INFLIGHT: LEGACY VS LOW COST – AIRASIA Retail ‘big piece’ in AirAsia travel tech evolution Unlock the full potential...
As the low-cost, long-haul phenomenon gathers pace and global travel becomes more democratised, passengers are looking increasingly for solutions akin to the traditional full service experience. As Luke Barras-Hill learns, AirAsia Group is using its technological expertise to deliver.
G
lobal airline ancillary revenue was estimated at $92.9bn in 2018 – a
$10.7bn increase year-on-year, according to an estimate from IdeaWorks and CarTrawler. Within the booming low-cost
segment, carriers continue to grow the proportion of ancillaries against their total revenues via the likes of dynamic a-la-carte options and onboard retail. These continue to play a big
part in Malaysian low-cost carrier AirAsia Group’s mission to transform itself into a self-proclaimed ‘travel technology company’, according to Head of Ancillary Barry Klipp. “By using the information we have,
we’re able to innovate and develop new and exciting products and in turn additional revenue streams,” he tells TRBusiness. “AirAsia is then able to maintain
its promise to keeping air travel accessible, through low fares and great service.”
New e-commerce platform Last year, AirAsia unveiled its new e-commerce platform OurShop that aims to connect its 90 million-plus consumers to a seamless purchasing ecosystem during their travels. “Considering our guests have
chosen to fly with a low-cost airline like AirAsia or AirAsia X, there is also considerable emphasis on value,” says Klipp. “This means attractive price points,
a user-friendly shopping experience, and good levels of inventory. By getting this right, we’re able to offset unnecessary cost, and ultimately increase our sales volumes. “We also make good use of our in-
financial year ending 31 December, total passengers increased by 14% to total 74.8m across its six aircraft operating certificates. Revenue passenger kilometres
(RPK), which multiplies the total number of revenue paying customers by the distance travelled as a reliable industry metric for measuring passenger traffic demand, rose by 10%. The group’s capacity also
expanded, with available seat kilometres (ASK) up by 15%. In a separate statement, low-cost
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affiliate carrier AirAsia X grew its passenger numbers by 6% to 6.2m. RPK increased by 2%, while ASK rose by 3%. More information on ‘other for full-year 2018,
revenue’
which includes sales of food and merchandise, was not immediately available.
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Duty free grows 54% However, in Air Asia Group Berhad’s most recent Q3 2018 results, Group CEO Tony Fernandes stated: “We have just started collecting in-flight data on merchandise sold with our Dolly ePOS device. “Our data collection and target
flight data to optimise onboard meal and duty free inventory, in order to reduce wastage and the loading of items that don’t prove popular.” According to the Group’s operating statistics for the full
FEBRUARY 2019
selling has started to bear fruit. As a result of this, our duty free revenue has grown 54% to RM9.4 million year-on-year.” Furthermore, a recently
announced partnership with Google Cloud is designed to integrate
together with machine learning and artificial Intelligence will help lift our overall ancillary revenue to help us predict passengers’ purchasing behaviour and increase their propensity for product uptake.” Asked whether there is a fine
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balance to be struck between strong service and customer satisfaction for LCCs, Klipp concludes: “Being guest- obsessed is part of AirAsia’s DNA, but balancing our guests’ expectations can be a challenge. “Low-cost carrier passengers are
often more price sensitive when it comes to travel, therefore balancing both low fares and great service with options to pick and choose products and services remains key to our success.” «
Watch out for a more detailed interview with AirAsia at www.
TRBusiness.com
TRBUSINESS 25
Air Asia Group Berhad’s duty free revenue grew by 54% to RM9.4m in Q3 2018.
TRBusiness
machine learning and artificial intelligence into AirAsia’s business. “We foresee a huge impact
in the future on further revenue generation, with the ability to drive better demand through accurate data forecasting and targeted marketing,” Fernandes added. “In time to come, these data
Above: Inflight retail is playing an important role in AirAsia’s transformation into a travel technology company. Source: AirAsia
Below: Barry Klipp, Group Head of Ancillary, AirAsia Group.
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