Tigerair Mandala slows 2014 expansion, perhaps giving the lead for Indonesia's other LCCs

Tigerair Mandala has decided to slow its rate of expansion in response to less favourable market conditions in Indonesia. All of Indonesia's carriers have been impacted by a rapid decline in the Indonesian rupiah, leading to rising costs, while fares remain low with increases difficult to pursue given the competitive landscape.

Tigerair's Indonesian affiliate ended 2013 with only nine A320s and currently has commitments to add only three additional aircraft in 2014. Tigerair Mandala's original fleet plan envisioned 12 aircraft by the end of 2013, increasing to 18 by the end of 2014. The carrier could re-look at acquiring more aircraft in 2H2014 but for now is taking a wait-and-see attitude and will fall well short of the original 18-aircraft plan.

As it restructures its network and significantly slows expansion, Tigerair Mandala risks seeing the gap widen with Indonesia's larger low-cost carriers - Lion, Citilink and AirAsia. Its two main shareholders are unwilling at this point to continue pursuing market share gains at the expense of losses. But neither shareholder is expected to exit with Tiger Airways Holdings remaining committed to the dynamic Indonesian market - despite the planned divestment of its Philippine affiliate.