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- Jakarta Soekarno-Hatta International Airport
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- Low Cost Carrier
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- Part of AirAsia Group
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Indonesia AirAsia is a low cost carrier based at Jakarta Soekarno-Hatta International Airport. The airline is a JV between Malaysian LCC AirAsia (49%) and PT Fersindo Nusaperkasa (51%). Indonesia AirAsia operates a fleet of Airbus A320 aircraft both domestically and internationally to destinations in South East Asia and Australia.
Location of Indonesia AirAsia main hub (Jakarta Soekarno-Hatta International Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Indonesia AirAsia fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
469 total articles
Indonesia AirAsia operating loss narrows significantly in 1Q2016 as it right-sizes fleet and network
64 total articles
AirAsia is slowing expansion as it attempts to turn around struggling affiliates and restore profitability. Six of the eight AirAsia-branded carriers were unprofitable in 1H2015 with only the long established short-haul carriers in Malaysia and Thailand in the black.
Passenger traffic across the AirAsia family grew by only 6% in 1H2015 to 26.5 million. 2015 will almost certainly see the slowest annual traffic growth in AirAsia’s 14-year history.
2015 will also mark the first year AirAsia will shrink its fleet. AirAsia now plans to end 2015 with 193 aircraft, including 166 A320s and 27 A330-300s, compared to 197 aircraft at the beginning of the year. Extremely modest growth is now planned for the next three years, resulting in a fleet of 208 aircraft (177 A320s and 31 A330s) at the end of 2018.
Lion Group full-service subsidiary Batik Air has entered the international market with a new double daily service to Singapore. Batik becomes the eighth airline operating Jakarta-Singapore and supplements the seven daily flights already operated by sister LCC Lion Air in the world’s second largest international route.
The launch of Singapore is part of a major expansion for Batik in 2015 as the airline nearly doubles its fleet to 34 aircraft. Lion has been allocating most of its narrowbody deliveries this year to Batik and Thai Lion Air while growth at the main Lion Air brand has slowed significantly.
The new route is also part of a major push in Singapore for the Lion Group. Thai Lion Air at almost the same time is launching service to Singapore, which will become the first destination to be served by all four of the main Lion Group carriers.
AirAsia has signed up as the anchor tenant for Changi Airport’s T4, a new hybrid terminal which is slated to open in 2017. AirAsia expects to reduce its operating costs significantly in Singapore as it moves from T1 to T4, giving it a better foundation to allow it potentially to resume expansion in Singapore.
AirAsia grew rapidly in Singapore from 2008 through 2013 but cut capacity in 2014 as market conditions became extremely challenging. Lower operating costs, driven by automation of passenger services, and incentive packages should make it easier for AirAsia to add capacity on some of its 15 existing routes from Singapore and launch new routes.
AirAsia could also potentially use T4 as a transit hub by introducing its Fly-Thru product in the Singapore market. Although it is not a hub or base Changi is AirAsia’s third largest airport. Only Kuala Lumpur and Bangkok have more AirAsia seats than Singapore.
Indonesia AirAsia (IAA) is planning further capacity and network adjustments as part of turnaround efforts. IAA is shrinking its fleet but should be able to reduce unit costs as aircraft utilisation rates increase and cost reduction initiatives are implemented.
Despite its recent struggles IAA remains an important component of the AirAsia Group group’s long-term strategy, particularly its international operation. The affiliate is also needed to feed new long-haul low-cost carrier Indonesia AirAsia X (IAAX).
IAA is expected to increase its focus on international operations, a sensible move given the challenges it has faced in Indonesia’s highly competitive domestic market. AirAsia can afford to live without being a significant player in the Indonesian domestic market and should instead try to leverage its leading position in the country’s relatively small but promising international market.
Long-haul low-cost start-up Indonesia AirAsia X (IAAX) has adjusted its fleet expansion plan for 2015 and 2016 in response to unexpected regulatory challenges. IAAX has finally secured approvals to serve Australia, which it now plans to launch on 18-Mar-2015, but is still seeking to secure approvals from Japan and South Korea while new regulations in Indonesia also pose a potential roadblock.
IAAX initially planned to commence operations in Dec-2014 on the Bali-Melbourne route. An unexpected last second setback from the Australian regulator forced IAAX to postpone the Melbourne launch by three months.
IAAX ended up shifting gears and commenced operations in Jan-2015 with services to Taiwan, which has a more favourable regulatory environment. But the carrier has since been operating only one weekly flight to Taipei, resulting in an extremely low utilisation rate for its initial fleet of two 377-seat A330-300s. IAAX is now planning to add only one aircraft 2015 and one more aircraft in 2016 although this could change if the regulatory environment becomes more favourable.
Garuda Indonesia budget subsidiary Citilink has further delayed the launch of scheduled international services as it focuses on its goal of achieving its first annual profit in 2015. Citilink will instead pursue less risky domestic expansion in 2015 and has begun operating seasonal international charters during periods of weak domestic demand.
Citilink has been the fastest expanding airline in Indonesia over the past four years as it has pursued strategic growth in an attempt to close the gap with rival Lion. Citilink accounted for about 14% of passenger traffic among Indonesian LCCs in 2015 compared to less than 4% in 2010.
But Citilink’s rate of expansion is slowing as it starts to focus more on profitability. Citilink was in the black for the first time in 2H2014 and is confident it can be profitable for the full year in CY2015.