AirAsia Group eyes disruption in Southeast Asian air cargo sector

AirAsia Group eyes disruption in Southeast Asian air cargo sector

Malaysia-based AirAsia is the region's biggest budget carrier by fleet size
File photo of AirAsia planes. (Photo: AFP/Manan Vatsyayana) 

SINGAPORE: Malaysian low-cost carrier AirAsia Group aims to disrupt the Southeast Asian air cargo sector by allowing customers to deal directly with the airline for their air shipping needs.

At an investors’ presentation on Tuesday (Mar 26), group chief executive Tony Fernandes announced that the airline will consolidate all its cargo operations and aircraft belly space under a newly established and wholly-owned unit, called Red Cargo Logistics.

This affects all its ASEAN-based units comprising the mainline Malaysian carrier, as well as AirAsia Philippines and Indonesia AirAsia. Its Thai AirAsia unit will come onboard in the second quarter of this year.  

Fernandes said that Red Cargo Logistics will officially be launched “in the next two weeks”.  

The group has also set a cargo revenue target of RM400 million (S$133 million) for the full year of 2019 – nearly double the revenue received for 2018, which stood at RM206 million.

Fernandes added that the group intends to double revenue for cargo with each year.

“(We are) building a fantastic blockchain system, which will partner other airlines … we will be very transparent in terms of moving cargo around Asia and Europe ... We are about to announce seven other airlines that we will be going to partner with.”

He described the belly space of AirAsia Group’s aircraft has being “underutilised”, with 26 per cent being used. 

“Customers will come direct to us now. So they don’t have to go through two or three middlemen. What would be a traditional air cargo (processing period) of 138 hours, we believe we can do in 12 hours.”

Fernandes expects that “very big brands” to tap on the AirAsia Group for its extensive air route network, as well as overall cheaper costs.

He also said that Red Cargo Logistics will heavily support what he called “social commerce”.

“It is where you see hundreds upon hundreds of people on Instagram … and all of those that are single sales people … Alibaba (and) Taobao’s live-streaming (channels) … you are going to see a lot of that in Southeast Asia, where entrepreneurs are beginning to set up small little shops and use social media to sell their products.”

Fernandes noted that such practices are already in place, but sales are mainly focused on where the seller is located. He added that AirAsia Group is in the process of acquiring a company to help with final stage delivery.  

“My whole drive in what I’m trying to do here is to utilise every asset to generate positive cash flow.”

Source: CNA/ac