CEO Spotlight - Tony Fernandes of Capital A

Tony Fernandes, Capital A

Alongside his co-founder, Tony Fernandes acquired AirAsia in late 2001 and relaunched it as a low-cost airline. He become chief executive of Capital A Berhad, formerly AirAsia Group Berhad, in 2018.

Capital A has been steadily developing from an airline to an online travel platform and most recently a super app offering financial services, ride hailing, food delivery and more. 

You recently got shareholder approval to progress from an airline to an aviation and travel group, what are three key tenets of this strategy?

Our transformation, which marks the birth of a low-cost, value-driven aviation and travel services group, is an exciting milestone for us at Capital A. The key tenets of this strategy are diversification, innovation and customer-centricity. We have expanded our offerings beyond traditional airline services, now providing a travel super app and fintech, aviation services businesses, as well as logistics. Embracing innovation and putting our customers at the center of everything we do will be crucial in achieving our vision of delivering the best value at lowest cost for millions of consumers across ASEAN [the Association of Southeast Asian Nations] and beyond.

What do you believe will be the greatest challenges to your success?

Adapting swiftly to market dynamics while maintaining profitability and brand loyalty will require continuous effort and strategic decision-making to ensure we remain ahead with an unwavering commitment to serve the underserved with our best value products and services across the group.

How have you adapted and changed the strategy of Capital A over the course of the pandemic and into the recovery phase?

The decision to pivot into more than just an airline and become a broad-based travel super app based on our rich and vast data was already planned and in the pipeline before the pandemic. While COVID-19 had posed unprecedented challenges, it also helped to fast-track our digital transformation during the downtime in flying, enabling us to adapt and evolve our strategy.

During the recovery phase, we focused on enhancing health and safety protocols, streamlining operations, introducing numerous innovations to make flying more seamless and contactless, whilst strengthening our digital capabilities. We leveraged the flying downtime to accelerate the development of our airasia super app, which has become a pivotal platform to offer a seamless travel experience and diversify revenue streams.

Move (previously AirAsia Digital) now encompasses AirAsia super app and BigPay. Can you update us on progress with the super app and what might be coming?

The progress with AirAsia super app has been remarkable. We have integrated multiple services, including flight bookings for other airlines, hotels and even ride-hailing into a single user-friendly platform. Our super app recorded its highest quarterly average monthly active users of 15 million in 2Q 2023, up 40% year over year with a 102% jump in the number of transactions.

Our fintech arm BigPay has also seen significant growth, growing carded users by 16% year over year in Q2 2023 with now over 1.4 million active users. Gross transaction value also increased 40% year over year in the second quarter of this year.

Looking forward, we are working on expanding the app's features, including additional travel services and partnerships with other travel providers providing even greater convenience, value and choice, with the aim to become the super app of choice for everyone’s travel needs in ASEAN and beyond.

How tough is competition in the super app space in Asia, where there’s Grab, WeChat, Alipay? What makes you think a travel super app can break through?

We see competition as an exciting opportunity to step up our game and leverage our unique value proposition as a travel-focused super app that has the advantage of being associated with an airline. Importantly, all of the products and services we offer are not only focused on delivering the best value in their respective industries with high quality and low cost, but also leverage off one another to fuel growth momentum across all business divisions, underpinned by the aviation business. With our extensive travel expertise, dedicated long-standing customer base, rich data and continuous innovation, we are confident that we will not only thrive but also capture a substantial market share in this dynamic and competitive landscape. We see competition as healthy and are inspired by the challenge and remain optimistic about the incredible growth potential that lies ahead for our platform.

In the past you have described AirAsia.com as an “OTA challenger” and set a goal of 50% of revenue on the platform from non-AirAsia flights by the end of 2024. Where are you with that target?

AirAsia.com, which is now "AirAsia Super App" as an OTA challenger, has made substantial progress. The goal to achieve 50% revenue from non-airline services remains on track. We are now the leading OTA in the region selling hundreds of airlines and thousands of hotels - all at the best value and cost for flights and accommodation deals. We have witnessed steady growth in non-AirAsia flight bookings alongside strong sales growth for AirAsia flight tickets, thanks to the rising demand for air travel post pandemic. Our ongoing efforts to enhance the user experience and diversify offerings are driving us to become a formidable player in the OTA space.

The AirAsia customer base and loyalty program played a role in the decision to become an online travel agency. How are you leveraging that customer base and what more can you do?

Our AirAsia customer base and loyalty program have been instrumental in our transition to an OTA. By leveraging the significant data built up over 20 years and leveraging insights from our loyal customers, we can tailor our offerings to their preferences, enhancing their travel experiences. Additionally, we have been continuing to actively partner with other synergistic businesses to create cross-promotional opportunities, further increasing the value and
engagement for our customers.

Customers have been enthusiastic about redeeming their rewards for various services, including food and other offerings. While I don't have the exact figures at hand, I can say that the uptake has been encouraging, and we continue to refine our loyalty program to offer even more attractive incentives.

As someone who has been pioneering in the aviation sector, what were your first thoughts when talk of generative artificial intelligence began?

I am a strong proponent of artificial intelligence. We plan to incorporate more AI in the next six months in our super app, BigPay and our operations, including route network, fleet planning and fuel optimization. The potential of AI to transform various aspects of the aviation and travel industry was evident, from streamlining operations to personalizing customer experiences. We introduced our first AI chatbot just prior to the pandemic, which was incredible timing. When we were flying close to 100 million passengers a year pre-COVID, manpower alone couldn’t have handled the unprecedented surge in customer queries during the pandemic, and our AI chatbot handled around 80% of these on the spot.

We have now launched a new and enhanced chatbot, which is even better equipped to handle the majority of customer queries. However as chatbots are ever evolving, we ensure we strike the right balance with a team of customer service agents to handle more complex queries the chatbot is unable to solve directly.

How do you see generative AI improving elements of airline operations and retailing?

As a company that has always been at the forefront of digital innovation, we believe that generative AI is an interesting technology that we should actively engage. We will continue to explore opportunities to integrate AI into other parts of the business and innovate to ensure the highest standards of customer care in all that we do, alongside the best value products and services, to best meet our guests' requirements.

What keeps you awake at night?

I always say if you don’t evolve you die in this industry. So I’m constantly thinking about new innovations, products, partnerships, services and more to ensure we remain resilient in the face of challenges, deliver exceptional experiences and stay ahead of the curve.

Our vision with super app is to make travel more accessible, affordable and putting a world of experiences within reach with just a single travel super app.

Tony Fernandes, Capital A

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I have two goals – firstly, giving every individual not just a job, but a pathway to a better life within our company. Capital A has a unique culture where we don’t limit our staff to dream. I encourage Allstars [employees] to dare to dream and not take no for an answer. We have many cabin crews that have advanced their careers into bigger roles within the company. One of our pilots started as an AirAsia dispatch boy.

We want to turn Allstars from raw diamonds into diamonds, for them to believe that they can achieve anything in their life, and my number one job as the CEO is to support that. At Capital A, we want to create a world-class workforce that is capable of achieving remarkable feats. We would like to disrupt the norm by treating our AirAsia ride drivers as our partners, ensuring their well-being are taken care of and that they are fairly compensated, so in return they can give us better service.

My second goal is to make a product that can change people’s lives. Our airline has did just that more than 20 years ago by making flying accessible for everyone. Our digital bank, BigPay, now allows the common man to access loans easily. Our logistics arm, Teleport, aims to revolutionize logistics, making it both efficient and economical. Our vision with super app is to make travel more accessible, affordable and putting a world of experiences within reach with just a single travel super app. By marrying technology with affordability, we're rewriting the rules and empowering people.

If and when you decide to step down or move on, what do you want your legacy to be?

The mark of a good leader is knowing when to go, and leaving a company that will do even better after the leadership changes. If you have left your company, and it goes to greater heights, then you know you have succeeded as a leader. We have a solid succession plan in the works, but I’m committed to the next five years to focus on Capital A. I am guiding a new generation of leaders across the group. I will continue to find things to do, I will never stop working. One area I am interested in is low–cost health care. My father was a socialist doctor who didn't believe in private medicine. That's why I want to build a low-cost hospital. And finally, education, which I am a strong proponent of. All of this will be based on my vision of serving the underserved, giving the common man the best chance in life.