Malindo Air launch drives 20% surge in Malaysia domestic traffic as MAS and AirAsia also expand

Malaysia's domestic market has seen a 20% surge in passenger traffic since the launch of Indonesia's Lion Group subsidiary Malindo Air.

Malindo Air began operations at the end of Mar-2013 and now operates 25 domestic flights across 11 routes, giving it about a 7% share of capacity in the Malaysian domestic market. Malaysia's other two main domestic carriers, AirAsia and Malaysia Airlines (MAS), have both responded by increasing capacity.

MAS has been expanding even faster than Malindo and been able to improve domestic load factors, albeit at the expense of yields. The flag carrier accounts for about 40% of the approximately 350,000 monthly passengers that have been added to Malaysia's domestic market while AirAsia and Malindo each account for about 30%.

The 20% to 25% domestic traffic increases that have been seen in Malaysia in recent months, making it one of the world's fastest growing domestic markets, are likely to continue for the remainder of 2013. But much more modest increases are expected over the medium to long term as Malindo and its two local competitors start to focus more on international expansion.