KUALA LUMPUR: AirAsia Group Bhd and venture capital firm Gobi Partners are jointly investing US$10.6 million (RM44 million) in e-commerce and parcel delivery player EasyParcel, and the low-cost airline expects the venture to add value to its underutilised aircraft belly space.
AirAsia Group CEO Tan Sri Tony Fernandes said 40-50% of its aircraft belly space is for baggage and the rest for cargo. It currently utilises only 15% of the belly space and sells only 7.5% of it.
“We have over 40% of space that we can sell. The potential of this business is large. We beat FedEx, UPS, DHL in speed of transferring goods (to Asean). Logistics is huge opportunity. We believe we can make cargo and logistics as big as passengers (business). The synergy between EasyParcel and us is enormous,” he told a press conference after announcing the investment today.
AirAsia’s investment in EasyParcel is made through its rebranded cargo and logistics platform Teleport, under a 50:50 arrangement with Gobi Partners, where both parties now become major shareholders and board members of EasyParcel. Teleport’s investment is funded from retained earnings, while Gobi Partners is making its investment through Meranti Asean Growth Fund, a fund that seeks to invest in Asean innovation such as cloud services, e-commerce and financial technology.
Teleport’s logistics and infrastructure capabilities include more than 100 cities, 10,000 AirAsia flights per week and some 1 million tonnes of cargo capacity. It rakes in about RM400 million revenue a year and plans to double this to RM800 million or 8% of AirAsia’s group revenue next year.
Founded in 2018 and formerly known as RedCargo Logistics Sdn Bhd, Teleport also has partnerships with Tasco Bhd, GD Express Carrier Bhd, Oman Air and Air New Zealand, among others.
Fernandes said the margin of logistics is better than the passenger business as the only extra costs are for transferring the cargo to the planes, fuel and warehouse.
“The airline business is good and more people are flying than ever. How do I keep fares low and get more people to fly is to generate a form of business. While AirAsia 2.0 was about ancillary income, selling food, insurance, nicer seats and merchandising, AirAsia 3.0 is continuing that and using our assets to keep more of our passengers’ spend,” he noted.
On monetising AirAsia’s data and belly cargo, Teleport CEO Pete Chareonwongsak explained that from AirAsia’s database of 100 million flyers and 25 million loyalty users, there is an overlap in people who buy tickets or goods online and people who require logistics services. This will enable it to leverage on the user base to mutually grow the business and create offerings for small and medium enterprises (SMEs).
EasyParcel, which has close to 500,000 users, will use the Series B funding to expand its offering for SME customers, leveraging on Teleport’s logistics and infrastructure capabilities. Headquartered in Penang, Malaysia, EasyParcel delivered 8 million parcels last year. It also operates in Indonesia, Singapore and Thailand.
Gobi Partners, headquartered in Shanghai and Kuala Lumpur, has a regional presence across China, Hong Kong and Asean with over US$1.1 billion in assets under management. It has raised 13 funds to date and invested in over 250 startups. Gobi’s existing logistics investments are Deliveree and Zoom.
Source: The Sun Daily