Why is Rakuten acquiring stakes in AirAsia Japan?
The partnership with AirAsia plans to net US$68M for Japan branch; complements well with Rakuten Travel businessBy Jonathan Toyad 01 Jul, 2014
We mentioned before that e-commerce giant Rakuten may be partnering up with AirAsia to get into the low-cost airline business. Those plans are slowly coming into fruition, as per the company’s latest announcement.
Straight out of its global investment funds announcement, Rakuten will acquire 18 per cent stake in AirAsia Japan, a future offshoot of the low-cost airline company courtesy of the original AirAsia. AirAsia Japan plans to raise a total capital of more than US$68 million.
The partnership makes sense, given that the e-commerce company has services related to travel like Rakuten Travel. The company did say that it wishes to accelerate the development of its travel services in the Southeast Asia region. We doubt that 17 Japan offices and 20 overseas offices is enough to sate Rakuten’s thirst for travel-planning.
The shares acquisition is also a great means for AirAsia to acquire a space in Japan to get flight routes headed to the West side of North America and the US. According to a Rakyat Post piece, AirAsia CEO Tan Sri Tony Fernandes said that Japan can help expand the brand beyond Asia.
“With Japan, we don’t only need to limit ourselves to Asia. Flights to Vancouver in Canada and Hawaii and the US West Coast are now possible. This means we’re well on our way towards becoming a global airline. To be a global airline, we definitely need to see how we can go back to Europe. Japan and India are key for us as they can be launching pads for expansion beyond Asia.”
This venture wouldn’t have started if it weren’t for a football match in London. Fernandes said that he made friends with Rakuten CEO Hiroshi Mikitani during a match between QPR and Manchester City. It also helps that Fernandes appreciates the innovative thinking of Japan when it comes with products and business know-how.