Investment house Authorised Investment Fund (ASX: AIY) has marked a major expansion into Indonesia’s booming aviation market, revealing Garuda Indonesia has teamed up with its investee company Asian Integrated Media (AIM).
The partnership, which has already commenced, will see the major Indonesian airline join AIM’s bespoke programmatic digital advertising company, Travel Elite.
Travel Elite enables advertisers to engage with the airline’s passengers through targeted computer-based automated buying, selling, placement, and optimisation of digital advertising, otherwise known as programmatic advertising.
Under the agreement, AIM expects to derive in excess of US$2 million in initial revenues but flagged the potential for considerable growth in revenue generation.
The partnership comes soon after AIM successfully launched Travel Elite in China at the end of 2018, providing brands with the opportunity to target both international and domestic travellers in the growing market.
Travel Elite was developed by AIM as a unique and powerful solution to address two important global trends – the growth in ancillary revenues amongst airlines and the continued growth in digital advertising spend, aimed at “high-value airline passengers”.
Indonesia a booming market
As a pooled development fund, Authorised Investment Fund provides passive equity capital to small or medium companies, with AIM being one of those investments.
Travel Elite’s new partnership with Garuda Indonesia will give Authorised Investment Fund a foothold into Indonesia’s growing travel market via its 25% stake in AIM.
With most of the world’s major airline growth being generated out of Asia, AIM is now well-placed to capitalise on the travel boom given Indonesia is the largest economy in South East Asia, boasting a large business and travel audience.
In 2017, tourism contributed around US$28.2 billion to Indonesia’s gross domestic product. In the same year, Indonesia received 14.04 million visitors, representing a 21.8% increase on the prior year.
Garuda Indonesia operates flights to 83 destinations in 14 countries, with approximately 500 daily departures from its hubs at Jakarta, Denpasar, Medan and Makassar.
Just the tip of the iceberg
AIM said the agreement with Garuda Indonesia marked the commencement of a major expansion of Travel Elite into the aviation sector, with the company also in “advanced multi-million-dollar negotiations” with other major Asian airlines.
Speaking with Small Caps following the Garuda news, Authorised Investment Fund chairman Ben Genser said it expects the agreement to have a big knock-on effect.
“Being Indonesia’s national carrier, the agreement with Garuda Indonesia will open up an avenue of opportunities with other Asian airlines,” he said.
“Travel Elite provides very solid revenue streams for the airlines that participate in it and AIM are anticipating a flood of conversions from this point on given a carrier the size of Garuda has signed on.
“We couldn’t be more delighted with the news and we are looking forward to more good news shortly.”