AirAsia to enter the Singapore food delivery market with AirAsia Food

Planning to order in? Your next meal might be delivered by…AirAsia. 

It’s a strange pivot to be sure (the Singapore Airlines Academy, in contrast, seems like a much more reasonable adjacency), but the news broke yesterday that AirAsia Food has already obtained all the necessary approvals from the Singapore authorities, and will launch from March 2021.

Not content to stick to just food, AirAsia is also soliciting interest from beauty, fashion and fresh produce retailers, as well as hotels. Interested merchants can email food@airasia.com for more details. 

What is AirAsia Food?

Contrary to popular belief, AirAsia Food is not an opportunity to try AirAsia’s inflight meals on the ground. AirAsia already set up their own cafe in Kuala Lumpur called Santan (no, not Satan) for those who crave that sort of thing. 

AirAsia Food is a full-fledged food delivery service, conceptualised back in March 2020 when Malaysia’s Movement Control Order (MCO) first grounded flights. Operations began in May 2020, and 15,000 orders from 500 restaurants were delivered in the first three months of operation. 

Singapore represents AirAsia Food’s first overseas venture, and the company plans to shake up the market here by offering lower fees. There’s a bit of confusion as to how this is going to work. The Straits Times (quoting the head of Air Asia Food) says that the platform runs on a “zero-commission model”, where merchants choose from flat-rate plans powering payment and delivery.

In contrast, Today Online (quoting a press release) claims that merchants will be charged a commission of 15% (going as low as 8% for the first month if they sign on before March), significantly lower than the 25-35% that competitors like GrabFood and Deliveroo are charging. 

Whatever the case, it’s certainly going to put downward pressure on pricing, a boon for restaurants and consumers (who pay higher prices when the restaurants mark up their delivery menu to cover commissions).

You may remember that food delivery commissions came under the spotlight back in April last year when the circuit breaker began, with restaurant owners petitioning the government to force delivery platforms to lower their commissions by at least 15%. As far as I know, there wasn’t any government intervention- perhaps this is the free market correction they were waiting for. 

Will I be able to earn/burn BIG points on AirAsia Food?

Given its airline backing, the natural question for miles chasers is whether AirAsia BIG points can be earned or burned through AirAsia Food. 

In Malaysia, users can earn and burn BIG points at the following rates:

• Earn: RM1= 1 BIG point (first order earns 5X points for limited time)
• Redeem: RM1= 125 BIG points

It’s basically a 0.8% rebate, which isn’t particularly life-changing- but consider how GrabFood in Singapore offers the equivalent of a 0.2-0.4% rebate via GrabRewards. I strongly suspect we’ll see earning and burning opportunities for BIG points to be offered in Singapore soon, if not at launch, then sometime shortly after. 

As a reminder, AirAsia BIG points can currently be earned with the following banks:

	⇒
500 DBS Points		1,500 BIG points
	⇒
2,000 TREATS		1,000 BIG points

I don’t know enough about the BIG loyalty program to talk about the best uses of points, but here’s some analysis from a Malaysian blog on the subject. 

Conclusion

It’s no secret that AirAsia is in some major financial trouble at the moment, with auditor Ernst & Young casting doubt on the carrier’s ability to continue as a going concern back in July 2020. Fast forward half a year, and the travel situation hasn’t improved by much. It’s unsurprising then, that they’re having to get creative with the revenue generation ideas.

I don’t see food delivery as a natural adjacent vertical for an airline, but then again, Tony Fernandes has probably forgotten more about business than I’ll ever know. I’m going to take this purely from a consumer’s perspective: new entrant= more acquisition promotions= cheaper food for me. 

At least for a while.