How Air Asia is utilizing Data to soar into the Digital economy?
IT’S EASY to forget that AirAsia beyond serving as a low-cost airline is a tech company (or a “travel tech” company, if you will).
This is, after all, an airline that was one of the first to encourage people to buy their tickets through AirAsia.com, back when e-commerce was still at its nascence. By October 2018, the company had already started integrating Google Cloud’s machine learning and artificial intelligence (AI) technologies into its business – one of several tech partnerships and acquisitions meant to expand its digital wing span.
It’s not surprising for an establishment the size and growth of AirAsia to invest in tech. Still, AirAsia’s tech expansion can serve as a valuable example of how organisations can complement their core business through smart and deliberate investments an aspect explored by AirAsia’s deputy group chief executive officer (Technology & Digital) Aireen Omar (pic) during her Malaysia Tech Week 2019 keynote speech.
“As we expand our business, we saw an opportunity to expand our ancillary business. We also saw the opportunity to build our adjacency business, which is a way to enhance the core business and the ancillary business and so forth,” she says.
“And now with the digital economy, we saw opportunity to embrace technology, and how we can use this data in order to do so and continuously disrupt ourselves to become Asean’s largest travel and lifestyle technology.”
AirAsia currently has a sizeable fleet more than 260 aircraft in eight airlines, flying across over 370 routes, of which 90 are unique (in the sense that AirAsia is the sole airline travelling through those routes).
Eighty percent of AirAsia’s bookings are done through their website and mobile applications. With 100 million passengers per annum, one can certainly expect a substantial amount of data that the company has to process.
It is, indeed, massive. According to Aireen, the company analyses 6PB (petabytes) of data monthly. “There are sixteen zeroes in one petabyte. Go figure,” she quips.
What AirAsia is doing with this data is to move them into the cloud and ensure that they can visualise the data better and make something out of it. “Because we can visualise the data better, we saw how we can use it to improve our revenue base. How we can use this to have more personalisation, so we can increase that conversion rate,” Aireen says.
The data is also used to optimise their efficiency. With more accurate data, Aireen says they can improve turnaround time; or use the natural behaviour of their own staff to create a more productive workflow. The data can help predict and reduce the time of the aircraft being on ground, and can also carry predictive maintenance.
Another aspect with how they use the data is to provide a seamless experience for passengers, from the moment they book their tickets to taking their return flight. “These are areas where we look at AI in order to enhance it. How do we work in using AI, whether it’s on voice AI or speech recognition,” Aireen says.
Incubating the right eggs
The data also allows AirAsia to get a sense of what new opportunities and businesses they can build around it. The idea, Aireen notes, is to build AirAsia into a platform that serves as a one-stop travel-lifestyle marketplace. “One big platform that so happens to fly people around,” she says, adding that various new features will be launched through the years that reflect this.
To achieve this, AirAsia has incubated a few companies that are aimed at expanding their core business. One of them is BigPay, which Aireen describes as their own digital bank. The conception of BigPay follows AirAsia’s observation that the higher margins of foreign currency exchange rates can be an issue to travellers.
BigPay provides reasonable currency exchange rates on top of e-wallet features like allowing the transfer of money and earning points that can be redeemed for free flights. The app is accepted at over 30 million merchants that accept Mastercard globally. In addition, BigPay also comes with its own card that is tied to the app.
Another company is Teleport, which is a cross-border delivery system that leverages on AirAsia’s network and flight frequency. The aim is to enable individuals and small business owners to ship their parcels and products cross-border and in 24 hours or less, eventually.
Aireen mentions that this also takes advantage of the e-commerce boom that is sweeping the region, allowing Teleport to serve as a courier service. In time, with the launching of its social commerce portal Teleport Social, the service will not just facilitate B2B and B2C transactions, but C2C as well.
Lastly, Aireen says that AirAsia is also looking into loyalty points and how they can go beyond merely being a means to redeem free flights. “We found that this is a fantastic opportunity for us to tokenise it and use it in other ways, such as redeeming it for your day-to-day activities,” she elaborates. In March of last year, AirAsia was reported as floating the idea of an initial coin offering.
Aireen says that while they have yet to explore the whole aspect of blockchain and tokenisation, they’re looking at how users can earn tokens beyond AirAsia.com, but also through BigPay.
All in all, Aireen notes that this is how the company has to continue to evolve and disrupt themselves. “Soon, our core business will become an e-commerce platform covering lifestyle and activities for the consumers,” she concludes.