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AirAsia aims to “democratise” food delivery service in SG by offering lowest commission rates

AirAsia's customary 15 per cent commission is going down to eight per cent for businesses that sign up before next month

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Singapore—AirAsia announced on Thursday (Feb 18) that it will be beginning food delivery services in Singapore next month.

What’s notable about the low-cost airline’s announcement is that it is seeking far lower commissions than its competitors.

And food delivery services are not the only thing AirAsia will be offering. The carrier has also asked hotels, cosmetics, beauty and fresh produce companies to tentatively sign up for an e-commerce venture to be launched at a later date.

This is the first time AirAsia is offering services outside Malaysia, where it touts itself as “Your new fav food delivery service!”

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It started food deliveries in Malaysia in May 2020, after seeing that services there were charging “exorbitant commission rates”, said the head of AirAsia food, Sabrina Khaw.

In three months, the company said, it had taken 15,000 food orders from 500 restaurants.

In a media release, Mr Tony Fernandes, the company’s CEO, called  Singapore “the most vibrant market in the region”, if not the whole world.

“We are super excited to kickstart AirAsia food in Singapore,” as AirAsia’s delivery teams have already “painted the town red in Malaysia and now we are ready to take on the streets of Singapore”.

He said in an announcement via LinkedIn, “As a disruptive leader, we’re ready to take on the new challenge in Singapore, providing value, simplicity and inclusivity for everyone.”

AirAsia has dangled an inviting carrot in front of Singapore’s merchants, with its customary 15 per cent commission going down to eight per cent for businesses that sign up before next month.

A sweet deal indeed, given that popular delivery services in Singapore, including GrabFood, charge a commission of 25 to 30 per cent.

The AirAsia CEO said that the low commission rate would serve to “democratise” the food delivery industry.

The Covid-19 pandemic exacted a heavy toll on the carrier, as on other airlines around the world. The company laid off many workers last year and lost over MYR 1 billion, which is approximately S$329 million.

A report last month said AirAsia’s stock is down by almost 22 per cent.

In an interview with CNBC, Mr Fernandes expressed optimism that AirAsia will resume flying on most of its routes later this year, but he did not expect passenger capacity to return to pre-pandemic levels for another two years.

Hence, the pivot to other sources of revenue is understandable.

/TISG

Read also: AirAsia’s Fernandes returns as boss after Airbus probe

AirAsia’s Fernandes returns as boss after Airbus probe

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