I flew Spirit across the US for $35 after it canceled thousands of flights in August. I wouldn’t hesitate to do it again but it wasn’t without risks.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

  • Spirit Airlines in August canceled thousands of flights after extreme weather impacted its operation, impacting its reputation for cheap on-time flights.
  • The event highlighted the risks of booking with an ultra-low-cost carrier, which may recover slower than larger carriers.
  • Even with the risks, Spirit still manages to attract flyers that are price-focused with fares lower than $35 one-way for cross-country travel.
  • See more stories on Insider’s business page.
Spirit Airlines is one of the US’s leading budget carriers, known for cheap flights with no frills that make air travel more accessible to the masses.

Spirit Airlines aircraft
A Spirit Airlines aircraft.

But over the summer, Spirit briefly became known for delayed and canceled flights. Extreme weather led to thousands of Spirit flight cancellations over the course of a week, seriously impacting the airline’s reputation for on-time performance.

Passengers wait in line at the Spirit Airlines check-in counter at Orlando International Airport on the sixth day the airline has cancelled hundreds of flights.
Passengers wait in line at the Spirit Airlines check-in counter at Orlando International Airport on the sixth day the airline has cancelled hundreds of flights.

Here’s how Spirit’s week-long meltdown started in August 

The event highlighted the risk that can come with booking through an ultra-low-cost carrier. Specifically, travelers on these airlines may have less recourse when things go wrong, such as a lack of backup flights on a given route.

Spirit Airlines passengers
Spirit Airlines passengers.

Spirit provided stranded customers with $50 vouchers and limited rebooking options during its August meltdown.

Airlines like Spirit also don’t commonly partner with other airlines, preventing them from rebooking disrupted passengers onto a different carrier.

Spirit Airlines plane Los Angeles International Airport LAX
A Spirit Airlines plane at Los Angeles International Airport.

Those risks usually entice me to book flights on full-services carriers over budget airlines. But I couldn’t resist the challenge when I saw the fare on a cross-country flight was only $34.57 on Spirit for a recent flight home.

Spirit Airlines Airbus A320neo flight
Flying on a Spirit Airlines Airbus A320neo.

I flew Spirit Airlines home from Santa Ana, California to Newark after a work trip to California. Here’s what it was like.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

My transcontinental journey started dark and early with a 7 a.m. flight from Orange Country’s John Wayne Airport. The first leg of my trip consisted of a short hop to Las Vegas, where I’d connect to a non-stop flight to Newark.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

As per tradition when I book flights on ultra-low-cost carriers like Spirit, I didn’t purchase any extras and let fate decide my experience. All I had with me was an overnight bag and a ticket to ride.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Here’s how I navigate flights on ultra-low-cost airlines like Frontier Airlines and Breeze Airways.

This would be the longest journey on Spirit at seven hours and 12 minutes from start to finish. I can’t say I wasn’t tempted to pre-pay for window seats, which started at $10 for the shorter flight and increased to $13 for the longer one.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Nevertheless, I stuck to my faith in the system and was rewarded with a choice of two window seats at check-in. Both were towards the back of the plane but I saved $25 by not pre-paying.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Tickets in hand, I went to the security checkpoint that was luckily empty at the ripe hour of 5 a.m.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Flying time to Las Vegas was a brief 44 minutes and I wasn’t concerned at all with this leg of the journey. The route is among the shortest in Spirit’s network and there’s not much I can’t put up with for 44 minutes on an airplane.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Boarding began in groups around 30 minutes prior to departure. Travelers that purchase extras like a carry-on bag or early boarded, as well as Spirit credit cardholders, are given the first two zones and board first.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

I was given zone three and still boarded relatively early. But this also wasn’t a full flight.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Spirit’s newest fleet type, the Airbus A320neo, was operating the flight to Las Vegas. This was the second time I was getting to fly on the jet for Spirit as it took me to Boston in 2020.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Here’s what it was like flying from Newark to Boston for $25 on Spirit Airlines

A total of 182 seats comprise the all-economy class cabin spanning 31 rows in the standard 3-3 configuration for an A320neo.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Source: SeatGuru

The first two rows, however, house “big front seats” that are essential business class-style recliners without the business class perks. These seats offer 36 inches of pitch and 20 inches of width, with a wide center console and adjustable headrests.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

There are no additional perks besides a larger seat with extra legroom but it did look comfortable. Upgrade bids for this seat started at $26 for the Santa Ana-Las Vegas flight and $31 for Las Vegas-Newark.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Regular economy seats offer 28 inches of pitch and 17.75 inches of width. It’s a tight fit and the seats are remarkably thin.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

There are no adjustable headrests, seat-back entertainment systems, in-seat power outlets, or even seat-back pockets.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

A small literature holder acted as a makeshift seat-back pocket that just barely fit my iPhone.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Seat storage isn’t Spirit’s strong suit and putting a bag under the seat would only serve to further reduce legroom. That said, I didn’t immediately feel too crammed into the seat, even as a larger traveler.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

But these were all things for which I was prepared. I had downloaded entertainment to my phone ahead of time and packed a portable charger.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

The only thing I forgot was a travel pillow to make up for the lack of a proper headrest. Other than that, the “deluxe leather” seats seemed to be comfortable enough for a cross-country journey.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

I was also lucky enough to have the row to myself and feeling good that I didn’t pay for a seat assignment. It didn’t get better than this.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

And where Spirit lacked in frills, it made up for in on-time performance on this short hop to Sin City. We pushed back to the gate a remarkable six minutes early and made our way to the runway.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

We started our takeoff roll just after 7 a.m. and I could rest easy that the airline’s troubles over the summer weren’t going to affect this flight. Though, I still had one more flight to go.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

The A320neo’s performance capabilities truly shined on takeoff as we climbed incredibly quickly over Orange County. John Wayne Airport is known for complex departure procedures to keep noise levels down, and the A320neo handled it quite well.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Plus, the aircraft’s Pratt & Whitney PW1000G geared turbofan engines were incredibly quiet on takeoff and throughout the flight.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Flight attendants quickly began the in-flight service once we reached our cruising altitude of 23,000 feet. Flight attendants walked around taking orders instead of rolling out the trolley, given the short duration of the flight.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Nothing is free on Spirit, not even water, but the prices were reasonable for what was on offer. Passengers could choose from combos or standalone purchases.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Tea was $2 per cup while coffee and hot chocolate were $3 per cup.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Soft drinks and bottled water were $3 each.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Servings of beer and liquor started at $8, comparable to what a beer costs in New York City, and cocktails were available for between $9 and $11.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Snacks then started a $3, with snack boxes increasing to $8. The pricing was comparable to what I’ve seen on other airlines.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

But for this short flight, I decided to wait and have a proper breakfast once we landed in Las Vegas. I wasn’t alone as not many of my fellow passengers placed orders.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

So far, I was holding to my initial fare of $34.57 and no more. We began our descent into Las Vegas shortly after flight attendants finished taking orders.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Seeing the Mandalay Bay marked the end of my Spirit journey’s first leg. Next came a layover of one hour and four minutes before the flight time to Newark.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Deplaning occurred as normal with no change to that procedure. Flying Spirit felt like flying during pre-pandemic times, as more and more airlines are getting back to the normal swing of things.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

McCarran International Airport didn’t have too much to offer for breakfast in the Spirit terminal. Moe’s Southwest Grill, Siegel’s Bagelmania, and Starbucks Coffee provided the only real breakfast options so I bought two bagels since I still had a long way to go until Newark.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

The flight time to Newark was scheduled for five hours and two minutes. And as luck would have it, I was going to be flying on the same exact plane that brought me to Las Vegas.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

This flight was markedly more crowded, however, with nearly every seat filling up. Boarding once again began around 30 minutes prior to departure and one gate agent was tasked with scanning boarding passes and checking passengers’ bags.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Multiple people were taken off the line for having bags that were too large. This gate agent wasn’t playing around.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

I was able to board with no issues thanks to my overnight bag, saving what would have been a $60 fee had my bag been larger in size.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

The familiar yellow and black A320neo greeted me once more and I got ready for the longest flight of my life on an ultra-low-cost carrier.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

This time I was in the second to last row with a seat assignment of 30A. I was way in the back but still had a window seat so I couldn’t complain.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

And this seat actually had a window. Row 31, the last row, does not have any windows.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Boarding went smoothly and those that were forced to check their bags, or pay the carry-on fee, soon filed onto the plane.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Once again, we pushed back from the gate and departed on time. I rested easy knowing I wouldn’t be stranded in Las Vegas and that I might even get home early if the tailwinds were strong enough.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

I was also happy that I didn’t spring for the $13 seat assignment fee as I had scored a window seat in a row with no middle seat. I couldn’t have asked for a better assignment, compliments of Spirit.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Flight attendants started the in-flight service and brought around a trolley this time. I once again declined, having eaten in the airport.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

The next few hours would be somewhat challenging. I didn’t sleep on the flight to Las Vegas and needed to get some rest. But I’ve never slept well when flying on ultra-low-cost airlines.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

I finally managed to get two hours of sleep, taking off a good chunk of the flight. It wasn’t a good sleep, and I really should’ve brought a pillow.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

I knew I was home free once we crossed the mighty Mississippi River, and that there would be no more than around two and a half hours until touchdown in Newark.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Flight attendants came around for the final service and I couldn’t help but indulge since I had a long journey home from Newark airport to my house on Long Island, New York.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

I purchased the $11 snack box and drink combo that came with almonds, Brownie Brittle, Craisins, crackers, and smoked gouda cheese. It was a typical airline snack box and I enjoyed every bite. The total cost of my $34.57 Spirit ticket was now $35.57.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

As there were no forms of in-flight WiFi or entertainment onboard, I had to rely on the old-fashioned method of using landmarks to gauge our location the rest of the way. Chicago’s O’Hare International Airport was the first marker, soon followed by Lake Michigan.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Next came Detroit, letting me know that there was no more than an hour and 30 minutes left of flying time. Our descent started around an hour later, marking the final stages of a long cross-country journey.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Overall, it wasn’t the most comfortable flight of my life but it was more than bearable, and I couldn’t complain given the $35 airfare. For comparison, $35 isn’t even enough to fill up my car with gas with current $3 per gallon gas prices in New York.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

But as with anything that seems too cheap to be true, I was taking a risk when choosing Spirit. The airline’s focus on improving its on-time performance in recent years has mitigated that risk but it still remains.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

We actually landed in Newark ahead of schedule. Next came the hardest part of the flight, getting home from Newark airport.

Flying Spirit Airlines across the US - Spirit Airlines Flight 2021
Flying Spirit Airlines from Santa Ana, California to Newark, New Jersey.

Read the original article on Business Insider

American has been building an team of airline partners to fill the gaps in its network, even if it means aligning with budget carriers and startups

american airlines
American Airlines is expanding its international presence with new airline partners.

  • American Airlines is taking on new airline partners to rebuild its global route network.
  • South America is of particular importance as American recently lost its larger partner in the region.
  • In the US, Alaska Airlines and JetBlue Airways help American expand its presence on both coasts.
  • See more stories on Insider’s business page.

American Airlines is planning to get by with a little help from some new friends as the airline continues to build out one of its top products: a global route network.

Global carriers often rely on smaller airlines to connect passengers within destination countries, and American has some major gaps to fill despite being a leading member of the Oneworld airline alliance.

This summer saw three foreign airlines – Chile’s JetSmart, Canada’s Connect Airways, and Spain’s Level – announce partnerships with America’s largest carrier.

South America has been a top priority for American following the loss of a partner in LATAM Airlines to Delta Air Lines in 2019. Delta’s $1.9 billion investment in LATAM bought a new ally in the region at American’s expense.

“For more than 30 years, American has been serving Latin America and has been the leading US airline in South America,” Henry Harteveldt, a travel analyst and president of Atmosphere Research Group, told Insider. “The loss of LATAM as a partner dealt American a severe blow.”

The continent’s other major carriers are already bound to carriers and alliances rival to American, including Star Alliance members Avianca and Copa Airlines. It’s not impossible for those airlines to partner with American but any partnership requires investment and would have to be worthwhile for the South American carriers to go against their alliance.

American, instead, found a new partner in JetSmart, an ultra-low-cost carrier that boasts destinations in Chile, Argentina, Brazil, Peru, and Colombia. It’s far from a match made in heaven but the move was necessary to build back in South America.

“American doesn’t want to give up a three-plus decade history of being the leading US airline in South America without a fight,” Harteveldt said.

American faces a similar problem closer to home in Canada, where it has no major airline partners. The Great White North’s largest carriers are already spoken for as Air Canada is part of the Star Alliance while WestJet is a Delta partner.

One solution is a partnership with Connect Airlines, a startup that plans to fly between Toronto, Canada and the Midwestern US. It’s another unlikely partner for American but will give customers a connecting option through Chicago and Philadelphia to Billy Bishop Toronto City Airport, according to Airline Weekly.

In Europe, American just reinstated a codeshare agreement with another ultra-low-cost carrier, Level, that can offer greater European connectivity through Barcelona, Spain. The partnership is ideal since Level is owned by the International Airlines Group, or IAG for short, which is a big American partner through its subsidiary airlines British Airways and Iberia.

Back home, US airlines are also helping American round out its domestic network on both coasts. Alaska Airlines moves passengers through Los Angeles, San Francisco, and Seattle while JetBlue Airways does the same in New York and Boston.

In New York, the new “Northeast Alliance” with JetBlue has given American the opportunity to launch additional long-haul flights to destinations like Athens, Greece and Tel Aviv, Israel.

JetBlue feeds American traffic through New York since the latter can’t scale up on its own in the Big Apple.

“To grow in New York organically is almost impossible and even if they could do it, it would be exceptionally expensive,” Harteveldt said of American.

But while American can control its network growth, it can’t control the product being offered by its new partners. In the US, JetBlue and Alaska offer a comparable, if not better, passenger experience than American but JetSmart and Level are ultra-low-cost carriers with markedly different onboard offerings.

US-originating customers, especially premium travelers, booking a JetSmart flight might be surprised at the differences from American. South American-originating customers, however, are likely already familiar with the JetSmart offering, according to Harteveldt.

The hope, however, is that customers will value the greater connectivity that the partnerships offer and overlook the differences in products.

“The network is the product,” Harteveldt said, adding that American may be able to offer suggestions on how the carriers can improve their offering as the partnerships continue.

Read the original article on Business Insider

How CEO Tony Fernandes and AirAsia are looking to redefine the role of an airline in a post-COVID world

Transforming Business

TONY FERNANDES   AirAsia
  • Headed by Tony Fernandes, budget airline AirAsia has this year accelerated the rollout of its non-airline offerings
  • Key to the company’s transformation has been the launch of a digital travel and lifestyle platform and superapp
  • New digital products and services include e-commerce, last mile delivery, digital payments and an expanded rewards program
  • Fernandes believes non-airline revenues will eventually match and then surpass airline revenue
  • Because of his work, Business Insider named Fernandes to our annual list of the 10 leaders transforming supply chain in Asia.
  • Visit Business Insider’s Transforming Business homepage for more stories.

Under the leadership of co-founder and CEO, budget flyer AirAsia has been disrupting the Asia airline industry since operations first began in 2001. The Malaysian company was last year named the world’s best low-cost airline at the Skytrax World Airline Awards. This was the 11th consecutive year it had picked up the award.

Despite its pioneering success, AirAsia has in recent years been implementing strategies to pivot toward a unified, all-in-one digital travel and lifestyle platform. Business Insider looks at how Fernandes and AirAsia are looking to redefine the role of an airline in a post-COVID world.

Moving from budget airline to digital travel and lifestyle platform

AirAsia has from the outset put digital and innovation at the heart of its operations. It was, for example, the first airline in the region to focus on selling tickets directly online through its own website, and today around 85% of its customers book directly through its website. 

From 2018, the company saw the potential to drive new revenue streams by building an ecosystem of businesses, all anchored on travel and all leveraging off each other. The arrival of COVID-19 and the subsequent downtime of flights provided the company with the opportunity to fast-track this digital transformation strategy. 

“As I always say you have to evolve or you die in this industry,” said Tony Fernandes. “The decision to pivot into a digital travel and lifestyle platform actually commenced in 2018, well before COVID-19 hit. One silver lining of the pandemic was that it allowed us to focus on and fast-track our digital transformation by growing our non-airline businesses which not only provides new revenue streams, but also creates new job opportunities for our staff to be upskilled and pivot into new roles within the company.”

The airline saw digital transformation as a natural progression. Pre-COVID-19, the company’s website had 60 million monthly visitors, which adds up to a powerful database of  loyal customers. 

“I’ve always been a firm believer in the digital revolution,” adds Fernandes. “Today, data is king and we realised we had a huge opportunity to extend our own assets and leverage our strong brand in Southeast Asia with our own big and rich data.”

Expanding the AirAsia product offering

To facilitate the company’s digital transformation, the AirAsia Group split its operations into two main divisions – the airline itself and the digital businesses under ​AirAsia Digital​. Under the digital banner, the company now has four key offerings:

  • airasia.com In October, AirAsia re-launched the airasia.com brand around the central concept of enabling its customers to fly, to stay, to shop and to eat, all from the convenience of one platform. There are now 17 lines of business available on the app including airasia food (meal deliveries), airasia fresh (groceries) and airasia shop (retail), powered by AirAsia’s logistics arm Teleport. In addition, there is airasia Health, which promotes medical tourism, Islam-compliant service IKHLAS, SNAP (flight and hotel bundles) and more.
  • Teleport AirAsia’s cargo and logistics division has transformed into a major Southeast Asian e-commerce transportation provider. The entity first focused on a cross-border e-commerce  delivery service, leveraging AirAsia’s flight networks to enable businesses to conduct cross-border trade anywhere in Southeast Asia within 24-hours. Adapting to post-COVID reality and recognising customers’ preference for home delivery orders, Teleport pivoted once more to concentrate on last-mile deliveries, transporting parcels, restaurant orders and fresh produce from airasia shop, airasia food and airasia fresh. Teleport now has over 5,000 delivery partners, with deliveries available across 70 cities.
  • BigPay AirAsia’s digital payment service started out life as a simple debit product but now offers money transfers, with remittances available in 10 countries including Malaysia and Singapore. The company says that loans, marketplaces, insurance and wealth products are all in the pipeline, and that BigPay is on track to become Southeast Asia’s first virtual bank. BigPay has received a provisional license for lending and users will soon be able to apply for fast loans at low interest rates. ​BigPay is also targeting key digital licences in the Philippines and Thailand. The payment service currently has 1.2 million users. 
  • BIG Rewards Already one of Southeast Asia’s largest travel and lifestyle rewards platforms with over ​35 million members, BIG Rewards has evolved from an airline loyalty program to a broader lifestyle rewards service, offering points redemption on a range of dining, shopping and entertainment deals. The platform includes BIG Xchange, the first airlines points exchange platform, which allows BIG Members to convert credit card loyalty points from participating banks into BIG Points.

Digital transformation already beginning to pay off

As a result of its accelerated digital transformation, AirAsia says it has seen significant growth in terms of customer base, as well as revenue and other key metrics, for all non-airline business divisions in 2020. According to 2020 third-quarter results, the non-airline subsidiaries grew by 182% and almost all non-airline business divisions are now profitable. 

The company says it expects non-airline revenues to contribute up to 50% of total AirAsia Group revenues in the next three to five years and gradually overtake the airline revenues in the longer term.  

“As I always say, never waste a crisis,” says Fernandes. “We have lived through many before and this will be no different. We will use the opportunity to extend our assets and leverage our big and rich data and go places we have never been before. For AirAsia, nothing is off the table anymore. We will consider any opportunity that makes commercial and viable sense. We are already selling flights for other airlines, including our competitors on airasia.com and providing last mile deliveries.”

In terms of the future, AirAsia says demand for travel is still huge and that people still want to fly. Noting the pent up demand for travel, the company says it is already seeing with strong demand for our domestic flights in its key markets of Thailand, Indonesia, Philippines, Malaysia and India. 

Given that during an economic downturn, low cost airlines are generally more popular, AirAsia believes it is in a strong position to recover faster than many of its competitors. The company points out that 50% of its traffic is domestic short haul, while the majority of its customers travel for leisure rather than business, both advantageous for fast recovery. In addition, many of its key international markets are in COVID-19 Green Zones, areas that are likely to reopen first. 

“Air travel is here to stay and it will bounce back,” says Fernandes. “I do believe we have weathered the storm. The worst is over. Our comeback is the best part of the story and I see this as a never ending story. No virus will kill the spirit of AirAsia. We will continue to innovate, adapt, recover and come back stronger.”

Read the original article on Business Insider