AirAsia’s Billion-Dollar Brand: The Hidden Gem in Capital A’s Corporate Shuffle

By The Malketeer

Beyond the Boarding Pass: There’s Real Cash Flow from the Brand Ecosystem

In a surprising twist, Capital A Bhd (formerly AirAsia Group) has revealed a game-changing strategy that puts its branding business front and centre.

While the company’s recent moves might seem like typical corporate restructuring, a closer look unveils a masterstroke in brand monetisation that marketers everywhere should pay attention to.

The Brand That Flies Higher Than Planes

At the heart of Capital A’s strategy lies a golden goose: its branding business.

Initially slated for a US$1.15 billion spin-off, this division is now being kept close to the chest, and for good reason.

The AirAsia brand, known for its vibrant red livery and cheeky marketing, is proving to be more valuable than ever in the post-pandemic landscape.

Tony Fernandes, Capital A’s charismatic CEO, told The Edge, “There’s real cash flow from the brand business.”

This understated comment belies the true potential of what could be a marketing juggernaut in the making.

Cashing In On Red: The Royalty Revenue Stream

Here’s where it gets interesting for brand strategists and CFOs alike.

The branding business, tucked away in Capital A International, stands to collect royalty fees based on the revenue generated by AirAsia’s aviation businesses.

Let’s crunch some numbers:

• 2023 Aviation Revenue: RM11.96 billion
• Potential 1% Royalty Fee: A cool RM119.65 million

That’s right – nearly RM120 million  from a single percentage point of revenue.

It’s a testament to the power of a well-cultivated brand and a lesson in creating value beyond traditional business models.

Beyond The Boarding Pass: AirAsia’s Brand Ecosystem

But Capital A’s vision extends far beyond airplane tickets.

The company is retaining control of:

• AirAsia Move App: Tapping into the digital lifestyle market
• Teleport: Leveraging the brand for logistics solutions
• BigPay: Extending the AirAsia experience into fintech

Each of these ventures benefits from the halo effect of the AirAsia brand, potentially multiplying that royalty revenue stream across diverse sectors.

The Turbulence Behind The Strategy

It’s not all clear skies, however.

Capital A’s decision to keep the branding business comes amidst efforts to exit its Practice Note 17 (PN17) status – a designation for financially distressed companies on the Malaysian stock exchange.

The company is banking on the sale of its core aviation business to AirAsia X to achieve this, a move that speaks volumes about the perceived value of its brand and ancillary businesses.

Lessons For Marketers: Brand As A Business Model

Capital A’s strategy offers several key takeaways for marketing professionals:

1. Brand value can transcend core business operations
2. Licensing and royalty models can create substantial passive income streams
3. A strong brand can facilitate diversification into new markets and sectors
4. In times of financial stress, a powerful brand can be a company’s most valuable asset

As the aviation industry continues to navigate post-pandemic turbulence, Capital A’s focus on its branding business may well prove to be the wind beneath its wings.

For marketers watching from the ground, it’s a masterclass in elevating brand strategy from a marketing function to a core business model.

In the words of an age-old adage, slightly modified for the occasion: “Build a great product, and you’ll have customers for a day. Build a great brand, and you’ll have royalties for a lifetime.”