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Digitisation high on AirAsia’s agenda in 2017 as it looks to cut costs

Malaysian low-cost carrier AirAsia said its current focus will be on “digitalisation,” as it recognises that travellers of today want a personalised and seamless travelling experience.

“Our current focus is digitalisation. We recognise the potential of leveraging in the vast data from our 369 million passengers over the last 15 years, to be able to connect better and further enhance their experience. By studying our data that we have collected over the years, we’ll be able to offer this to our guests,” said AirAsia CEO and executive director, Aireen Omar said. Omar was commenting on the airline’s performance in 2016 and its outlook.

Apart from marketing point of view, Omar also added that digitalisation will also help the airline to reduce cost further by “automating more operations and integrating all operational data”. This is while it optimise efficiencies along its entire value change from procurement, aircraft engineering and maintenance, cabin crew rostering and inflight service.

In fact last year, AirAsia set up a full fledge data and digital team to manage its digital journey to increase revenue and save costs. “Keeping cost low is integral to the sustainability for our business,” Omar added.

To keep AirAsia running at low cost, the airline was also centralising many processes to reduce redundancies and optimise cost last year. “By centralising many of our functions across the group, we will be able to achieve economies of scale and reduce our unique cost further. Our focus is on being cost disciplined as we grow, and improve further, as we integrate all resources throughout the group and become truly one AirAsia,” she added.

ASEAN path on track

Meanwhile, AirAsia’s group chief executive officer Tan Sri Tony Fernandes said the airline in on track and will continue its expansion in the region to become a truly Asean airline.

“Our ASEAN story continues with our impending JV with Vietnam, and recently I’ve returned from Cambodia where the Cambodian government is very excited to offer us a 100% license,” said Fernandes. Apart from ASEAN, Fernandes said with its latest JV in China in which he hopes will launch in a “not so distance” future, the airline will have the two biggest countries in Asia – India and China, in addition to its upcoming launch in Japan which is expected to start operations in the second half of this year.

On this note, during an earlier exclusive conversation with A+M, AirAsia’s commercial director Spencer Lee said data-driven marketing will be useful to target the Chinese market.

Lee said: “The thing about China is that it’s a really big market, fraught with both abundance and challenges. Whilst we have been successful as a brand, we do not have the luxury of burning cash to pursue every opportunity at our doorstep. At AirAsia, we use data to evaluate options that allow us to focus on maximising impact, whilst consuming minimum resources.”

Meanwhile, Omar added, to facilitate AirAsia’s growth, the airline has established a fleet delivery plan that runs up to 2028. In 2017, the group fleet size is expected to increase by 29 aircraft, which will bring it to 203 A320s by end of this year.

Omar said apart from the passenger service business, the airline would also focus on increasing ancillary income such as revenue from seat selections, inflight WiFi service, food and beverage, baggage fees, fly-thru flight transfer and duty free products.

She said that last year, ancillary income grew more than 10% to RM48 per passenger: “Ancillary income is a high margin business and fuels growth for the company. It is making more meaningful contribution to our earnings and provide an additional source of revenue to buffer against uncertainty.”

In an exclusive conversation with A+M, AirAsia’s commercial director Spencer Lee recently shared on how data-driven marketing will be useful to target its new market, China after it recently signed a memorandum of understanding for a JV to establish a low-cost carrier in the highly-populated country.

“China is a key market for AirAsia. Peering back into the past, our first maiden flight to China was from Kuala Lumpur to Macau, way back in 2004. Today, AirAsia flies to more than 15 destinations in China alone, and we definitely have plans to cover more cities in the pipeline,” Lee said.

The thing about China, he added, is that it’s a really big market, fraught with both abundance and challenges: “Whilst we have been successful as a brand, we do not have the luxury of burning cash to pursue every opportunity at our doorstep. At AirAsia, we use data to evaluate options that allow us to focus on maximising impact, whilst consuming minimum resources.”

Lee also added that the invest heavily in technology and automation, to ensure “that we do our best to expand and maintain our edge in all our markets.”

 

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