alternative to your bank which you can use all around the world, but with lower fees, more transparent foreign exchange rates and soon we are planning to offer better value credit and remittances,” he said.
According to Aireen, AirAsia is still keen on the tokenisation of its Big Loyalty points, possibly by converting them into a blockchain-based cryptocurrency.
“But we have to be sure on how we build this, because we want to ensure that it is a stable currency, that our own consumers have confidence in using it, we don’t want it to be a volatile, unstable currency that people would be shying away from,” Aireen said.
“We’re hoping to see how we can create this by this year. We’re quite serious about it and we want to do so very soon,” she added.
It seems that there is no end in sight to the updates that AirAsia has for its consumers, and Aireen admits that “you won’t get perfect offerings right now because we’re still building them”.
However, AirAsia will continue introducing changes “piece by piece”.
“We know what we need to achieve, but not everything will happen in one go because it will [all] be built in stages,” she said.