Air Cargo Is Hot Right Now: Does AirAsia Have Last-Mile Amazon Dreams?

The Southeast Asian low-cost airline certainly is thinking its future is digital. It may be too soon to say it's a digital company that runs an airline, as AirAsia chief Tony Fernandes has been known to quip, but it certainly is looking for new revenue streams now that the pandemic has laid its revenues low.

AirAsia, like all airlines, collects data when passengers book or shop for travel on its website, and AirAsia figures about 40 million people visit its website every month. That's a lot of data. The company now is thinking it can leverage that data into new lines of business, transforming AirAsia.com into a travel agency of sorts and not just a place to buy tickets on its airline but even on other carriers. Turkish Airlines, for example, is allowing AirAsia to sell its tickets on AirAsia.com.

The company also is using the platform to sell cargo transport and to facilitate logistics for the last mile of e-commerce package delivery. The inspiration, we report in this week's Airline Weekly, is Amazon, for AirAsia to transform itself into a "super app" that provides all sorts of services. These include fast-food restaurants and medical services.

This may be more necessary now than ever, as the company reported an operating margin of -165% in the third quarter, with revenues down 87%. Its bedrock home market of Malaysia is struggling with a Covid spike. AirAsia X and AirAsia India are struggling, and talk of those two carriers disappearing is growing increasingly loud. Thailand is a bright spot, with traffic almost back to pre-pandemic levels. But carriers like VietJet are putting more capacity in Thailand, putting competitive pressure on AirAsia.

But the company sees hope in growing talk of travel bubbles in parts of its region. These could boost demand, when they're implemented. The digital business also is giving AirAsia's management some hope. Tourism will pick up again, and AirAsia is betting its strong brand and its low costs will help it out of the current crisis, despite its dismal topline numbers now.