Tony Fernandes, a Malaysian tycoon AirAsia Introduces Parcel Delivery Service to Capitalize on the E-Commerce Boom
AirAsia Group, run by Malaysian businessman Tony Fernandes, has established a parcel delivery service in an attempt to capitalize on Southeast Asia’s e-commerce growth.
The new service, dubbed AirAsia Xpress, is the airline’s newest venture as it looks to grow its digital business and shore up income that has been hit hard by the Covid-19 outbreak, AirAsia said in a statement on Tuesday. The service will begin in Kuala Lumpur and other densely populated areas of the Klang Valley, before expanding to other parts of Malaysia and Southeast Asia.
Powered by Teleport, the group’s logistics business, AirAsia Xpress offers its superapp users two delivery options: instant delivery in less than an hour or same-day delivery within six hours. The new business complements the airline’s food delivery and ride-hailing services, which are both part of the airline’s efforts to construct a superapp to compete with Southeast Asia’s digital titans such as Indonesia’s GoTo and Singapore’s Grab and Sea Group.
“As we continue to recover from the epidemic, we anticipate that people will continue to rely heavily on efficient and economical delivery services—one of AirAsia’s fundamental competencies,” said Lim Ben-Jie, head of e-commerce delivery at AirAsia’s superapp. “By combining our ease of use and network reach across ASEAN and beyond, AirAsia Xpress will provide fast and convenient delivery for individuals and tiny companies.”
Southeast Asia is one of the world’s fastest expanding regions, with gross merchandise value from the digital economy increasing by 49 percent to $174 billion this year, according to a new research released this month by Google, Temasek, and Bain & Company. The study projects that as customers across the area adopt e-commerce and other digital platforms, the GMV will expand to $363 billion by 2025 and surpass $1 trillion by 2030.
This rapid development bodes well for AirAsia, which aims to increase the share of its digital companies to 50% of total revenue by 2025. As a result of the Covid-19 travel restrictions, the group has been diversifying into digital enterprises.
AirAsia reported its third-quarter sales fell 37% year on year to 296 million ringgit ($70 million) earlier this week. Raymond Choo, an analyst at Kenanga Research in Kuala Lumpur, trimmed his full-year earnings projection for AirAsia by 17% to a net loss of 2.41 billion ringgit in a research note.
“We have used the downtime in flying to diversify our revenue streams and completely transform ourselves into an investment holding company with a portfolio of synergistic travel and lifestyle businesses,” Fernandes, CEO of AirAsia Group, said in a statement announcing the group’s third-quarter results. AirAsia’s superapp, as well as Teleport and the group’s fintech subsidiary BigPay, are gaining traction and establishing a strong presence in important regions, he added.
Fernandes and his business partner, Kamarudin Meranun, acquired AirAsia in 2001 with the goal of creating an economical airline. Fernandes, who was not included in this year’s list of Malaysia’s 50 wealthiest people, is also involved in hotels, insurance, and education.