Summary
- AirAsia and Garuda Indonesia Group have formed a strategic partnership to expand their network across various business lines, including airline services, logistics, and maintenance.
- This partnership allows for seamless transfers between AirAsia’s international destinations and Citilink’s domestic destinations, providing access to underserved cities in Indonesia.
- The extensive alignment between the two companies suggests the possibility of a deeper alliance or joint venture in the future rather than just a strategic partnership.
On Wednesday, the parent company of AirAsia, Capital A, announced that it had formed a strategic partnership with Garuda Indonesia Group. It’s a very interesting read that focuses on integrating some of the Capital A businesses with their counterparts in the Garuda Indonesia Group, but is it the start of more than a partnership?
This is more than interlining
The announcement said the partnership explores the network expansion across various business lines, including commercial airline services between AirAsia and Citlink, logistic services with Teleport and Garuda Indonesia Cargo and MRO (maintenance, repair and overhaul) services with Asia Digital Engineering and GMF AeroAsia.
Photo: Airbus
There is probably no one who loves a mystery more than Capital A CEO Tony Fernandes, and at the signing ceremony in Jakarta, Indonesia, he said:
“We are witnessing the blossoming of a meaningful partnership between two leading ASEAN brands that are loved by millions of people in this region, known for the best value, quality and choice. Our relationship with Garuda began when Citilink joined our Superapp journey. We are excited to further elevate this relationship by pooling our strengths and resources to add more value to people’s lives.”
The low-cost carrier model does not usually include interline deals, and until now, the AirAsia Aviation Group has not put any in place. The new partnership will involve interlining between AirAsia and Citilink, providing passengers unparalleled access to many underserved third and fourth-tier cities in Indonesia. The partnership will bring together AirAsia’s ASEAN 150 international destinations and Citilink’s 50 domestic destinations to provide seamless transfers.
AirAsia Group CEO Bo Lingham said that over the next few years there will be more tie-ups like Citilink, which will help AirAsia, its partners and guests to make the world smaller. Citilink CEO Dewa Kadek Rai said the collaboration with AirAsia is an effort to expand Citilink’s market presence internationally, adding:
“Through the integration networks of both airlines, leveraging AirAsia’s strengths in ASEAN routes and Citilink’s strength in domestic routes, it is hoped that the aviation industry can progress more effectively post-pandemic era. This collaboration is expected to enhance the flying experience for customers with seamless and hassle-free services.”
Where will this agreement go?
On the face of it, this is two low-cost carriers joining forces much the same as many other airline partners, starting with an interline agreement with checked-through baggage and boarding passes from the point of origin. Citilink customers get access to the AirAsia international network, and AirAsia customers can transfer seamlessly to Citilink domestic services.
Photo: Garuda
Capital A’s logistics business, Teleport, has signed a partnership agreement with Garuda Indonesia Cargo that combines both parties’ air logistics networks. This enables the partners to move goods across Teleport’s network of 160 destinations across Asia-Pacific and Garuda’s connectivity of more than 90 worldwide destinations under a single airway bill.
Capital A’s aircraft maintenance provider, Asia Digital Engineering (ADE) and Garuda Indonesia’s GMF AeroAsia have agreed to explore opportunities for another strategic partnership. The aim is to leverage their mutual strengths and efficiencies and strategic ASEAN location to deliver greater value-driven, low-cost MRO services to third-party airlines seeking maintenance support.
In essence, these agreements bring together AirAsia and Citilink, the logistic businesses and the maintenance arms of each partner, aiming for more connectivity and extracting additional efficiencies beyond what they can do apart. That extensive alignment looks more like a precursor for a deeper alliance, joint venture, takeover or IPO than just a strategic partnership. It will be fascinating to watch this unfold in the coming months.