Indonesia AirAsia slows expansion. Domestic share to suffer but international position to strengthen

Indonesia AirAsia has decided to significantly slow down expansion in 2014 as market conditions in the Indonesian market, particularly domestically, have become challenging. The carrier, which added eight A320s in 2013, had dropped plans to add two aircraft in 1H2014 and is also considering deferring some or all of the four deliveries initially slated for 2H2014.

Indonesia AirAsia is also planning to adjust its network to focus more on international services. The international market is more profitable as it is less impacted by the devaluation of the Indonesian rupiah. But cutting domestic capacity will result in a reduction in AirAsia's already small share of Indonesia's domestic market.

AirAsia still has a strong position and bright outlook in Indonesia's international market. But 2014 will mark another setback in the group's long-term strategy of securing a larger presence in Southeast Asia's largest domestic market.