Malaysia’s budget airline, AirAsia, is launching its new ride-hailing service in Indonesia. As a trail for the broader Indonesian market, the company will launch AirAsia Ride by the end of November in Bali. The announcement was made by the company’s Regional CEO, Lim Chief Shan, during a virtual press conference on the 13th of September.
AirAsia Ride is a competitor of existing ride-hailing apps in the marketplace. That said, Grab and GoJek have a much stronger focus on scooters and food delivery. In contrast, AirAsia Ride will lead with a focus on cars. Speaking at the event, Tan Sri Tony Fernandes, CEO of Capital A (the parent company of AirAsia), confirmed that AirAsia Ride will prioritize the wellbeing of its employees.
Fernandes explained that employees will work 8 hours a day with a choice of shift patterns. They will also be provided other employment incentives and benefits such as health insurance and holiday allowance. Fernandes acknowledged that the industry had exploited ride-hailing service drivers in the past.
Fernandes said ‘In the e-hailing business, the driver is basically the most important part of the operation. From day one, since we started our AirAsia journey, our priority has always been to look after our drivers, and we are very proud to stay ahead of the curve by making this announcement today’. The service is already being offered across Malaysia within the AirAsia Super App. There are currently 53,000 registered drivers in Malaysia alone.
Sharing further business plans, Fernandes said, ‘Every independent driver can choose to become a full-time driver with a better income, and eventually grow into a corporate role in AirAsia ride including becoming a Fleet Manager, Driver Trainer, Operations Executive and many more’. The company is also applying for relevant licenses to roll out the service in the Philippines, Sarawak, and Singapore following a successful entry into the Thai market.
Despite fierce competition from competitors GoJek and Grab, AirAsia Ride has made over two million journeys in Malaysia since its launch in August 2021. Fernandes explained, ‘Speed to market is secondary to us, but we don’t want to build everything on our own. We might collaborate or look for inorganic opportunities where we can find the right technology and skillset’.
The CEO of the AirAsia Super App spoke publicly earlier in the year to state the company’s long-term vision. Amanda Woo confirmed that the app is working to position itself as the top ride sailing company within five years.
While the news is an exciting new work opportunity for some in Bali, others will not be so convinced. There have been longstanding issues between private taxi drivers and GoJek and Grab drivers in Bali. In many tourism hotspots, local communities have banned Grab and GoJek drivers from picking up locals and tourists in a bid to ensure that the local taxi drivers retain businesses. Much of the local taxi driver’s arguments lay in the fact that they pay taxes and play an active role in their community, paying for road development and infrastructure.
Many local Balinese drivers were frustrated that Grab and GoJek drivers, many of whom come from other parts of Indonesia, were able to swipe businesses from their ‘patch’. These digital ride-hailing services intervened with the local systems to spread business fairly between Balinese taxi drivers. Many Balinese taxi drivers also provide a guiding service which is an integrated part of their business model that ride hailing cuts out.
Many tourists prefer ride-sharing services’ safety and set rates amidst widespread anecdotal reports of taxi drivers scamming international visitors to Bali. In areas outside tourism hotspots, local people use Grab and GoJek widely, including food delivery services.
It remains to be seen if AirAsia’s foray into the Bali market will be welcomed or condemned. The fixed fare rates may be a competitive edge as fuel prices rise in Indonesia affecting all the transport sector. The service will be available by the latest of November this year.
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