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SINGAPORE – Malaysia’s low-cost carrier AirAsia has launched its food delivery service in Singapore as it continues to seek alternative sources of revenue outside of the struggling aviation sector.
Its airasia food platform will initially feature some 80 restaurants, including Swee Choon Tim Sum Restaurant and No Signboard Seafood. About 300 other restaurants are in the process of being incorporated, AirAsia said on Tuesday (March 2).
The platform will charge restaurants a 15 percent commission per delivery, rather than going ahead with plans for a zero commission model.
The rate is even lower than those offered by the three major food delivery operators: GrabFood, foodpanda, and Deliveroo. AirAsia said the lower commission would in turn lead to lower charges for customers.
AirAsia also said it had recruited about 500 delivery passengers and aims to double that number by the third quarter of the year.
Passengers will deliver within a maximum distance of 20 km from the listed restaurants. The shipping fee typically ranged from $ 2.99 to $ 20, AirAsia added.
CEO Tony Fernandes said, during a virtual press conference, that the airline would seek to bring better value to the food delivery business, with cost reduction being a key aspect.
“Like (how) AirAsia doesn’t have all the luxuries of Singapore Airlines, airasia food, for example, we don’t have maps. We don’t think you really need to know where your driver is because that costs us,” said Mr Fernandes.
“We believe that you will still be able to contact us to find out where your food is and that is an unnecessary luxury.”
He said AirAsia is aware of the stiff competition it will face from the current dominant food delivery players.
“Will we be the largest food delivery service in Singapore? Probably not, but I think we will be a useful segment of the market, we will be a very useful segment for small restaurants.”
Airasia Food seeks to awaken interest in its service by offering unlimited free delivery for two weeks between March 2 and March 16. This will apply to deliveries within 8 km from the point of order.
It has committed to delivering all orders within 60 minutes and will allow customers to earn reward points that can also be used for AirAsia flights.
Fernandes acknowledged that a 60-minute delivery schedule is relatively long, but said it will be shortened.
Lim Ben-Jie, head of e-commerce for the airasia super app, said that businesses will be able to enter the airasia food platform within 48 hours of registration. They will not have to pay any registration fees.
He added that his delivery passengers can earn up to $ 700 per week on average.
Marketing executive Tan Kwang Yu, 27, who requests convenience food delivery services and when there are offers, said he will be interested in using the airasia food app if it can offer a variety of options at a lower price. The speed at which the food can be delivered will also be key, he added.
Research firm Statista has said that online food delivery was a $ 464 million (S $ 616 million) business in Singapore last year.
Nanyang Business School Adjunct Associate Professor Zafar Momin said that while AirAsia is a new entrant on the food delivery scene, it has the advantage of being a well-known company. He noted that your brand and marketing awareness could help you make quick breakthroughs.
But he cautioned: “Profitability has been elusive for most of the established operators in the food delivery business in Singapore and around the world.
“Even if AirAsia’s entry into the local food delivery business takes off and it becomes an established player in the near future, it will face the same challenges as others to become financially viable in the short term.”
Associate Professor Lawrence Loh from the National University of Singapore Business School said AirAsia already has a customer base looking for value-for-money deals, so its food delivery service will have to be consistent with this profile.
On what might be AirAsia’s motivation to diversify its business, Professor Loh said: “It is quite clear that air travel is not going to improve any time in the near future, so some money is better than nothing.”
He added: “There are many companies in the market that have totally changed from their original model … I think this is perhaps the beginning of the movement towards a super application and who knows, they could get out of the aviation business.” “
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