AirAsia is a low-cost airline based in Southeast Asia. Tony Fernandes, the CEO of the $3 billion company, recently issued a statement explaining the company was considering launching an initial coin offering, or ICO.
AirAsia is a publicly-listed company in Malaysia. In a discussion with TechCrunch at this year’s Money2020 event in Singapore, Fernandes claims the ICO would be offered as part of AirAsia’s push into financial services. AirAsia would hold an ICO to raise money while also expanding its loyalty points program worldwide.
Essentially, AirAsia is exploring the idea of placing its loyalty points program on the blockchain, and then allowing customers to buy and sell loyalty points like any other digital token:
“We have two things that are very interesting which will have relevance to ICOs, one is our loyalty card where we have [loyalty program] BIG Points, and I think those BigPoints can be easily transferred to the blockchain.”
“We have a product that can be a currency in Big Loyalty, [and] we’re building a payment platform so the two can marry quite nicely. We have an ecosystem that enables you to use that currency, there’s no point having a currency that can’t be used,” Fernandes added.
Fernandes has a history of taking big risks: he’s a businessman who pioneered the low-cost airline model in Southeast Asia, growing the Kuala Lumpur-based company since the mid-1990s into the giant it is today. Today, AirAsia is notable among airlines for offering the world’s lowest unit cost per available seat kilometer, or ASK, with a cost of just $0.023 per ASK.
Fernandes also owns the English football club QPR and founded a Formula One team.
Southeast Asia and Singapore, meanwhile, have emerged as a hub for cryptocurrencies and ICOs. In 2017, ICOs generated more than $6 billion for companies. However, most of those companies have been young startups – few established companies have launched an ICO, for example, and even fewer publicly-traded companies. Telegram, the messaging app that raised $850 million in part through an ICO, is one notable exception.
If AirAsia launches an ICO for its loyalty program, it would be big news for the cryptocurrency industry.
AirAsia is Moving Into Financial Services
Why does an airline need its own digital token? Well, AirAsia has announced plans to offer financial services beyond just its loyalty program. The company aims to grow to 100 million customers, and offering financial services is a big part of that expansion.
AirAsia has already proposed a payment platform that would make its cabins cash-free. The company is also exploring offering loans and insurance policies to customers – including small and medium-sized businesses and entrepreneurs.
Fernandes maintains that he likes the idea of an ICO over traditional fundraising systems:
“I like [the idea of an ICO] because it just takes cost out of my system. So I’m driven, not by trying to take over the world, but in the first instance, everyone buys in my ICO and I take out a lot of exchange risk, I take out a lot of settlement risk, etc etc. So there are many ways of how we are looking at it.”
Governments around the world have issued regulations on ICOs. Southeast Asia, however, is one notable exception: governments have not yet introduced any regulation. Nevertheless, aviation is the world’s most regulated industry, and Fernandes maintained that the company would comply with all regulators and regulations in launching its token sale.
AirAsia, of course, would also need to deal with the ownership question of its crypto tokens. AirAsia’s tokens would not include equity, for example, but they would need to take into consideration the company’s existing shareholders and status as a publicly-traded business.
Ultimately, AirAsia has shown a history of taking risks. By exploring the use of an ICO as a crowdfunding mechanism, AirAsia could change the way major, publicly-traded companies raise money in the future. Stay tuned for more information about AirAsia’s ICO. At this point, it’s just a proposal – but AirAsia’s blockchain-based loyalty points could become a reality in the near future.