1.3 C
Moscow
Wednesday, January 27, 2021

AirAsia Wants Half Of Its Revenue To Come From Outside Flights

Must read

ByteDance to cut jobs in India amid TikTok ban – TechCrunch

Chinese internet giant ByteDance has told employees in India that it will be reducing the size of its team in the country after New...

China Misses Expected Boost From Lunar New Year

China’s lunar new year is in mid-February. It is China’s most important holiday. Typically, hundreds of millions of travelers go on the move, heading...

Boeing 747-200 Returns To Karachi Following Engine Stall

A Boeing 747-200 suffered an engine stall and shutdown while taking off yesterday, forcing it to return to Karachi International Airport. The aircraft belongs...

ANA Allows Staff To Take Two Years Leave For Personal Endeavours

As passenger traffic to Japan continues to sit at historical lows, All Nippon Airways is scrambling to cut costs and bunker down for a...

Low-cost airline AirAsia had a tough 2020. But its CEO, Karen Chan, is taking a glass half full approach. She says the travel downturn and subsequent fallout for AirAsia was a blessing in disguise. It forced AirAsia to look outside its comfort zone and at a new way of doing business. Now, Ms Chan plans to transform AirAsia into a lifestyle brand. As a result, by the mid-2020s, she expects 50% of AirAsia’s revenue will come from non-aviation sources.

AirAsia-50-percent-non-flying-revenue-getty
AirAsia wants to significantly increase its ancillary revenue streams. Photo: Getty Images

AirAsia wants to build on already solid ancillary revenue streams

Speaking at a CAPA Live event on Wednesday, Karen Chan spoke about her vision for AirAsia and what it would mean for the airline.

“We anticipate in five years time, basically by the end of 2024, that 50% of (AirAsia’s) revenue would be coming from non-flight related non-aviation-related revenue.”

As a low-cost carrier, AirAsia already has handy ancillary revenue streams. Their base fares are cheap, but checked-in luggage on short sectors starts from US$12, seat selection starts from just under $3, and a reheated container of AirAsia’s pretty good nasi lemak costs just over $4. In 2018, ancillary revenue made up 22% of AirAsia’s total revenue. Around half of that 22% came from baggage charges.

Last year, AirAsia Group chief executive Tony Fernandes, said his airline group was diversifying.

“AirAsia.com is more than just selling airline tickets,” he said. “We now have the same potential to sell hotel rooms. I can do some crazy things. I can say I can buy hotels, book a hotel room with us and I can give you a free flight. Hotels can be as large as AirAsia tickets.”

AirAsia-50-percent-non-flying-revenue-getty
AirAsia wants to sell a lot more than just cheap and cheerful seats on a plane. Photo: AirAsia

Not just an airline, AirAsia wants to be your lifestyle partner

Yesterday, Karen Chan spoke about AirAsia’s ambitions to become a fully-fledged online travel agency that offers not just hotels but also a range of travel and lifestyle products and experiences.

“Not all the flights are always full, and the load factor will not be 100%,” said Ms Chan.

“So the unsold infantry, and because they are so perishable, even as an 85% load factor for an Airbus A320, I still have about 20 to 25 seats unsold. I will now be able to bundle that unsold inventory for one ringgit or 25 cents with the hotel’s direct inventory. And I will be able to go into the market with a best buys guarantee.

“We can go and expand into where other airlines are just not able to do so. We actually want to go and be seen as basically a lifestyle partner.”

AirAsia-50-percent-non-flying-revenue-getty
AirAsia wants to be your lifestyle partner, says CEO Karen Chan. Photo: AirAsia

AirAsia wants to better harness its passenger database

AirAsia’s ancillary revenue plans are not restricted to the travel basics of hotels, transfers, and side excursions. The airline wants to build its delivery and e-commerce business. AirAsia sees itself as a future Asian e-commerce giant. But it’s not just Amazon parcels AirAsia wants to ferry around. AirAsia has detailed data on 75 million former passengers in its database. They know you purchased a nasi lemak on your last three AirAsia flights. Ms Chan wants to get down to the nitty-gritty. She wants to be able to deliver that meal to your home.

“Data is basically the new black gold for us,” Ms Chan said.

With AirAsia’s fortunes taking a hammering in 2020, there’s a good reason why the airline wants to expand its ancillary revenue sources. Whether a cheap and cheerful low-cost carrier out of Southeast Asia can successfully transform into a lifestyle brand is another issue. Whatever the result, but it will be interesting to watch.

What do you think. Is AirAsia the kind of lifestyle partner you are looking for? Is the airline right to chase more sources of ancillary revenue?  Post a comment and let us know.



Source link

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest article

ByteDance to cut jobs in India amid TikTok ban – TechCrunch

Chinese internet giant ByteDance has told employees in India that it will be reducing the size of its team in the country after New...

China Misses Expected Boost From Lunar New Year

China’s lunar new year is in mid-February. It is China’s most important holiday. Typically, hundreds of millions of travelers go on the move, heading...

Boeing 747-200 Returns To Karachi Following Engine Stall

A Boeing 747-200 suffered an engine stall and shutdown while taking off yesterday, forcing it to return to Karachi International Airport. The aircraft belongs...

ANA Allows Staff To Take Two Years Leave For Personal Endeavours

As passenger traffic to Japan continues to sit at historical lows, All Nippon Airways is scrambling to cut costs and bunker down for a...

Alaska Airlines’ Boeing 737 MAX Options Could Be Transformative

Alaska Airlines has its roots as an all-Boeing carrier. The airline used to operate a fleet of all-Boeing 737 jets and is keenly looking...
Translate »