AirAsia Group Berhad strengthens SuperApp during the Covid-19 Pandemic

Many times, the world has gone through economic crises and one of the worst is the Covid-19 pandemic. This pandemic has spread across the globe and various policies to limit people's mobility are implemented such as flight restrictions that affect airlines business. With a significant reduction in the number of passengers, the revenue stream from airline passengers has also decreased significantly. This case study explains the business decisions made by AirAsia in the face of the Covid-19 pandemic. The Covid-19 challenges companies to respond and run their operations in new, effective, and efficient ways to continue the business. We use a descriptive case study approach with PEST (Political, Economic, Social, and Technology) and SWOT analysis (Strength, Weaknesses, Opportunity, and Threats) to determine the internal and external factors used to monitor and evaluate business decisions. We find that AirAsia Group Berhad has an excellent opportunity to make AirAsia’s SuperApp even more developed amidst the Covid-19 pandemic and become a new revenue stream. However, AirAsia management must be wary of its big competitors who are more experienced in digital applications.


Introduction
The aircraft industry started less than 11 decades ago, but from year to year, the number of airlines worldwide continues to grow and is set to reach close to 40,000,000 (Mamrina et al., 2020).The number of passengers continues to grow; compared to previous years, it is estimated that it will double and reach 7.8 billion by 2036 (Mazareanu, 2019).This is why many industries are developing this field, and Malaysia is no exception.There are many airlines in Malaysia, such as Malaysia Airlines, Malindo Air, Firefly, and the Center for Aviation, but the largest airline in Malaysia is AirAsia.
AirAsia Group Berhad is a company well known for its air transportation business line.AirAsia Berhad was registered in 1993, and its operations started in 1996.The airline operates in ASEAN and Asia and has 388 flight routes.Air Asia Group Berhad is headquartered in Malaysia and has branches in Indonesia, the Philippines, Thailand, India, and Japan.Included in the category of low-cost carrier (LCC), this is in accordance with its vision, which is to become the airline with the lowest cost in each market.Low cost has become a competitive advantage of AirAsia.In its operations, AirAsia, which is a low-cost carrier (LCC), has the slogan "Now everyone can fly" and is coordinated by executive Tony Fernandes.AirAsia not only provides flight services but also helps find places to stay during the trip, various holiday packages, and activity information on the official website.AirAsia has several goals going forward, and the main goal is to become the largest low-cost airline in Asia.The next goal is to ensure that their slogan works and to maintain great client connections with better media techniques, and continuously advise clients on improving their organization as is known that AirAsia has four affiliates in countries such as Thailand, Indonesia, Philippines, and Japan.
There are so many non-Asian countries with low-cost flights, but right now, each low-cost airline is struggling with lifestyle changes due to economic conditions (lack of passengers) and  Lockdowns in various countries have finally ended local and international flights.Therefore, it is necessary to have a strategy to anticipate the current crisis.In September 2020, AirAsia CEO Tony Fernandes had a meeting with Tata Sons management.Tata Sons is proposing fundamental changes to how the industry will operate during the Covid-19 pandemic.Tony Fernandes is not comfortable with the idea, where Tony Fernandes always wants to have full control over the change authority at AirAsia.Tony's style of staying in control is an integral part of AirAsia's business plan (Mohammad, 2021).
This paper is organized as follows.The second section is review of previous related literatures.The third section is the methodology of this paper.The fourth section is the results and discussion of this paper.The last section concludes the entire paper.

Review of related literature
In the last four decades, revenue management has adapted to changes in technology and business models in the competitive landscape (Vinod, 2021).This is done so that it remains relevant and can continue during the Covid-19 period and beyond.There are four recommendations for survival during the Covid-19 period, namely cargo, flight schedules, airline pricing, and revenue management that support airline revenue planning (Vinod, 2021).Usually, airlines that carry passengers also carry cargo in the belly of the plane.In a time of a pandemic where passengers are drastically reduced like this, the airline is using cargo flights to generate cash flow.Airlines also need to reorganize their data and flight schedules with reduced passenger capacity, market, frequency, and fleet composition.Another thing that is also important is to rethink the profitability of flight routes.
Companies need to use physical assets, human resources, and tangible and intangible organizational assets to manage their competitive conditions (Caseiro and Coelho, 2019).Innovation has been a major contributor to business success, especially in a competitive and complex environment (Rajapathirana and Hui, 2018).Innovation, entrepreneurship, and knowledge have become the basis for competitiveness and economic growth (Chousa et al., 2020).In this time of the Covid-19 pandemic, digitalization technology has become more critical.In connection with the Covid-19 pandemic, a proactive attitude towards e-business has a direct impact on organizational agility in responding to the Covid-19 crisis, where this condition forces organization that have used e-business as a second business channel to re-prioritize their business processes and activities.On innovative e-business solutions (Omoush et al., 2020).
Digitalization is a high technology that can improve industrial performance and make people's daily lives more comfortable (Zhou, 2013).Digitalization is a strategy that is considered important in the aviation industry in order to increase productivity and attract more customers (La et al., 2021).Investing in information technology (IT) during difficult economic times can extend periods of profit when the industry is facing many challenges (Altschuller et al., 2010).(Oh and Teo, 2006) states that high IT skills and proactive behavior are significant determinants of increasing organizational resilience during times of crisis.

Methodology
This study uses secondary data from various sources.The data obtained from The International Civil Aviation Organization (ICAO) website (https://icao.int) for the periodic data of airlines worldwide, including net profit of the airlines, the number of passengers, and the income changes of the airlines.We also use the data from AirAsia Group Berhad website (https://airasia.com)for their business line, the financial statement, and the information about AirAsia SuperApp.We use data from a website of business data platform Statista (https://statista.com) for the AirAsia Group's market share.We also conduct PEST analysis (Political, Economic, Social, and Technology) and SWOT analysis (Strength, Weaknesses, Opportunity, and Threats).This study is qualitative descriptive research to find out through the data whether AirAsia Group can make AirAsia SuperApp their new revenue stream or not because of their decrease revenue condition during Covid-19 pandemic.

Results and Discussion
A glimpse of the spread of the Covid-19 virus was initially detected in Wuhan, China, in December 2019 (Jiang et al., 2020), while in the United States, Europe, and in the West, it was earlier.
The COVID-19 virus, which spreads worldwide, was declared a pandemic by WHO in March 2020.Previously, in 2003 there was an outbreak of SARS; in 2014, there was the Ebola virus, and in 2015 MERS disease also affected the volume of air traffic so that it decreased.Restrictions on community mobility are also applied.The impact of this pandemic has hit many businesses around the world, and the tourism industry, particularly the aviation sector, has been hardest hit as services that require meeting customers are limited or even unavailable (Dunn, 2020).The International Civil Aviation Organization (ICAO) estimates that the Covid-19 pandemic will reduce air passenger traffic by nearly 3 billion people by the end of 2020 (ICAO, 2020), causing airlines to reduce their operations by more than 60% (Josephs, 2020).IATA estimates that airline revenues will decrease by USD314 billion or 55% from the previous year (IATA, 2020).For example, capital injections, loans, tax deferrals, and reductions in tax obligations, which until mid-May 2020, the amount of assistance has been disbursed, amounting to USD123 billion (Bailey, 2020).The loss of this amount of revenue causes airlines to get into liquidity problems, then seek a settlement in credit lines or other channels to support their finances.IATA estimates that air travel will not recover until 2024 (IATA, 2020).Covid-19 is a challenge for companies to respond immediately and run their operations in new, effective, and efficient ways to continue their business.This pandemic has provided a new opportunity to study the defining factors and role of e-business solutions in global crises and those that disrupt offline activities and human life (Al-Omoush et al., 2020).
The pandemic has further delayed any recovery if there are no future plans for business continuity.The problem of the pandemic and the uncertain situation due to barely seeing a stable economic environment contributed to the pessimistic prospects of the aviation industry.The only hope is that the arrival of a vaccine in the near future can guarantee the reopening of the tourism and business travel sectors.Finally, AirAsia's current top managers are entrusted with developing sustainable strategies in the face of rising operating costs for airlines in a competitive and no-revenue environment during Covid-19.Most recently, the airline company engaged Navitaire-tech entity to build its own booking site.This will be a first for any airline at AirAsia.
Following the travel ban policy from various countries, Air Asia Group Bhd suffered a loss of RM992.89 million in the second quarter of 2020 or a fall of around 96% from the same period in the previous year.Management said that the decline in revenue was because 42% of its revenue contribution was from the airline business line, which experienced a significant decrease in the number of passengers during the Covid-19 pandemic.
In addition to the decline in revenue, they also suffered losses throughout 2020, where the biggest loss was in the fourth quarter of 2020, amounting to RM5,866,704.Various methods are implemented in order to be cost-efficient and survive during the pandemic, including reducing employees by up to 30% (Harper, 2020).
To maintain its revenue growth, AirAsia Group decided to expand into the digital business and create a new branding, "AirAsia Digital," which consists of several key digital business lines, namely AirAsia.comSuperApp, Teleport's e-commerce logistics supplier.Regarding digital business diversification during the pandemic, AirAsia Group CEO Tony Fernandes said: "This is our Plan A to diversify our revenue.This process didn't start during Covid-19.It started two years ago (in 2018)."This AirAsia Digital business line will become the new focus of the AirAsia Group, after previously focusing on airlines.
Most recently, in mid-2021, AirAsia Digital has partnered with Gojek for Gojek Thailand operations.In order to expand in the ASEAN region, AirAsia Digital handles Gojek's operations in Thailand, and Gojek will become a shareholder in AirAsia SuperApp with a market value of around USD 1 billion.AirAsia CEO Tony Fernandes said: "We already have a completely digital economy ecosystem.We have successfully built more than 15 different non-airline products and lifestyle services on our digital e-commerce platform in Malaysia.Now is the time to take it to the next level.In response to our overwhelming regional demand, we set our sights on bringing our SuperApp offerings to all of our major markets, following a successful launch in Thailand.All of our digital businesses are growing from strength to strength, and through this alliance, our goal of becoming the ASEAN SuperApp of choice is fast becoming a reality.(AirAsia, 2021a) " It appears from this partnership strategy that the goal of this SuperApp is to dominate the ASEAN market.AirAsia Digital's three main businesses: a. AirAsia SuperApp.An application that is a platform for traveling, lifestyle, and offering rewards for users.This application provides flight data, hotels, SNAP (flight and hotel packages), culinary, online taxi and motorcycle taxi transportation, and others.b.Teleport Logistics.Cross-border logistics operations cover goods delivery and e-commerce.This teleport leverages AirAsia's existing partners and network.c.BigPay Fintech.Focusing on payment solutions, remittances, loans, and soon-to-be a virtual bank (AirAsia, 2021a).

PEST Analysis
PEST analysis is needed to determine the external factors that influence business decisions.Because AirAsia is in a business called SuperApp, such as Grab and Gojek.It shows how the political, economic, social, and technological environment strengthens or weakens a firm's operations.The four important factors to be analyzed in an organization so that business decisions can be made better.any company.This is the reason why AirAsia positions safety as a priority.2. AirAsia has managed to understand the needs of its Asian market customers and has provided them with a low-cost option with In addition, the way in which additional services such as hotel bookings demonstrate AirAsia's ability to take advantage of technological advantages.As well as the new branding that they are currently launching by good service quality.They have succeeded in creating value for the amount the customer is paying.To support its customers through quality service, AirAsia has managed to engage staff who can speak multiple languages, especially Asian languages, to better serve its customers.
AirAsia is now also integrating the Big Pay e-wallet into the AirAsia app.This company has been doing business using digital technology for a long time.AirAsia decided to expand into the digital business and create new branding, "AirAsia Digital," which consists of several key digital business lines, namely SuperApp as a Teleport e-commerce logistics distributor to become the number one market in the digital business sector and compete with other digital companies such as Gojek, Grab, Shopee, etc.
becoming Super App, people will open the AirAsia application every day to use the various services offered in it apart from booking flights.2. Companies leverage and use artificial intelligence in their operations to cut costs.AirAsia also uses its app to reward frequent flyers with points and make them more loyal by Air Asia tries to stay abreast of technological developments and digital media.The airline has a strong presence on social media such as Instagram and continues to post the latest updates and discounts offered by the airline on various routes.The company promotes online booking, hotel booking, car rental, etc. AirAsia runs the GO holiday online program, where you can book holiday packages online.With the latest technology, the company has succeeded in increasing fuel efficiency while providing consumers with a more luxurious and easier ride.3. AirAsia has also used in-air Wi-Fi, which can be charged.This will make it easier for consumers by providing free Wi-Fi when flying.providing bonuses.

SWOT Analysis
For this SWOT analysis, we start from the "Strength".First, AirAsia is well-known worldwide.AirAsia has been awarded as the best LCC airline in 2021 from Skytrax.Based on a survey followed by consumers in more than 100 countries, AirAsia received 13.42 million votes for being the airline most preferred by air users.Second, its market share in Southeast Asia is large.The market share of the AirAsia brand in Southeast Asia and India is quite large, so people are already familiar with the AirAsia brand.However, penetration of AirAsia's SuperApp will not be an easy task because this SuperApp is a new product in the digital application world.Third, AirAsia has a large enough capital for its development.AirAsia's digital business requires around USD300 million, and CEO Tony Fernandes said that AirAsia Digital is in the process of discussing its investment.In its release on the https://www.airasia.comwebsite in September 2021, the source of capital for AirAsia Group's future steps has been obtained from a private capital placement of RM336.5 million, a loan scheme from Danajamin (two banks and several financial institutions), issuance of new shares worth RM1 billion, as well as investment in fintech BigPay of USD100 million.Fourth, AirAsia Digital's collaboration with the other technology companies, such as Thailand's Gojek.AirAsia Digital, through SuperApp took over the operations of Gojek Thailand in early July 2021 in exchange for a 4.76% stake for Gojek in AirAsia Digital.As per its release on the website https://www.airasia.com in September 2021, AirAsia's desire is to expand its expansion efforts in ASEAN by offering it on SuperApp in all major markets, following its expansion in Thailand.We continue to the weaknesses of this airline.First, not many people know about AirAsia's SuperApp.AirAsia is known as a low-cost carrier airline company, so many people do not know about this SuperApp from AirAsia Digital.Second, it is classified as a newcomer in the field of technology.AirAsia Digital's new line of business plans started in 2018, while other similar competitors have already started, so they are more experienced than AirAsia Digital.
Regarding opportunities, we discuss several issues as follows.First, AirAsia Digital's SuperApp can be placed as a revenue stream when there are many vacancies in flight schedules during the Covid-19 period.During the Covid-19 pandemic, where there were many flight restrictions, AirAsia's revenue stream from the airline business decreased and even lost money.However, in Q4 2020, AirAsia SuperApp was able to increase revenue by 15% to RM12 million.This SuperApp is predicted to be one of the mainstay businesses of AirAsia Group Berhad.Second, many customers are loyal to the brand.AirAsia claims that they have a customer database of 60 million customers.This makes AirAsia's SuperApp easier to penetrate to AirAsia's loyal customers.Moreover, AirAsia also has a website airasia.com that can be accessed by its airline customers for ticket reservations.Third, the number of internet users in Southeast Asia.As of November 2020, internet users in Southeast Asia reached 40 million people, an increase of four times from 2019 (Liputan6, 2020).In addition, there was also a 30% surge in internet technology-based service users in various sectors, particularly in the education, food, and loan sectors.There has been rapid growth in the e-commerce sector during the Covid-19 pandemic.E-commerce transactions reached USD 62 billion in 2020 and is predicted to reach USD 172 billion in 2025.This fact makes AirAsia's SuperApp has a great opportunity to penetrate the Southeast Asian internet user market.
We then continue to discuss two threats.First, the emergence of other application competitors.With the increasingly booming use of internet applications during this pandemic, it will certainly attract a number of parties to participate in enlivening the internet application market in Southeast Asia, both for local and international markets.This certainly deserves to be taken into account by AirAsia Digital as a threat to its market penetration efforts.Second, big competitors, such as Gojek and Grab, have long emerged and dominated the ride-hailing application market.AirAsia's SuperApp ambition to become the main competitor to Gojek and Grab in Southeast Asia is a big undertaking.Moreover, Gojek and Grab have already entered the ride-hailing application market, and the public is familiar with the two applications.

Conclusion
The state of the economic crisis during the Covid-19 pandemic hit almost all sectors, and even the airline sector was among the worst affected.Various policies that limit people's mobility and travel restrictions make airlines have to bear a significant decrease in revenue.AirAsia was among those affected and even suffered losses.However, in times of crisis, companies are forced to innovate in order to survive, including by doing digitalization business as AirAsia Digital did with its SuperApp.
With the strong revenue growth of the SuperApp and the large revenue contribution from AirAsia Digital to the AirAsia Group at a time when revenue from the airline business is at a standstill, this SuperApp could be a new revenue stream for the AirAsia Group.This is an effort by the management of AirAsia Group Berhad to maintain AirAsia's business so that it remains standing in the midst of the Covid-19 pandemic in addition to carrying out various efficiencies.Judging from the PEST and SWOT analysis, AirAsia Group Berhad has an opportunity to make SuperApp grow even more in the midst of the Covid-19 pandemic and expand in countries in Southeast Asia.However, their management must be aware of their big competitors who are more experienced in the world of digital applications.By getting a new revenue stream, AirAsia will be able to survive the Covid-19 pandemic and continue until the pandemic is over.Therefore, we see AirAsia Group's management efforts to develop SuperApp during this pandemic as optimism from management, along with AirAsia's management ambition to make one of its digital business lines a competitor to Gojek and Grab in Southeast Asia.

Figure 1 .
Figure 1.The Business Line of AirAsia Group Berhad and AirAsia Digital

Table 1 .
Airline Net Profit Worldwide

Table 2 .
Changes in Income from Airline Passengers in Asia (compared to 2019)

Table 3 .
Total revenue of AirAsia Group Berhad in 2014-2020