AirAsia Group controlled by Malaysian tycoon Tony Fernandes has launched a parcel delivery service as the loss-making budget airline seeks to tap the e-commerce boom across Southeast Asia.

The new service, called AirAsia Xpress, is the company’s latest venture as it expands its digital business to shore up the airline’s revenues that have been hard hit by the Covid-19 pandemic, AirAsia said in a statement on Tuesday. The service will initially be available in Kuala Lumpur and other areas around the densely populated Klang Valley, before rolling out to other parts of Malaysia and Southeast Asia.

Powered by Teleport—the group’s logistics arm—AirAsia Xpress gives its super app users two options: instant delivery to receive their packages in less than an hour or same-day delivery to receive their packages within six hours. The new venture complements the airline’s food delivery and ride-hailing services, which are part of initiatives to build a super app that will compete with Southeast Asia’s tech titans such as Indonesia’s GoTo and Singapore’s Grab and Sea Group.

“As we move forward with the post-pandemic recovery, we believe that people will remain greatly dependent on efficient and affordable delivery services—one of AirAsia’s core strengths,” said Lim Ben-Jie, head of e-commerce delivery at AirAsia’s superapp. “Combining our ease of usability and network reach across ASEAN and beyond, AirAsia Xpress will support individuals and micro-businesses with fast and convenient deliveries.”Southeast Asia is among the fastest-growing regions in the world, with gross merchandise value from the digital economy climbing 49% to $174 billion this year from the previous, according to a new study jointly published by Google, Temasek, and Bain & Company this month. As consumers across the region increasingly embrace e-commerce and other digital platforms, the study predicts the GMV to grow to $363 billion by 2025 and surpass $1 trillion by 2030.

This strong growth trajectory bodes well for AirAsia, which is seeking to grow the share of its digital businesses to 50% of the group’s revenue by 2025. The group has been pivoting into digital businesses as Covid-19 travel restrictions drag passenger and cargo traffic lower.

Earlier this week, AirAsia reported its third-quarter revenue declined 37% from the previous year to 296 million ringgit ($70 million). In a research note, Raymond Choo, an analyst at Kuala Lumpur-based Kenanga Research, cut his full-year earnings estimate for AirAsia by 17% to a net loss of 2.41 billion ringgit.

“As a group, we have taken advantage of the downtime in flying to tap new revenue streams and fully transform ourselves into an investment holding company with a portfolio of synergistic travel and lifestyle businesses,” Fernandes, CEO of AirAsia Group, said in a statement when the group announced its third-quarter results. AirAsia’s superapp, along with Teleport and the group’s fintech unit BigPay, are gaining traction and building a strong presence in key markets, he added.

Fernandes and his business partner, Kamarudin Meranun, took over AirAsia in 2001 to build a low-cost carrier that would make air travel affordable. Fernandes—who dropped out of this year’s ranking of Malaysia’s 50 Richest people—also has interests in hospitality, insurance, and education.

 

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