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Blue Bird expands core business to survive competition

Intense competition with app-based ride-hailing services has forced Blue Bird Group, Indonesia’s largest taxi operator, to think of ways to innovate and develop new businesses to survive

Winny Tang (The Jakarta Post)
Jakarta
Mon, June 12, 2017

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Blue Bird expands core business to survive competition

I

ntense competition with app-based ride-hailing services has forced Blue Bird Group, Indonesia’s largest taxi operator, to think of ways to innovate and develop new businesses to survive.

Its partnership with local online transportation and services app Go-Jek — which started in February this year — has contributed to the firm’s operational growth, Blue Bird director, Adrianto Djokosoetono, said in a recent press briefing.

“With the partnership, the company was able to add more major cities to its operation that use [Go-Jek’s] Go-Car services such as Bandung, Surabaya, Semarang and Medan,” he said, explaining that in the past, the partnership service with Go-Jek was limited to Greater Jakarta.

In the near future, it will continue to strengthen its partnership, eyeing to provide services in collaboration with Go-Jek, in all 15 cities across Indonesia where it operates.

The taxi operator, however, refused to disclose the contribution of its collaboration to the company’s overall growth, citing that it had signed a confidentiality agreement with Go-Jek.

Stiff competition from app-based services like Uber and Grab that is expected to continue this year, has hurt Blue Bird’s top line and bottom line, as reflected in its performance in the first quarter of 2017.

The revenue of the publicly listed company declined by 18.1 percent year-on-year (yoy) to Rp 1.04 trillion (US$78.2 million) in the first three months of 2017, while its net profit slumped by 14.9 percent to Rp 117.5 billion yoy.

Despite the strong competition, the drop in its financial performance was attributed to uncertainty in the industry ahead of the issuance of Transportation Ministerial Decree No. 26/2017, which has gradually taken effect since April.

“The first quarter was the last quarter before the issuance of the decree. So, there were many last-minute things that we did such as give huge promotions,” Blue Bird finance director Fransetya Hutabarat said.

The new decree stipulates that the government is authorized to limit the quota for fleets partnering with ride-hailing apps and set base and ceiling fares for their services. The regulation will become fully effective starting from July 1.

Hoping for improved financial performance this year, Blue Bird has set aside capital expenditure of Rp 1 trillion to Rp 1.2 trillion to revamp and add more cars and develop new businesses to cater to more market segments.

It has initiated a charter bus service under the name Big Bird Jalan-Jalan, which rents out buses for business and leisure purposes such as for daily school transportation, family vacations, company outings and travel arrangements across Java, Bali and Sumatra.

The firm is also developing a shuttle bus business for commuters going from outside Jakarta to the city center.

Furthermore, it also kicked off last month an initiative to provide an airport shuttle service to and from Jakarta’s Soekarno-Hatta International Airport, the country’s largest and busiest airport, under the name (JA) Connexion.

Every day, more than 150,000 people travel to and from the airport. From this number, only 50 percent of them use public transportation, Blue Bird claimed.

“This is our first step for the next five years. We are confident that the number of people going to the airport will keep increasing, thus the market will keep growing,” president director Purnomo Prawiro said.

During the company’s shareholders meeting on Friday, it announced a plan to distribute
Rp 152.6 billion in dividends. The figure represents around a third of the firm’s net profit in 2016.

Blue Bird operates over 30,000 vehicles in its fleet, the majority of which are regular taxis and the remaining premium taxis, limousines and buses.

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