KUALA LUMPUR (Sept 27): Capital A Bhd has inked three memoranda of understanding (MOUs) to partner long-time rival PT Garuda Indonesia (Persero) Tbk in both parties’ commercial airline, cargo as well as maintenance, repair and overhaul (MRO) businesses.
Both parties will explore network expansion in commercial airline through AirAsia Aviation Group Ltd and Garuda’s low cost carrier PT Citilink Indonesia; logistics services between Teleport Everywhere Pte Ltd and Garuda Indonesia Cargo; aircraft maintenance between Asia Digital Engineering (ADE) and GMF AeroAsia, according to a joint statement on Wednesday.
At the signing ceremony in Jakarta, which was broadcasted virtually, Garuda president and CEO Irfan Setiaputra said both parties will begin their collaboration by interlining their commercial airline services before embarking on codesharing in the future.
“There are three things that we agreed on. First, it is an interline cooperation between AirAsia and Citilink. So, if you fly with Citilink to Kuala Lumpur, and then you fly to China or any other area, [it] can be [on] one ticket,” Irfan told reporters after the signing ceremony.
“You can also buy a ticket to AirAsia from Citilink. Citilink can also be purchased from AirAsia. Slowly, we will continue to add cooperation modes. But in principle, this is a cooperation between Citilink and AirAsia on the passenger side.
“The second is a cooperation with Garuda Cargo Group together with Teleport, which is a company in the cargo sector. And this is also the same, a single airway bill to be able to fly from one place to another, where Garuda can fly and then be connected by AirAsia, and vice versa. And the last one is a cooperation between GMF and ADE to increase expansion of the two companies in the aircraft maintenance areas,” he said.
Capital A CEO Tan Sri Tony Fernandes opined that the collaboration sets a new standard for healthy collaboration and competition between airlines.
“We will still compete on certain routes, that is inevitable. In fact, I am doing a partnership with an Indonesian airline, I have never been able to do a partnership with a Malaysian airline. But Garuda has shown the way. It is bravery, and it takes guts to come out and do something different.
“I am thrilled to see so many Garuda staff smiling at me, that is a new experience, and sitting next to a Garuda CEO today is unbelievable. I never thought I would be in a room and see Garuda and AirAsia logos on the same table,” he said.
In a stock exchange filing on Wednesday, Capital A said the interline MOU enables the provision to travellers unparalleled access to a multitude of underserved third and fourth-tier cities in Indonesia.
“This marks the first bilateral interline agreement for AirAsia. The partnership will leverage on the depth of the domestic network of Citilink, which includes Palembang, Pontianak, Semarang, Banjarmasin and Jambi, and the breadth of AirAsia’s international routes, which stretch to Hong Kong, Taipei, Tokyo, Seoul, Ho Chi Minh City and more.
“Once the infrastructure interline is ready for operations by the first quarter of 2024, travellers would be able to check through baggage from origin to destination, on a single boarding pass, for seamless transfer through integrated services,” the filing read.
Meanwhile, the interline partnership agreement between Capital A’s cargo logistics business and Garuda’s cargo operation will allow customers of both parties to move their goods across Teleport’s network of 160 destinations across the Asia-Pacific and Garuda’s connectivity of more than 90 destinations under a single airway bill.
“Teleport will leverage Garuda’s strong domestic connectivity as well as added skidded capacity they bring into high-demand sectors, such as Singapore, Shenzhen and Hong Kong-bound flights.
“Garuda will tap into Teleport’s strong network connectivity across Southeast Asia and Greater China network with extended connectivity into key Asia-Pacific cities such as Taipei, Sydney, Auckland and Delhi, among others,” said Capital A.
Capital A disclosed that these MOUs are not legally binding and do not constitute agreements.
“The MOUs have no commercial value and are executed by the parties in good faith. The MOUs provide for collaboration and strategic partnership travel services within the Asean region to passengers travelling to Indonesian cities through the combined power of [Capital A], Garuda and Citilink,” the filing read.
Meanwhile, in a filing earlier this month, the PN17-status Capital A said it has till October 7, 2023 to submit its regularisation plan to the relevant regulatory authorities.
Shares of Capital A closed 1.5 sen or 1.5% lower to 99.5 sen on Wednesday, valuing it at RM4.19 billion.