AirAsia is aiming to use its strong network in Thailand to speed up the growth of Gojek in the country and put the loss-ridden service on the path towards profit within one year via upcountry expansion, starting with three key provinces in the fourth quarter.
The group’s plan is to boost revenue from digital services to 50% within five years, which will become easier after it agreed to acquire the unit from Indonesia’s delivery giant via a share deal worth US$50 million (1.61 billion baht).
Malaysia-based AirAsia Group chief executive Tony Fernandes said the negotiations between AirAsia and Gojek began two months ago and wrapped up recently. The deal will enable Gojek to transfer its resources and services in Thailand to airasia Digital — a venture arm of AirAsia Group — in early August and rebrand from Gojek to AirAsia.
He added that when the group was approached by Gojek to take over in Thailand, it saw the move as the right opportunity to leverage know-how from Gojek and integrate it with the much stronger brand of AirAsia and expand into food deliveries and fintech services.
The group chose Thailand because the country is a major market outside Malaysia. It is confident that the firm will help grow services that Gojek has built and expand to other provinces beyond Bangkok, starting with Phuket, Chiang Mai, Hat Yai where it has a strong presence already.
Besides brand awareness, it also has the advantage of a large customer database as the airline started selling tickets 17 years ago in Thailand, mostly upcountry and this can help generate more income for Gojek in the future than just a hub in Bangkok.
On Dec 7, AirAsia group announced that it had entered into an agreement to acquire 100% of the equity interest in two units of Gojek in Thailand — Velox Technology (Thailand) Co for a purchase price of $40 million and Velox Fintech Co for a price $10 million.
The investment will be completed via a share deal which will see Gojek receive 4.76% of shares in AirAsia’s SuperApp — one of three key digital businesses of airasia Digital which provide a platform for travel and lifestyle products.
Besides this acquisition, AirAsia group has stepped up efforts to acquire a stronger hold on digital businesses by applying for a digital banking license in Malaysia last week as BigPay — a fintech company with 1.2 million users — is also one of the three companies under the digital unit.
“Under this deal with Gojek, we have also secured a license to operate fintech services in Thailand via GoPay, another ambitious expansion we are eyeing in the country,” Mr Fernandes said.
Gojek chief executive, Kevin Aluwi, said the company can now focus on expansion in Vietnam and Singapore.
AIR TO GROUND
E-commerce and market experts believe the battle between super apps in Thailand will heat up following AirAsia’s acquisition of Gojek’s operations in the country.
Pawoot Pongvitayapanu, an e-commerce market pundit, pointed out that AirAsia’s acquisition would make the firm a complete travel and transport service provider from “air to ground” and achieve last-mile delivery to customers at home.
AirAsia’s aircrafts can serve passengers and ship parcels while it can use Gojek’s ride-hailing and delivery services on the ground to help with intercity services.
The company also has a Teleport logistics network, which can facilitate food and parcel deliveries in different cities with same-day shipments.
“Digital services will also become a new revenue stream that helps offset declining earnings from the airline business,” Mr Pawoot said. Under the new normal, business travel will decline as people adopt technology for meetings instead, he said.
If AirAsia becomes successful with this move, it could draw other airlines to join the foray, he added.
CLASH OF SUPER APPS
Anantaporn Lapsakkarn, a senior researcher at Kasikorn Research Center, said the acquisition has cleared the way for AirAsia to find a shortcut into digital businesses and onboard customers, merchants and drivers onto its platform instead of building it from scratch.
This deal will “trigger superapps’ competition” in the country, he said. The deal also provides a way for the airline to foray into the food delivery and ride-hailing segment, supporting business diversification and revenue sources for AirAsia, he noted.
Regarding the food delivery business in Thailand, Grab still dominates the market while Gojek which has changed names often — from Get to Gojek and then to AirAsia app — can be a source of confusion for users.
This acquisition would encourage companies from other sectors to provide more services in line with the super app concept.
Reports have already emerged that the e-marketplace platform Shopee is expanding its reach into food deliveries as well.
Wholesale logistic service providers are also looking into retail and last-mile delivery services.
“We will see more competition from players across sectors in super apps but for the food delivery business, there would be only three or four who survive,” Mr Anantaporn said.
Food delivery operator Robinhood indicated the entry of AirAsia and Shopee into the food delivery means a big war is approaching.
“We will fight and we will be the last man standing in the market,” said Thana Thienachariya, board chairman at Purple Ventures, the operator of Robinhood. Purple Ventures is a subsidiary of Siam Commercial Bank (SCB).
“We will see more competition from cross-sector players in super apps, as well. They are also exploring how to offer banking and financial services. We as a bank have to protect our territory,” he said.
Michael Araneta, assistant vice-president of IDC Financial Insights Thailand, a finance research unit of IDC, said the acquisition would help accelerate AirAsia’s expansion of its digital services in Thailand.
The challenge, he said, is how AirAsia will drive further growth in digital services from Gojek.
The deal shows that platforms need to be large and encompassing as possible to fight in the market, he added.
Gojek forayed into Thailand in 2019 with the “Get” brand, providing food delivery, courier and motorcycle ride-hailing services.
Source: Bangkok Post