Indonesian airline Garuda talking with Go-Jek to provide logistics support

Indonesia’s national carrier Garuda and Go-Jek are in talks for a partnership that will make it easier for the ride-hailing and e-commerce app to move goods to customers within the 17,000 islands of the sprawling Southeast Asian archipelago. Garuda chief executive Ari Askhara told Reuters the talks are in an advanced stage and an agreement is expected to be finalised by the two companies in the next few months. Askhara said Garuda was developing a new technology relating to e-commerce and logistics. The partnership would enable goods ordered via Go-Jek’s app in one city in Indonesia to be delivered in another using Garuda’s fleet, he said. The CEO did not provide more details.

Started in 2011 in Jakarta, Go-Jek has evolved from a ride-hailing service to a one-stop app through which its customers can make online payments and order everything from food, groceries to e-commerce goods.

Go-Jek, which is valued at between US$9 billion and US$10 billion according to sources, declined to comment.

E-commerce has been growing rapidly in Southeast Asia’s biggest economy, but one of the main obstacles is logistics as the islands are sprinkled across an area bigger than the European Union.

Go-Jek recently raised over US$1 billion in a funding round as it challenges Singapore-based rival Grab for a larger share of the region, sources told Reuters.

The Go-Jek proposal is one of several being explored by Garuda to cut its dependence on passenger traffic as the airline tries to grow its profits after a bumpy 2018.

The airline has been battling for market share against local market leader Lion Air, which in October suffered a crash of a Boeing Co 737 MAX jet, killing all 189 people on board.