Asia’s biggest low-cost carrier, AirAsia, has plans to merge the inflight duty free businesses of its eight regionally-based airline operations into a single entity that is conservatively expected to generate sales of $100m annually. And Hong Kong-based Inflight Sales Group will be its preferred supplier.

 

In March this year, the airline – run by entrepreneur and Chairman of UK football club Queens Park Rangers – hired former Tourvest Duty Free Chief Commercial Officer, Max Williams (below), to spearhead the new inflight business called Big Retail.

 

Among the new unit’s core aims is to streamline the inflight offers of AirAsia’s various airline operations into a unified structure, at the same time maximising efficiencies and developing a pre-order system for its expected 50m passengers by 2015.

 

Speaking to TRBusiness earlier today, William said: “We estimate that duty free for AirAsia will generate revenues of $100m once all (eight) AOC’s are operating and delivering both on-board and pre-order duty free. By 2015, we’ll be offering the service across four AOC’s generating duty free sales of $60m.” The figures exclude on-board F&B sales.

 

These on-board and pre-order revenue projections are conservative, based on AirAsia’s predicted 50m passengers spending just $2 per head on average.

 

While this will be the first time that AirAsia has consolidated its inflight sales across its fleet at 16 Asian hubs in this manner, Williams say the offer on-board will still reflect relevant markets such as Malaysia, Thailand, Indonesia and the Philippines.

 

“We will ensure we have regional products on board that are tailored to suit the passengers,” he said. “Where we will score is by offering a much wider range of products through pre-order by creating our own retail e-commerce site.”

 

HIGH CONVERSION ON F&B

AirAsia already allows its customers to pre-order meals through its booking engine which Williams claims has a 60% conversion rate. From the end of next month, the airline will trial 25-30 retail products at this early point of the travel process to gauge the level of interest.

 

With an e-commerce site in place, Williams says that brands will get exposure to AirAsia’s database; of the airline’s current 42.6m passengers, 12m are subscribed to receive communications, a strong number given that UK retail chain Boots has 17m using its long-established Advantage Card loyalty scheme.

 

The tie-up with ISG gives instant access to the concessionaire’s wide product portfolio and also allows Air Asia to take full advantage of its buying power. Current inflight concessionaires serving AirAsia include DFASS for AirAsia X in Malaysia, and King Power for AirAsia Thailand.