AirAsia’s food delivery service to debut in S'pore in March promising lower commissions levied on F&B firms

• AirAsia aims to launch its new food delivery platform in Singapore by March
• Its merchant commission rate is 15 per cent for each order, lower than rates charged by the major food delivery platforms here
• To woo merchants, it is offering a special sign-on rate from as low as 8 per cent for the month of March

SINGAPORE — Close to a year after owners of struggling food-and-beverage outlets here campaigned to pay lower commissions to food delivery platforms such as GrabFood, a new player is breaking into the market, promising far lower commissions.

In a press statement on Thursday (Feb 18), Malaysian budget airline AirAsia said that its latest venture, AirAsia Food, is expanding to Singapore, and that it would charge merchants a commission of 15 per cent on each transaction.

TODAY understands that commissions charged by the three major food delivery platforms here, GrabFood, Foodpanda and Deliveroo, range between 25 and 35 per cent.

And in a campaign to woo merchants onto its platform ahead of its target launch date of March 2, AirAsia said that merchants joining before March 1 would receive a special sign-on rate from as low as 8 per cent for the month of March.

Merchants can go live within 48 hours of registration, once the service is up and running, it added.

In response to TODAY’s queries on the service, Ms Amanda Woo, chief commercial officer of AirAsia.com, said consumers would be able to start ordering food deliveries on its platform starting on its March 2 launch date.

Currently, AirAsia Food offers unlimited free delivery within a delivery radius of 15km at Klang Valley in Kuala Lumpur, Malaysia, where it charges a commission rate of 10 per cent.

Asked if free deliveries would be offered to Singapore consumers, Ms Woo said it is “definitely one of our unique offerings which we want to introduce in the Singapore market as well soon”.

AirAsia Food, which started operating at Klang Valley last May, is still expanding to more Malaysian cities and is a small player in Malaysia so far.

Last December, AirAsia Group’s chief executive Tony Fernandes told Malaysian newspaper New Straits Times that it was fulfilling 1,000 food deliveries a day, while the “big boys” were fulfilling 55,000 deliveries a day.

He then indicated his aim to ramp daily deliveries up to 10,000 by end-March.

AirAsia’s press release on Thursday came a day after Mr Fernandes took to LinkedIn to say that AirAsia Food is coming to Singapore “with a roar”.

In the post, Mr Fernandes said: “As a disruptive leader, we’re ready to take on the new challenge in Singapore, providing value, simplicity and inclusivity for everyone.

“Sceptics and naysayers who’d said we’ll never make it in the airline industry – took me seven years to get approval to fly to Singapore but better late than never. So I’d say we’re way ahead of schedule on food.”

Meanwhile, in the post’s comments section, he agreed with a statement that other food delivery platforms are taking too much in commissions, and said: “That’s why we are coming in lower.”

Mr Fernandes’ post came just a few days after Malaysian news outlet The Star reported that AirAsia Food would expand out of the Klang Valley area to other major Malaysian cities, starting with Johor and Penang in March.

In that report published on Feb 15, AirAsia Malaysia chief executive officer Riad Asmat was quoted as saying that the company is also aiming for a presence in Indonesia, the Philippines and Thailand.

Within Malaysia, the cities of Ipoh, Kota Kinabalu, Kuching, Miri and Kota Bharu are the next potential markets, he added.

Asked what guided AirAsia’s decision to break into the Singapore market at this time, Ms Woo said that it was because AirAsia Food has in place the “right logistics infrastructure and ecosystem” to support the move.

“We started with Kuala Lumpur, and we are excited to bring AirAsia Food to Singapore — mobilising our logistics infrastructure and technology to introduce a seamless, fuss-free and affordable solution for customers and restaurateurs,” she said.

She added that AirAsia plans to enter Thailand, Indonesia and the Philippines in the second half of the year.