This article first appeared in The Edge Financial Daily on November 17, 2017
SINGAPORE: AirAsia Bhd is looking to roll out an e-wallet service for Southeast Asian travellers as it unveils a digitalisation strategy that aims to optimise big data to boost revenue and drive savings.
Dubbed BigPay, the e-wallet payment card will offer all 10 Asean currencies at a cheaper foreign exchange rate than that offered by commercial banks, said its group chief executive officer (CEO) Tan Sri Tony Fernandes.
Users will be able to link up to 10 debit and credit cards to the BigPay for ease of payment as they travel in the region, he said. At present, BigPay can only be used for transactions on AirAsia’s website and its other platforms.
“Within the next two to three months, we will have our own version of Alipay,” Fernandes told reporters after unveiling AirAsia’s digitalisation initiatives here yesterday.
The e-wallet, among others, will remove the need for physical cash for inflight purchases on AirAsia flights. The low-cost carrier (LCC) is also testing an inflight ordering system via mobile that would remove the need for sales via food and merchandise trolleys inflight.
The initiatives may help AirAsia understand individual flyer preferences better to spot upselling opportunities such as personalised purchase recommendations from its online duty-free store based on historical purchases of flyers.
AirAsia’s digital initiatives leverage on its growing customer base — it flew 56.6 million passengers last year. This year, it expects a 29% year-on-year (y-o-y) to 73 million.
Fernandes said AirAsia has spent the last two years fine-tuning its data collection to make it more monetisable and it is beginning machine learning initiatives to enhance its data use soon.
Another initiative that seeks to tap the growing data trove is personalised baggage pricing, which AirAsia is currently testing. The airline is working on dynamic pricing on checked-in baggage based on flyer profile and data.
If successful, the initiatives may boost AirAsia’s ancillary revenue, which amounted to RM48 per passenger in 2016. As at the second quarter ended June 30, 2017, that figure is at RM50 per passenger, up 2% y-o-y.
Ancillary revenue made up 18.4% of the airline’s revenue of RM6.85 billion last year. It had previously targeted to hit RM60 per passenger in ancillary revenue.
Fernandes also lauded Singapore’s Changi Airport Terminal 4 (T4) as the model airport for the future for LCCs.
Calling T4 the “final piece in the digital puzzle”, he said AirAsia will use its operational data in T4 as an ongoing case study to discover potential improvements to LCC airport processes via digitalisation.
Lessons from T4 will be implemented across the group’s operations. AirAsia currently serves 120 destinations across Asia, Australia, New Zealand, the Middle East and the US.
Fernandes also noted that other airport operators in the region are also moving towards digitalisation to enhance the airport experience, citing the Philippines, Indonesia and Thailand. “We can only go so far without our partners sharing the same vision.”
T4, which began operating on Oct 31, is a fully automated terminal for departing passengers. It offers a range of self-service options called “fast and seamless travel” (FAST), from check-in and baggage drop to immigration clearance and security screening, which includes using facial recognition technology.
“FAST is the future. The improved savings and efficiencies from FAST align perfectly with our quest to maintain the lowest cost structure as well as our vision of seamless travel, which means lower fares for our guests and more traffic for Changi,” Fernandes said.
As an example, such cost savings would arise from needing fewer personnel due to automation of various processes, he added.
AirAsia moved from Terminal 1 to T4 on Nov 7 and is the largest foreign LCC in Singapore, flying over one in eight passengers. LCCs made up 49.6% of Singapore’s air passenger traffic in 2016.