Did AirAsia’s Rivals Arm-Twist Online Travel Agencies to Stop Selling Its Low Air Fares? – Skift

A tiff between AirAsia and Indonesia’s Traveloka has taken on a new twist. Garuda Indonesia and Lion Air have allegedly prevented the country’s two largest online travel agencies, the other being Tiket.com, from selling AirAsia low-cost flights.

AirAsia announced on March 4 it was permanently withdrawing sales of its flights from Traveloka, covering all flight routes across its network, following the unexplained disappearance of AirAsia Indonesia’s flights from Traveloka for the second time in two weeks. It charged Traveloka with “a clear display of preferential treatment and an act of favoritism.”

“We observed through social media messages how customers who enquired about the unavailability of AirAsia flights were recommended by Traveloka to book with other airlines instead,” AirAsia Indonesia President Director Dendy Kurniawan said at the time.

Traveloka said it was due to “system maintenance.” When asked by Skift at the time why only AirAsia flights were affected by the system maintenance, a Traveloka’s spokesperson said: “We can’t comment further on this because currently we are still trying to reach them [AirAsia] to create a discussion and hope that this will lead to the best solutions for all of us.”

A meeting ensued last week in Jakarta between Traveloka and AirAsia, Traveloka’s director of public relations, Sufintri Rahayu, confirmed with Skift Wednesday. But she declined to comment on the discussions.

AirAsia also held a separate meeting with Tiket.com, Skift has learned. Mikhael Gaery Undarsa, co-founder and chief marketing officer of Tiket.com, did not return Skift’s calls.

But an internal source, speaking on the condition of anonymity due to the sensitivity of the issue, said during both meetings, AirAsia learned that the two online travel agencies face pressure from Garuda and Lion Air to drop AirAsia or risk losing their flights on their platforms.

They were allegedly asked to stop selling AirAsia’s domestic flights in Indonesia, or any of AirAsia’s international flights to and from Indonesia, meaning Jakarta-Singapore is not allowed but Singapore-Kuala Lumpur is fine, for example.

Contacted by Skift, Garuda’s spokesperson, Ikhsan Rosan, said, “I can’t say, I mean, I have no idea about that. It is not true, as far as I know. I don’t have information about that.”

Lion Air’s corporate communication strategist, Danang Mandala Prihantoro, did not return calls and an email.

Why the Pressure

Industry players contacted by Skift said the key reason could be the two airlines want to increase fares due to high fuel costs and AirAsia isn’t playing ball. And as travel booking has moved online, Traveloka and Tiket, being the largest homegrown online platforms, are the prime targets.

SimilarWeb’s top sites ranking for travel in Indonesia, released February 1, shows Traveloka in first position, followed by Tiket.com, Booking.com and Jakarta.go.id.

“None of the Indonesian airlines have ever had very strong direct sales strategy and as a consequence depended on traditional travel agencies for distribution initially and the big OTAs more recently as travel booking has moved online,” said an industry CEO who wished to remain anonymous as “we have to work with all of them.”

“They have also under-invested in their websites, mobile apps, e-commerce teams, analytics, digital marketing, metasearch partnerships, yield management tools across channels, et cetera. The consequence of all this is that the big online travel agencies offer Indonesian consumers a dramatically better user experience than you get from trying to book direct on one the Indonesia carrier websites or apps, particularly if you want to do something complicated like change your booking. I encourage you to try it and I think you’ll see what I mean.”

Domestic airfares have risen between 40 percent and 120 percent since November, according to data from the Indonesia National Air Carrier Association, remaining high even after the last December peak season. In January, Lion Air also started charging for check-in baggage.

Without AirAsia, Lion Air, and Citilink, the low-cost unit of Garuda, emerge as having the best fares on Traveloka and Tiket.com, a search for a roundtrip from Jakarta to Yogyakarta roundtrip March 30 to April 3 on both websites shows. AirAsia does not appear, even though it has not pulled out flights from Tiket.com.

A search on meta search Wego Indonesia for the same roundtrip shows AirAsia has the lowest fare, however Traveloka and Tiket.com are not offering it. Travelers could choose Trip.com, Jollytravel, Kiwi.com, Skytours and Rumbo, none of which are local players and are much smaller in Indonesia than Traveloka or Tiket.

The Real Price

It is also interesting that AirAsia is the only low-cost carrier that’s allegedly penalized, as a search on Traveloka for a Jakarta-Kuala Lumpur flight shows up other low-cost airlines, such as Jetstar and Scoot.

One explanation could be that Jetstar and Scoot do not offer as many routes as AirAsia does in Indonesia. AirAsia offers eight unique domestic routes, i.e., not offered by another airline, and 36 unique international routes.

AirAsia declined to comment on the matter. However, it issued a statement on Tuesday to the Indonesian market, reaffirming its commitment to always offer the best fares and network to passengers.

“Now Everyone Can Fly isn’t just a slogan or philosophy, but a business commitment,” said Kurniawan in the statement, issued in Bahasa Indonesia.

AirAsia also demonstrated how low its fares are on domestic and international routes, adding  this includes15 kilogram free baggage for domestic travelers and the passenger service charge.

The airline also urged passengers in Indonesia to book it on its own website or app.

When contacted, AirAsia Group’s head of communications, Audrey Progastama Petriny, claimed the airline is seeing “50-60 percent increase in web traffic” in Indonesia and that thus far there has been no significant impact from its absence in Traveloka and Tiket. However, she added, “While our withdrawal from Traveloka has not significantly impacted our sales, it does affect the traveling public as there are now fewer options to choose from on the online travel agency.”

On the potential impact from not having AirAsia’s flights on its platform, Traveloka’s Rahayu admitted, “It is a setback and we’re sad about it. Our value proposition is to provide the widest range of offerings, from budget to high end and without AirAsia we cannot maximize this value proposition. It is not a matter of proceeds or losses but the fact we can’t deliver our premise and take care of our brand and image.”

Tellingly, AirAsia’s Kurniawan said, “Competition should be free and fair to ensure consumers benefit from the best deals. We should not let monopolies kill competition at the expense of the traveling public.” This was on March 4, when AirAsia pulled out its flights from Traveloka.

The traveling public is already suffering as domestic airfares have risen tremendously. Meanwhile, Indonesia as a destination also stands to lose. A Wonderful Indonesia data shows AirAsia Group boarded the most number of passengers in the country, 3.8 million in 2017, and brought the most number of foreign tourist arrivals, an estimated 2.9 million in 2017, an increase of 16 per cent over 2016.

This was followed by Garuda, Lion Air, Singapore Airlines, and Jetstar groups.

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