AirAsia in the pandemic: from no-frills airline to low-frills food delivery

MALAYSIAN budget carrier AirAsia will be launching a food delivery service based on a new commissions model in Singapore on March 2, after a year plagued by struggles with capital, staffing and liquidation due to the ongoing pandemic. The Business Times takes a look at its journey over the past year.

Feb 5, 2020: Covid-19 carrier on board

AirAsia announced that a Chinese passenger was on board one of its planes that travelled from Cebu in the Philippines to Shenzhen, China on Jan 31. The passenger was the third positive case of Covid-19 in the Philippines. The airline disinfected all aircraft and cancelled flights between the Philippines and mainland China, Hong Kong, and Macau.

March 26, 2020: Planes stored, salaries voluntarily cut

AirAsia Group Berhad - operating flights under the AirAsia Group and the AirAsia X Group in regions including Malaysia, the Philippines, Thailand, Indonesia and India - announced the hibernation of most of its fleet in view of the outbreak. Management and senior employees took a voluntary salary cut of between 15 per cent and 100 per cent.

April 29, 2020: Resumption of domestic flights

Flights within Malaysia resumed, with plans for domestic flights in Thailand, the Philippines and Indonesia to resume in May, which were later delayed. Executive chairman Datuk Kamarudin Meranun said AirAsia was restructuring fuel hedges, taking voluntary pay cuts, renegotiating contracts and deferring non-essential expenditure to reduce costs.

May 5, 2020: AirAsia offers delivery of its inflight meals in Thailand

Inflight meals - suspended on domestic flights - were offered for delivery instead through orders on messaging app LINE in two service areas in Bangkok - Don Mueang and Ratchathewi. Food for delivery included boba tea and chilled meals. Chiang Mai was included as a service area in June.

May 14, 2020: Launch of pilot version of food delivery service in Malaysia

F&B businesses taking orders directly from WhatsApp, Facebook and Instagram shared a customised menu link to pay, check out and track their food order status.

The prepaid plan for partner restaurants included transaction and service fees, while customers paid delivery charges. There were no sign-up fees, contracts, or special devices required. A promotional rate that ended on June 30 was RM25 for 10 orders.

Aug 17, 2020: Launch of reciprocal green lane travel

Cross-border flights between Kuala Lumpur and Singapore resumed with AirAsia, following the announcement of the Reciprocal Green Lane scheme, with restrictions.

Sept 28, 2020: AirAsia looks to lay off staff

Reuters reported that AirAsia sought to lay off hundreds of staff in its Malaysian unit and long-haul arm AirAsia X Bhd, according to state news agency Bernama. AirAsia Malaysia staff retrenched were expected to be rehired after the pandemic and remaining staff would not have to take pay cuts. AirAsia X would undergo wider retrenchment and salaries would be reviewed, with unpaid leave an option. Layoffs were expected to be completed in September for AirAsia Malaysia and October for AirAsia X.

Oct 5, 2020: AirAsia Japan ceases operations

Unable to cope with low demand and high costs, AirAsia ceased its operations of domestic and international flights from its base in Chubu Centrair International Airport. All its flights were cancelled. Other flights into and out of Japan operated by other airlines within the AirAsia Group continued to operate.

Oct 22, 2020: Airline secures loan to raise capital

AirAsia Malaysia CEO Riad Asmat said that "a loan has been approved and disbursed", in response to a Reuters query about a report from the New Straits Times that said the airline had secured a RM300 million (S$98 million) loan to keep it afloat. AirAsia had said it was looking to raise as much as RM2.5 billion by year end, of which RM1.5 billion could be in bank loans.

Dec 29, 2020: Plans to sell stake in Indian operations

AirAsia Group said in a bourse filing that it planned to sell 32.67 per cent of its stake in its Indian operations to Tata Sons for US$37.7 million. It hoped that the sale would allow it to focus on its recovery in key South-east Asian markets. The airline previously owned 49 per cent of AirAsia India.

Jan 13, 2021: Digital platform eyes partnerships for flights

Airasia.com CEO Karen Chan said the company was working on selling more flights on the online platform, including those from other airlines.

Jan 21, 2021: AirAsia Group looks to raise up to US$113 million via private placement

The airline group announced plans to undertake a private placement to raise up to US$113 million, to be used for fuel hedging settlement, aircraft lease and maintenance payments, technology development costs, product and market expansion costs, marketing expenses and general working capital.

In a bourse filing, AirAsia said the proposed exercise would entail the issuance of up to 20 per cent of its total existing shares or 668.4 million shares to be placed with third-party investors to be identified later. The issuance could be implemented in tranches, within six months of regulatory approvals.

Feb 18, 2021: Plans to bring food into Singapore

AirAsia's chief executive Tony Fernandes' LinkedIn post on Feb 17 announced AirAsia Food's venture into Singapore, its first foray into food delivery platform overseas. It plans to charge a commission of 15 per cent, with an early sign-on rate of 8 per cent.

Feb 24, 2021: Leakage of details on AirAsia Food's rates in Singapore

READ MORE: AirAsia food delivery in Singapore to charge merchants S$3 to S$5 on fixed plans