AirAsia Ride keen to unseat Grab, Gojek as ASEAN e-hailing champion

FILE PHOTO: AirAsia Group CEO Tony Fernandes speaks during a news conference at AirAsia headquarters in Sepang, Malaysia December 13, 2017. REUTERS/Lai Seng Sin

After beating the odds at disrupting the airline industry in Southeast Asia two decades ago, AirAsia is now attempting a similar coup in the regional ride-hailing industry, dominated by Singapore’s Grab and Indonesia’s Gojek.

AirAsia Ride is positioning itself to take on the giants and emerge as the top ride-hailing company by overcoming its competitors in five years, says Amanda Woo, chief executive of AirAsia SuperApp, which oversees the nonairline businesses. Besides e-hailing, she oversees AirAsia’s food and parcel delivery businesses as well as its duty-free and grocery segments.

After launching in August, the e-hailing service now covers all major cities in Malaysia, with bookings totaling more than six digits per month and involving 30,000 drivers, Woo told Nikkei Asia in an interview.

“I definitely see AirAsia Ride dominating the region, just like how we did with the airline,” Woo said in a clear challenge to competitors.

AirAsia Ride is part of AirAsia Group, co-owned by aviation tycoon and founder Tony Fernandes. He started focusing on the expansion of nonairline businesses after the coronavirus pandemic paralyzed air travel beginning in February 2020.

From initial baby steps into cargo logistics and online travel agency businesses, Fernandes now owns an empire of nonairline enterprises ranging from restaurants to food, groceries and parcel delivery as well as insurance and microlending. AirAsia’s digital business division was valued at $1 billion as of July, and Fernandes has said he aspires for the division to provide half of the group’s total income in the medium term.

In July, AirAsia announced that AirAsia Digital had acquired Gojek’s operations in Thailand in an all-share deal worth $50 million. Gojek’s investment was valued at $40 million, while that of GoPay, its digital payment service, was at $10 million — in return for a nearly 5% stake in AirAsia Digital.

Gojek is one-half of the merged entity GoTo, along with Indonesian e-commerce company Tokopedia.

Grab has been the dominant e-hailing player in Malaysia since Uber’s exit in 2018. The company commanded over 72% of the local market as of 2020, according to documents for its initial public offering.

AirAsia Ride will expand to Thailand this year and later to Indonesia and the Philippines, Woo said, with the processes to secure approvals having begun in those countries.

“We don’t see any challenge in securing the approvals because we are a known brand in these countries and we have a business case in Malaysia,” said Woo, a 10-year AirAsia veteran, having started as a marketing manager.

AirAsia is also engaging with local partner companies in the three countries to ensure smooth operations upon launch.

Woo, however, declined to elaborate on the financial backing for the expansion of AirAsia Ride and the larger digital businesses. “It’s all finalized on the group investment team’s level,” she said.

Woo said AirAsia Ride’s advantage over its competitors is its complete ecosystem as well as data-sharing from its airline operations, which she stressed makes it unique in the region.

“Soon we are going to incorporate ride-sharing to the airport when someone is purchasing their airplane tickets,” she said.

“The system will then assign the closest driver to the arrival time of the passenger, which is part of our ecosystem. … This is unique, and no one else can do this,” Woo added.

According to Frost & Sullivan’s “2021 ASEAN Shared Mobility Market” report, the ride-sharing market is nascent and will continue to grow despite private ownership of vehicles being relatively high in some Association of Southeast Asian Nations countries, as heavy traffic and high vehicle flow in key capital cities of the 10-country group will prop up demand.

“Residents face parking difficulties and high parking rates, such as in workspaces and commercial buildings (long parking time),” the report said. “E-hailing helps overcome these drawbacks.”

But it said challenges abound given that Grab and Gojek have already secured the largest fleets and subscriber bases in ASEAN. “Hence, the e-hailing market entry barriers are relatively high,” it said.

This article was first published on Nikkei Asia. 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.