Annual Report 2019

AIRLINE ANCILLARY In line with the reorganisation of AirAsia in 2019, we now categorise our Airline Ancillary business into three pillars – Core, Inflight and Partnership Products and Services. Core ancillary comprises baggage (inclusive of express baggage and priority baggage collection at check-out), Pick-A-Seat, priority boarding, etc, while Inflight includes services offered on board such as food and beverages, duty-free as well as merchandise shopping. Partnership Products and Services encompass travel-related products provided by our partners, such as travel insurance (Tune Protect), travel connectivity (Fly-Thru), AirAsia advertisements, inflight connectivity (AirAsia WiFi) and a new e-commerce business, OURSHOP, which brings together duty-free, select ASEAN products and other non-duty free products that can be purchased online by anyone, including non-AirAsia guests. Along with digitalisation of AirAsia, we are able to leverage the data we have from close to 100 million guests a year to better understand their preferences and buying behaviour thus increase sales of our ancillary products and services. Using data analysis and machine learning (ML), we seek to increase the number of guests that enter the purchase funnel, and improve their conversion rate by enhancing the range, relevance and pricing of products offered. Results are already beginning to show. In 2019, we grew our Airline Ancillary revenue by 13% to RM2.1 billion. Pick-A-Seat Pick-A-Seat enables guests to choose their seats prior to their flight. Better understanding of guests’ preferences led to an offer and pricing re-organisation for seat selection. Together with improved accuracy and relevance of retargeting marketing campaigns across a broad variety of channels from push notifications, in-app Ourchat messenger, emails and social media, revenue from Pick-A-Seat increased by 24%. Baggage Implementing ML, we are optimising our baggage pricing according to the different routes while also targeting the most relevant offers to guests based on their propensity to pre-book their baggage. Efforts such as these resulted in an 17% increase in baggage revenue. Moving forward, we will continue to expand our smart offer recommendation engine to develop even more personalised bundles and promotions for enhanced revenue. Inflight Food & Beverage As always, we continued to innovate on our inflight menu, Santan, collaborating with celebrity chefs and introducing attractively priced combo meals while also enhancing our beverage and snacks offerings under the T&Co brand. This led to a 7% increase in revenue for Santan to RM119.5 million and a 11% year-on-year increase in T&Co’s revenue, totalling RM3.1 million. A highlight was to engage with Korean Chef Hong Suk-Chun, who developed a Dakgangjeong (sweet and spicy chicken) meal for our flights; and Thai Chef Hong Thaimee, who launched the Inspi(RED) Burger. Both gourmet delights have been made available on all our regional flights, as were a new Thai Basil Chicken with Rice, and Roasted Chicken with Black Pepper Sauce. We also launched some destination-specific meals catering to local tastes, such as Mapo Tofu with Rice, Nasi Padang with Prawn Crackers, Glutinous Rice with Chicken and Dim Sum Combo, Superior Fried Rice with Chicken Satay and, for vegetarians, a popular Hyderabadi Vegetable Biryani with Kofta in Tomato Curry. To sweeten the palate, T&Co introduced the in-vogue burnt cheesecake and classics such as pineapple tarts. Meanwhile, they have further filled their drinks cart with a number of innovations including Malaysians’ perennial favourite, teh tarik, as well as the long-awaited ASEAN Blend Drip Bag, using choice coffee beans from the region. Stimulating greater uptake of our enhanced F&B offerings, we made available Meals of the Month including snacks and beverages as well as other value-for-money combo selections. We also launched Santan Xpress, allowing guests to pre-book meals up to four hours prior to their flights. On shorter flights, we introduced Grab & Go Snack boxes. In addition, we have started targeting guests who do not purchase meals when they book their flights, reminding them of our tempting offers right up to the day of their flight. Along with digitalisation of AirAsia, we are able to leverage the data we have from close to 100 million guests a year to better understand their preferences and buying behaviour. 102 MORE THAN JUST AN AIRLINE > BUSINESS REVIEW (CONT’D)