Lion Air has opportunity to accelerate LCC growth in Indonesia after modest traffic gains in 2013

Lion Air has an opportunity to win back market share in Indonesia's dynamic low-cost sector as competitors slow their expansion and in some cases reduce capacity. Lion in 2013 recorded the lowest rate of traffic growth among Indonesia's four LCCs as its share of the Indonesian LCC market dropped from over 78% in 2012 to about 71%.

Indonesia AirAsia, Garuda Indonesia budget subsidiary Citilink and Tigerair Mandala all gained market share as they expanded more rapidly than Lion, albeit from much smaller bases. But Indonesia AirAsia and to a lesser extent Citilink are slowing expansion in 2014 while Tigerair Mandala has cut capacity.

Lion also has quietly slowed its growth by retiring 737 Classics and switching 737-900ER orders to smaller 737-800s. But Lion has not followed rival LCC groups AirAsia and Tigerair in deferring or cancelling orders. The group will account for about three quarters of the aircraft being delivered to Indonesia's LCC sector in 2014, putting it in position to make market share gains.