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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 local interests. Indonesia AirAsia operates a fleet of Airbus A320 aircraft to destinations across Indonesia, and international services from Indonesia to destinations in Australian and South East Asia.
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.
225 total articles
47 total articles
Garuda’s Citilink to expand into international market, starting with Malaysia, Singapore & Australia
Garuda Indonesia budget subsidiary Citilink is planning more rapid domestic expansion in 2014 and the launch of international services, with an initial six routes. The expansion comes despite challenging market conditions in Indonesia and continued losses, including a net loss of USD48 million for 2013.
But Citilink is striving to reduce its costs and improve its profitability by increasing utilisation levels and average stage lengths. Longer domestic routes and the launch of international services will drive up utilisation rates on its fleet of A320s, which is expanding from 24 to 32 aircraft in 2014. International services will also provide an important new foreign currency revenue stream, cushioning the impact from the rapid depreciation of the Indonesian rupiah.
Citilink aims to launch services to four international destinations in 2014. The carrier has selected Johor Bahru in Malaysia as its first destination overseas, followed by Kuala Lumpur, Singapore and eventually Perth.
Indonesia AirAsia slows expansion. Domestic share to suffer but international position to strengthen
Indonesia AirAsia has decided to significantly slow down expansion in 2014 as market conditions in the Indonesian market, particularly domestically, have become challenging. The carrier, which added eight A320s in 2013, had dropped plans to add two aircraft in 1H2014 and is also considering deferring some or all of the four deliveries initially slated for 2H2014.
Indonesia AirAsia is also planning to adjust its network to focus more on international services. The international market is more profitable as it is less impacted by the devaluation of the Indonesian rupiah. But cutting domestic capacity will result in a reduction in AirAsia’s already small share of Indonesia’s domestic market.
AirAsia still has a strong position and bright outlook in Indonesia’s international market. But 2014 will mark another setback in the group’s long-term strategy of securing a larger presence in Southeast Asia’s largest domestic market.
Indonesia’s Tigerair Mandala is boldly slashing capacity by about 40%, hoping to lead by example as it responds to overcapacity and challenging market conditions. The capacity cuts will reduce the carrier’s average aircraft utilisation rate to less than nine hours, which is very low for an LCC operating a new fleet of A320s.
Reducing utilisation is an unusual move in Asia’s low-cost sector, where expansion continues at an ambitious rate despite signs of overcapacity in several major markets including Indonesia. But reducing utilisation and even temporarily grounding aircraft is a more common response by LCCs in other regions during periods of low demand.
More Asian LCCs should consider adopting the strategy used by leading European LCC Ryanair, which parks up to 80 aircraft every winter. So far only tiny Tigerair Mandala, which is roughly number 35 among the 47 LCCs in Asia-Pacific, has taken the initiative.
Malaysia-based long-haul low-cost airline group AirAsia X is moving forward with plans to establish its second affiliate in Indonesia with a base from the resort island of Bali. The group recently signed an agreement with a local partner to establish Indonesia AirAsia X (IAAX) and has already secured an air service licence from Indonesian authorities.
IAAX will likely launch services by the end 2014, sourcing 377-seat A330-300s from the group’s recently expanded order book. The new carrier plans to serve destinations in Australia and North Asia, connecting dots which are already served by AirAsia X from Kuala Lumpur and soon by Thai AirAsia X from Bangkok.
Indonesia’s LCC sector is fiercely competitive, with a fleet of nearly 200 aircraft which is slated to expand by another 20% in 2014. But IAAX will be Indonesia’s first long-haul low-cost carrier, giving it important first mover advantage in several relatively underserved markets.
Jakarta’s old airport Halim has re-opened to scheduled commercial passenger jet flights, slightly relieving congestion at constrained Jakarta Soekarno-Hatta. Garuda budget subsidiary Citilink became on 10-Jan-2014 the first of at least four major Indonesian carriers to launch flights from Halim, with eight frequencies on four domestic routes.
Garuda, Indonesia AirAsia and Lion Air are also preparing to launch flights from Halim within the next couple of months. Lion initially planned to move the Jakarta operation of new full-service subsidiary Batik Air from Soekarno-Hatta to Halim but in a change of strategy has instead decided to move select Lion Air-operated frequencies on major trunk routes.
Garuda and AirAsia are also expected to use Halim for some frequencies on domestic trunk routes. An overwhelming majority of flights will remain at Soekarno-Hatta, which is now operating at levels nearly three times its designed capacity, as there is only room at Halim for limited commercial operations.
Darwin is seeing a surge in capacity from foreign carriers as demand for international services expand to and from northern Australia, driven by growth in the energy and mining sectors. The increases offset an upcoming reduction in international capacity by Jetstar Airways as the Qantas low-cost subsidiary closes its Darwin base.
Seat capacity between Darwin and Southeast Asia has expanded by about 40% over the last year as three foreign carriers – Indonesia AirAsia, Malaysia Airlines (MAS) and Philippines Airlines (PAL) – have entered. Garuda Indonesia is also now looking at resuming services to Darwin in 2014.
Darwin was previously only served by one foreign carrier, Singapore Airlines (SIA) regional subsidiary SilkAir, which launched services in 2012. Jetstar also operates three international routes from Darwin – Bali, Manila/Tokyo and Singapore – but is dropping Manila/Tokyo and slightly reducing capacity on Bali and Singapore.
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