It appears that AirAsia has a bigger problem on its hands than it can possibly imagine. Now, even the largest local tour operators have stopped selling its flights on their online platforms. Whatever the outcome, one thing is clear: Online travel booking is such a powerful weapon.
As it turns out, it isn’t just Traveloka and Tiket.com that are allegedly being arm-twisted by Garuda Indonesia and Lion Air to stop selling AirAsia Indonesia’s tickets, as reported by Skift on March 13. The pressure has also been placed on the country’s biggest offline local travel agencies, including Panorama Group, Golden Rama Tours & Travel, and Wita Tour, which have stopped featuring AirAsia flights in their online platforms since last week.
However, these brick-and-mortar agencies could still sell AirAsia tickets offline, for example, through their branches. This does not make a huge dent to the airlines, since online booking has become the preferred method in Indonesia. Skift reached out to Panorama, Golden Rama, and Wita for official comment, but did not hear back.
Based on a list obtained by Skift, the purported ban on AirAsia has extended to 15 online and offline local travel agencies. A source at one of the 15 agencies told Skift, on the condition of anonymity, “Indeed, there is a move to ‘exile’ AirAsia. In our case, we were approached by Garuda. Call it ‘anti-monopoly’ or ‘cartel,’ whatever, I don’t know. We are watching it cautiously.”
The source said this is the first time such a thing has happened.
“We don’t have a choice. They [the airlines] squeezed the OTAs first [since January], then the big agents. It is very sad, to be honest. We have a good relationship with AirAsia; I know the [AirAsia Indonesia] CEO Dendy [Kurniawan]. But AirAsia just doesn’t want to be dictated by the two big airline groups,” said the source.
AirAsia declined to comment directly on these allegations of agencies teaming against it.
Travel agencies privately believe Garuda is under pressure to perform and wants to keep airfares high, according to the source. This is also in the lead up to the Indonesian presidential elections in April. The airline is often used as a woeful example of a money-losing, state-owned enterprise by the challenger of the incumbent administration.
Lion Air too is struggling and trying to recover from the Boeing 737 Max crash in October last year, which in the aftermath shone a spotlight on its image and safety record. The airline even started charging passengers for check-in baggage in January.
“The short story is, the customer has to pay more,” said the source. AirAsia benefited, in his opinion, as passengers avoided Garuda because of higher prices, and Lion Air because of the baggage fees. Thus, the reported move by the two airlines to get agencies to remove AirAsia from their online sales.
When asked why his agency agreed, the source said, “As a group Garuda is powerful as it owns three other airlines, Citilink, Sriwijaya Air and Nam Air. For now, all the agents have been obeying. We’ll see.
“The situation is very fluid and keeps changing. I foresee we will see this kind of tension until at least after the elections is over. What’s more Lion Air now has to ground 14 Boeing 737 MAX and Garuda one or two may be. That is bound to change the landscape again.”
Asked if it hurts his business, he said the number of passengers flying has dropped 15 per cent, but the sales volume has increased 25 percent due to higher prices.
When approached by Skift, AirAsia’s Kurniawan remains mum about the airline’s alleged exile but appears to be softening about its decision to permanently withdraw flights from Traveloka on March 4.
“We’ve made a decision to withdraw from Traveloka following the unexplained disappearance of our flights from their platform for the second time in two weeks. However, we’re always open to have a dialogue with any travel agents or business partners,” he said.
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Photo Credit: AirAsia fleet in its homeground, Kuala Lumpur. Even the largest local tour operators have stopped selling its flights on their online platforms. Charles Pertwee / Bloomberg