Growth Amidst the Covid-19 Crisis? And Pigs Might Fly! Or Will They for AirAsia?

The Malaysian budget airline AirAsia has announced that it is seeking to launch a flying-taxi business as soon as 2022. In what has been a turbulent time for the airline industry, the company has made diversification plans for both an air-taxi and drone delivery service, to combat the shrinking effects of the Covid-19 pandemic.

Opening up in the flying-taxi market, AirAsia would be following in the footsteps of more than 100 different electric aircraft programs planned and in development worldwide. These include some big names such as Hyundai, Toyota, Airbus, and Boeing. According to AirAsia’s CEO and Co-Founder, Tony Fernandes, the airline is around 18 months away from launching its flying taxi business.        

The company has responded to the pandemic – a global event that has crash-landed the airline industry – by seeking areas for growth. AirAsia has been expanding in the digital space. For example, in 2020, the company launched an app called The Asean ‘super app’ that offers services from travel and shopping to logistics and financial services.            

Drone Delivery Service:

AirAsia expects the begin its drone delivery venture by the end of 2021. The company announced that its logistics unit, Teleport, is partnering with state-backed firm Malaysian Global Innovation and Creativity Centre to develop an urban drone delivery service.

A word of caution? Whilst this is undoubtedly exciting news, it is important to remember that, as with all airlines, AirAsia is experiencing massive reductions in customer numbers and revenue as a result of the pandemic. The company will have to act cautiously if they are to break into this new market without making a loss. Not only could AirAsia make a financial loss from making a rash decision to invest in this new technology, but the company could just as easily tarnish its reputation if this optimistic project backfires and the airline is unable to compete. It is therefore important that the company can build upon its existing customer base to fuel a surge in its drone delivery services. If they cannot break into this market quickly and take advantage of their expertise, then AirAsia may have to abort this project.

All image rights belong to According To A Law Student (ATALS).

What Exactly Are Flying Taxis?

So, how will flying taxis work?

Well, AirAsia hopes to use quadcopters (helicopters with 4 rotors) to transport up to 4 passengers at a time. These flying taxis would be flown by pilots to transport both people and products.

AirAsia would have to consider the cost implications of this move, however. Although the airline is not the first to consider entering this new market, it will have to bear in mind intellectual property law issues. For example, AirAsia will have to protect their idea and designs for the flying taxi through copyright protection and the use of various design rights.   

This is not to say though that AirAsia should necessarily snub this move. If they can gain the protection ahead of other companies in the field, then AirAsia could well gain a head-start over the competition in what could very well turn out to be a lucrative market in the years to come. 

Of course, though, as well as with their proposed drone delivery service, AirAsia needs to be confident that they can effectively penetrate this market. With lost business throughout the Covid-19 pandemic, this costly project could be the undoing of AirAsia. It will likely be a venture with many hurdles along the way, especially because flying-taxis do not even currently exist, and the technology is still in its developmental phase.

It is anyone’s guess how AirAsia will do. However, if the airline incorporates its existing aeronautical knowledge and customer data, then it could very well be flying high in the coming years… Not only would this service be highly innovative, but it will also be easy to use. It is proposed that customers could book these services using their phones and a pilot will collect them and take them to their destinations.

Although it is yet to be announced whether AirAsia will use their current ‘super app’ to allow customers to book these taxis, it would make commercial sense. If the company were to create a new app exclusively for the flying-taxis, then this would inevitably run up their development costs. Seeing as customers can already book flights, hotels, buy insurance policies, and shop through their ‘super app’, AirAsia can expand this even further. This would help bolster the ‘all inclusive’ feeling for their customers. 

What About the Competition?

UBER: It has been in the pipeline for a while that Uber will enter the airline industry. It too is expected to commercialise its ‘sky-taxi’ service under the name ‘Uber Air’. Uber will offer customers short flights using an on-demand service. The company is aiming to reduce the waiting times associated with typical longer-haul flights.        

In terms of the transportation method, Uber Air is also proposing an environmentally friendly alternative to the planes of today. It is proposed that a ‘flight-sharing’ network will be operated by a fleet of electric vertical take-off and landing aircraft (referred to as e-VTOLs). These will be similar to AirAsia’s quadcopters. Consumer flights for Uber Air are expected to start in 2023. Perhaps they can learn from the actions of AirAsia? 

JOBY AVIATION: Announced in December 2020, tech start-up Joby Aviation will acquire Uber Elevate (the flying-taxi division at Uber). AirAsia could well be up against some serious competition when Uber enter the market. Seeing that Uber wishes to integrate its services with Joby Aviation signals its strong desire to streamline its services and ultimately accelerate its plan to bring this service to its customers soon.    

From AirAsia’s point of view, it is clear that the Malaysian airline wants to be one of the pioneers of the flying-taxi industry. On the one hand, AirAsia could hold back and wait to see what impact Uber will have on the industry, learn from their mistakes, and then test the waters. This has its obvious benefits as AirAsia could probably cut down on costs this way by avoiding any errors Uber makes. AirAsia would also be able to cut their losses if they see that customer numbers are not high enough to justify the investment. This is particularly important for a project as big and as risky as this, considering the present slump in AirAsia passengers and injured global economy due to the pandemic. 

On the other hand, what AirAsia seems to want is to establish its name in this future industry, before the likes of Uber. As hinted by Tony Fernandes, AirAsia sees the pandemic as their ‘once in a lifetime moment’ to make a change to their brand. In a move as risky as this, it is certainly interesting to see how far AirAsia progress. 

Uber and AirAsia’s plans are at the forefront of electric travel, so it will certainly be exciting to see how quickly this new industry expands. Although there is sizeable competition in the race to start a flying-taxi service, no one has started to offer it so far. Without any established competitors taking the customers yet, Uber and AirAsia could very well be the architects of this new industry and might just make themselves sky-high profits as the newly established brands.   

Whatever happens, with the electric car market still relatively in its early stages, it will likely take time for electric-powered aircraft to gain traction.       

A Safe Journey for AirAsia?

With many competing airlines announcing massive losses and severe job cuts in the wake of the pandemic, AirAsia has used the pandemic as an opportunity to diversify its business. Although it too has made huge losses as a result of Covid-19, the airline appears to want to use its air travel experience to make an impact on the smaller-distance transportation industry.

That said, there are reasons to be sceptical of this move.

With the severely reduced passenger numbers of the Covid-19 era, AirAsia has been struggling financially. The company reported a fifth straight quarterly loss in November 2020 and has been seeking to raise 2.5 billion Malaysian ringgit (roughly £435 million) through loans and investors. To many, it would seem commercially unwise to splash out when times are as tough as they are now. The airline risks closing down completely if they are unable to turn a relatively quick profit from this venture, and investors will likely be turned off by the idea as they will not believe AirAsia will be able to repay.        

However, (and perhaps unsurprisingly) through the eyes of Tony Fernandes, AirAsia’s future looks bright. The CEO believes that, with the company seeking out further opportunities to expand its services into new areas, and now with the global rollout of vaccination programs, there are many reasons to be optimistic. With the gradual re-opening of the global economy post-Covid-19, and with the likely introduction of vaccine passports, AirAsia may take-off once more…    

This article was written by Tom Bailey. Tom is a final year LLB law student at the University of Law in Guildford, and a Content Writer for According To A Law Student (ATALS). Tom is keen to pursue a career as a Solicitor, having a specific interest in property law.   

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