April 26 2023

Revisiting the fintech ambitions of AirAsia

During the pandemic, the idea of a travel-focused super app built on top of an airline and focused on the Asia-Pacific region seemed iffy. After all, international travel was grounded in Asia for longer than anywhere else in the world. But with the pandemic in the rearview mirror at last, Capital A CEO Tony Fernandes’ idea is starting to make more sense. All the groundwork AirAsia did to build its super app may come to fruition before long.

The more we think about it, the more we believe that if a super app should start from transportation, it should be air travel. The reason is that the potential to bundle products together is much higher than if the original service is ride-hailing. Just think about airline miles and such. And people spend much more when they fly than they do on a taxi or the equivalent.

So, can Capital A make it happen? Well, it experienced a setback last year when it was denied a digital banking license in Malaysia. We cannot blame the Malaysian central bank though. Capital A’s finances were in suboptimal condition at the time.

It may turn out to be for the best. If Capital A wants to scale its fintech services rapidly, being beholden to all the requirements for holders of digital banking licenses is not ideal. Instead, it can launch any services that do not require a banking license. For instance, Capital A offers insurance, investment opportunities, remittances and social fundraising through the airasia money marketplace launched in March 2022.

Many more products are available through BigPay Later Sdn Bhd, a wholly-owned subsidiary within the BigPay group and a digital money lending license holder – the next best thing to a banking license. In March 2022, BigPay rolled out its first personal loan facility for Malaysian customers.

Meanwhile, the airasia Super App managed to break even in the second quarter of FY2022 and reached an EBITDA of RM15.8 million in the third quarter as gross booking value jumped 49% quarter on quarter. At a recent analysts’ briefing, Capital A said 4QFY2022 looks even better.  

Tony Fernandes is still keen for the digital units of his company to go public, but first he needs to sort out the PN17 distressed entity designation the company has had since January 2022. Fernandes has said he expects the designation to be lifted this year.