While the aviation industry suffered over the year-long COVID-19 pandemic that caused lockdowns globally and domestically, one company that hit a new sales record of RM2.4 million in November 2020 was Malaysian startup T-Commerce Gateway (TCG).
Positioned in between online travel agent (OTA) portals and airlines, TCG works like a typical payment gateway between shops and the banks.
During the pandemic, it was publicly obvious that the top line revenue had been badly affected due to closed borders and grounded planes, KC Cheah, founder of Alpha Red Services that owns TCG told Vulcan Post.
“However, another critical pain point that also came into the picture is cost management. Cost management is critical during the pandemic, it is even more critical when the market resumes.”
“Hence, TCG is providing an efficient and cost-effective solution for airlines to reach out to the broader market through online distributions. Consumers who are keen to fly will be able to search and book their preferred airlines and timing via our online travel agents without needing airlines to pay upfront marketing spend,” he explained.
But that alone isn’t enough to guarantee the resiliency of TCG’s business model.
Well Positioned For The Pandemic
KC explained, “TCG is connected to airlines in several markets. Different airlines make for a good market mix serving different target audiences and routes. So our content demand doesn’t rely heavily on a particular airline, route or market.”
While international borders are closed and even Malaysia is under a domestic lockdown, domestic flight demands in countries like Thailand and Vietnam which are recovering well, on the other hand, provide TCG with cash flow too.
“Furthermore, we don’t need to invest heavily into marketing to boost bookings because we are running a B2B business serving the online travel agents who handle consumers,” KC added.
Another thing that aided TCG well during this time was their pricing mechanism that optimises the margin, not to mention the price competitiveness in the aviation market too.
In the recovery period, KC said that domestic flight sales contributed to a higher portion of their revenue. Therefore, domestic flights with their lower pricing averages provided TCG with higher margins through their pricing mechanism.
For comparison, he shared that their 2018 average monthly revenue was RM400k, while 2019’s was RM770k with the exception of October 2019, where they had RM1.8 million booking revenue.
Travel Is Here To Stay
In 2021, KC is confident that we’ll be seeing a strong recovery with the markets gradually opening up, followed by a full recovery in global demand by 2023.
“Travel has become an element of daily life since the beginning of the decade no matter for work or leisure purposes. That is why travel had been enjoying the boom in recent years.”
Repeating a sentiment many others in the travel industry have shared, he added, “No doubt that travel is going to come back, but its just a matter of when.”
And when that happens, the next key concern for them would be the travellers’ mindsets on travel safety and restrictions. This is going to directly affect the demand itself, KC said, but they’ve got plans for handling that too.
“Airlines are working closely with the respective authorities to gather and disseminate the latest information to all travellers. So, we’re working closely with our airline partners to make sure all the information is being given accurately and in a timely manner too,” he explained.
Keeping Up With The Anticipated Demand
In anticipation for the upcoming travel demand, TCG is looking to raise RM3 million on ECF platform pitchIN to serve it better.
These funds will mainly be for working capital as TCG broadens commercial partnerships with airlines and supports fast-growing demand with the onboarding of more travel portal partners (mainly OTAs).
“After a positive fourth quarter in 2020, we are projecting US$18.77 million worth of gross booking value transactions in 2021,” KC shared.
He maintains an optimistic outlook on the year ahead as his team plans to expand their airline beyond the APAC region too.
They’re already working with airlines like British Airways, Scoot, Malindo Air, and Vietnam Airlines, for example.
Thus, they’re now looking to partner airlines such as China Southern Airlines, Singapore Airlines, Lufthansa, Fly Dubai, and more for their expansion.
Featured Image Credit: KC Cheah, founder of Alpha Red Services / Flickr
