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AirAsia seeking to diversify, boost revenue from ancillary services

AirAsia seeking to diversify, boost revenue from ancillary services

File photo of AirAsia planes. (Photo: AFP/Manan Vatsyayana)

SINGAPORE: Malaysian low-cost carrier group AirAsia is looking to diversify its business and working towards being a tech and services company.

Group chief executive Tony Fernandes said that in order to achieve this, AirAsia must boost its ancillary businesses – particularly on its website, its main booking platform.

“AirAsia.com is more than just selling airline tickets. We had a record number of hotel rooms being sold last week. So now I’m pushing the very powerful AirAsia platform, which we are seeing online travel agents do – that I can be an online travel agent as well,” he told Channel NewsAsia on the sideline of a regional fintech event on Tuesday (Mar 19).

Mr Fernandes described that it is hard to predict what percentage of the airline’s revenue will come from its ancillary business, but he admitted that AirAsia can improve its sales on services such as car rentals and holiday packages via its website.

“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,” he said.

Mr Fernandes cited Indonesian ride sharing firm Gojek, which he said “has showed him the way” where previously they only sold rides, but now have other services as well.

On the AirAsia’s operations, he said that its long-haul sister carrier, AirAsia X, could launch a new service from Kuala Lumpur to Los Angeles via Osaka “within the year” after it takes delivery of its first Airbus A330neo aircraft.

At present, AirAsia X’s only United States destination is to Honolulu, which is also served via Osaka using A330-300s.

Within Malaysia, Mr Fernandes said that AirAsia “has never looked at what Malindo or Malaysia Airlines are doing” and is confident of further growth in the Malaysian market.

“We looked at what the market can take in terms of growth and we have just added capacity.  I should not focus on my competitors, but instead on what is the growth potential of the Malaysian market and we still think the growth potential is very large,” he said.

Today, AirAsia and its various subsidiaries carry about 100 million passengers each year.

“The passengers are there. It’s about getting the right product and the right model.”

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