AirAsia’s Founder Is Building A Super App – What Does That Mean?

Budget carrier AirAsia has unveiled the development of a new all-in-one app. Tony Fernandes, founder and CEO of the airline, has used the current aviation downturn as an opportunity to work on this “super app”. But what exactly will the app do, and what does this mean for the airline? Let’s find out.

airAsia A320 Super App
The budget carrier is on its way to developing a super app for the Southeast Asian region. Photo: AirAsia

When AirAsia’s flights halted, and 96% of its fleet was grounded, Fernandes tried to generate income in other ways. As such, he spent time building up AirAsia’s app as well as BigPay, the company’s e-wallet system. In a recent interview with BBC, he explained,

“The downturn was a blessing in disguise in some ways as it allowed us to focus more on it. Running an airline takes up a lot of our time but we have been given the opportunity and time to focus on our digital business.”

Fernandes also mentioned that the super app is going to be the region’s next best mobile application.

What will the app entail?

The founder of the Malaysian-based carrier aims to trump other major apps in the region – such as Singapore and Indonesia’s ride-sharing services Grab and GoJek, as well as China’s messaging platform WeChat.

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Specifically, the AirAsia app will be a one-stop app for entertainment, shopping, payments, and travel. This follows the trends of the other apps mentioned above, where Grab, which started as a ride-sharing platform has evolved into an application for users to make payments, and opt for food delivery among other things.

On August 24th, AirAsia revealed a partnership with digital travel platform, Agoda. The collaboration aims to provide users with a convenient way to access 600,000 Agoda properties, and then book airline tickets with the carrier. Users can find hotel and flight packages on the app as well.

AirAsia Founder CEO Tony Fernandes Getty
Fernandes told BBC that being digital is in AirAsia’s bloodstream. Photo: Getty Images

Fernandes acknowledges that this may be a considerable feat, but he brought up the fact that AirAsia has always been a digital company. He added,

“I know a super app sounds like a lofty target but Grab and GoJek also started out small as food or mobility apps. Plus people also questioned me the same way when I said I wanted to start AirAsia.”

The BBC reported that AirAsia currently boasts at least 60 million users on its mobile app.

Delving into the music industry

Trying out different things is not new for CEO Fernandes. Last year, the airline launched a record label titled RedRecords in conjunction with Universal Music Group.

The record label aims to elevate Asian music from the region of Southeast Asia to a global audience. RedRecords has signed Thai pop star, Jannine Weigel, as their first artist. According to Fernandes in an official statement on the launch of the record label,

“We [Kamarudin and Nadda] have already revolutionized air travel enabling everyone to fly and as we celebrate 18 years of operation for AirAsia – we are focused on transforming the airline into a global digital travel and lifestyle leader.”

 Datuk Kamarudin Meranun is AirAsia’s chairman and co-founder and Nadda Buranasiri is the Group CEO of sister airline AirAsia X.

AirAsia is evolving

The new ventures showcase how AirAsia is evolving into more than just an airline. The way AirAsia has diversified its income also means the aviation downturn may hurt the carrier less and less.

As reported by Malay Mail, the airline encountered a $187m loss for the three months ended March 31st. However, AirAsia said there was breakeven in earnings before taxes, depreciation, amortization, and interest. The Malaysian newspaper mentioned that this was due partly to “strong performances from the non-airline businesses”.

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AirAsia’s non-airline businesses have helped shoulder its losses. Photo: Getty Images

One week ago, the low-cost carrier reported another loss. For April and June, AirAsia recorded a $238m loss. This is compared to a net profit of $4.15m for the same period in 2019.

The carrier had planned to restart flights to Bali, one of the most popular tourist destinations in the region. However, the coronavirus situation in Indonesia has prompted the government to forbid tourists from entering until 2021.

For the time being, it seems most profitable if AirAsia continued building up its non-airline businesses. What do you think?

Do you think the super app is a good idea? What are your thoughts on AirAsia’s non-airline businesses? Let us know in the comments.