Sometime around February this year, Malaysian budget airline AirAsia’s flights on routes within Indonesia began vanishing sporadically from Indonesia’s largest online travel agent (OTA), Traveloka. Instead, the platform’s users had to manually check AirAsia’s website or app to see if the airline had better options.
This was no oversight or technical glitch. Or at least, that’s what AirAsia alleged. In March, the carrier, owned by eclectic Malaysian businessman Tony Fernandes, declared it would permanently withdraw all of its flights from Traveloka, Indonesia’s biggest OTA, because it felt unfairly treated by the platform.
“The exclusion of several AirAsia Indonesia flights by Traveloka is a clear display of preferential treatment and an act of favouritism,” the statement read.
It concluded with a comment from then-AirAsia Indonesia CEO Dendy Kurniawan: “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 travelling public.” Kurniawan has recently been succeeded by Veranita Yosephine Sinaga.
AirAsia’s tenuous relationship with OTAs has only worsened since. After its decision to shun Traveloka, AirAsia flights began disappearing from more and more OTA platforms. Most recently, around October, Traveloka-owned Pegipegi—a smaller OTA targeting local travellers—also stopped featuring the company.
Today, AirAsia has severed ties with Indonesia’s OTAs altogether, choosing instead to fly solo. Its lack of a footprint on these platforms, though, presents a significant hurdle to its growth in the country. According to market research firm RedSeer, the overwhelming majority—96%—of online travel bookings in the country happen through either Traveloka, Tiket (the second largest Indonesian OTA), or Pegipegi.
Already, despite consistent growth in demand over the last two decades, Southeast Asian airlines struggle to attain profitability. Operational inefficiencies, price-sensitive customers, fuel price fluctuations and the effects of digital disruption have made the space a turbulent one.
In Indonesia, the region’s biggest aviation market with gross merchandise value of online flight bookings touching the $10 billion mark, the industry’s cut throat struggle for survival has reached a whole other level. Competition has bittered to a point where fair play seems to have gone out the window—and AirAsia off digital platforms.
Analysts and insiders believe that Indonesia’s two main domestic airline groups—national airline Garuda and its affiliates on one side, and low-cost carrier Lion Air Group on the other—have skewed the playing field.