Suchitra Narayanan, group head of risk and insurance, AirAsia Berhad, explains why the low-cost airline made the shift from being asset heavy to asset light and how the company’s risk profile has changed as a result
Airlines historically own a lot of physical assets in their aircrafts and so it’s rather radical to become ‘asset light’ and more digitally focused. Why did AirAsia make this shift?
The push to become more digital was twofold. The first decision was to sell off the leasing arm of the business, which was a strategic balance sheet decision. The second was driven by the competitive industry and the constant need to innovate to better serve our guests who, rightfully, demand a seamless experience.
Tell us more about the digital initiatives
Aviation is not just about getting customers to a destination any longer. One of our core values is to be ‘guest-obsessed’, as we realise that customers are far more demanding in terms of how they want to get to their destination and the experience that this entails. In this industry, there is also fierce competition. The digital push is to be able to leverage our data to improve the guest experience to the best of our ability and to engage customers in a meaningful way.
Customers also expect a simple but effective website experience. We have just launched our chatbot, which means that a lot of the more straightforward customer queries can be answered automatically, so our live customer care can focus on the more complex queries.
We are also working hard to get our facial recognition technology rolled out to several airports so this will speed up immigration, boarding and baggage drop.
Naturally, we focus on the customer experience on the plane, where passengers may want to buy our duty-free products and refreshments. In keeping with the trend against cash transactions, we have a complementary product, a prepaid card/mobile wallet, BigPay. Customers will be able to use this card to purchase merchandise. Additionally, we are rolling out our on-board WiFI to all our aircraft, so customers can stay connected.
This journey aims to look at each and every point in the customer journey to see how we can make that better and, with the way the world is today, that’s predominantly by going digital and embracing technology.
How does your new business model impact your risk profile?
The core operational risks of our business are always going to be present, but as we become more digital as a company, we need to make sure that we use the data in a responsible and intelligent fashion. This, of course, means that cyber risks as well as the speed of change are now hugely important. There is a plethora of innovative and strategic initiatives that are taking place within the organisation to ensure that we embrace these changes and turn risks into opportunities.
That being said, some of the more traditional risks such as business interruption are still very real. The office in Kuala Lumpur is still the nerve centre of the organisation so we are constantly looking at ways to improve our business continuity risks.
With greater use of technology, has your data risks increased too?
It is a challenge to keep abreast of all the different data protection regulation around the world and the complexity of our business dictates that we must constantly be on top of all those regulations.
The fact that we are an ASEAN airline doesn’t remove us from the EU GDPR, for example, and that’s where the collaborative effort comes into play across the organisation. Risk is of course not the responsibility of the risk function or the Board. Everyone plays a part.
The risk division works closely alongside IT, compliance and the operational teams to align on strategy and work together on this digital journey.
How does insurance fit into your risk management plan?
Our ethos is that data is our biggest asset and we like our insurers to share that belief. When it comes to cyber insurance, the industry is still evolving and we try to be transparent with our insurers to that we can effectively learn together. We look to partner with insurers that can adapt with us as we grow to become a digital airline. Being forward-looking and proactive is key. They digital journey has unknowns of course but that’s what excites us – the passion to push boundaries and be the best.