Lion Air Group rate of fleet expansion kicks into a higher gear while AirAsia slows down

Lion Air Group's pace of expansion is about to accelerate as it takes delivery of its first A320 and increases its 737 delivery rate. The group plans to add over 30 aircraft in 2H2014 as it increases its overall average monthly intake from three to five aircraft - a rate it will maintain in 2015, resulting in a staggering 60 deliveries next year.

At the same time AirAsia Group is slowing its fleet expansion, particularly in the Southeast Asia market. AirAsia is growing its Southeast Asian fleet by only six aircraft in 2H2014 and may not add any aircraft in 2015 as the focus will be on spooling up new affiliates in India and Japan.

If Lion does not follow AirAsia in slowing down growth in Southeast Asia it will quickly shoot past AirAsia. There is a risk market share gains will come at the expense of yields and profitability as several Southeast Asian markets are already suffering from overcapacity - but there is a larger strategic game being played out now.