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Lion Air is an Indonesian hybrid airline based at Jakarta-Soekarno-Hatta International Airport. Commencing operations in 2000 and based in Jakarta, Lion Air is the largest privately-owned airline in Indonesia. The carrier operates a network of scheduled passenger services throughout South East Asia and the Middle East.
Location of Lion Air main hub (Jakarta Soekarno-Hatta International Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Lion Air 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.
336 total articles
53 total articles
Indonesia’s Merpati Nusantara Airlines is facing a financial crisis and is looking to recapitalise and restructure its network to survive. The government-owned carrier has already shrunk in recent years while all its competitors and Indonesia’s overall domestic market have expanded rapidly. But Merpati has held onto some trunk routes, where it competes against larger and stronger carriers.
The most logical solution is for Merpati to abandon competing against Indonesia’s main carriers and focus entirely on regional routes to remote areas. But the number of regional routes requiring government subsidy are declining.
More efficient Lion Air has a fast-growing regional subsidiary operating ATR 72s and is looking to add smaller turboprops to access an even larger chunk of Indonesia’s vast regional market. Garuda is also introducing ATR 72s in Nov-2013, leaving even less room for a government-backed regional carrier. The Indonesian government seems to recognise there is no longer a need to keep Merpati running.
Indonesia AirAsia and Tigerair Mandala have unveiled plans for further international expansion, with both low-cost carriers in particular targeting the Indonesia-Hong Kong market. Indonesia AirAsia, which is already the largest carrier in the Indonesian international market, is also planning to launch services to Vietnam and India.
Tigerair Mandala has announced the launch of services to Hong Kong from Bali and Surabaya from Dec-2013, supplementing its relatively new Jakarta-Hong Kong route. Indonesia AirAsia is preparing to also launch Surabaya-Hong Kong service in 2014 and is looking at serving Hong Kong from Medan.
The AirAsia expansion could result in the carrier widening the gap in Indonesia’s international market over Lion Air, which is the dominant player in the Indonesian domestic market but has been slower in pursuing international expansion. The forthcoming expansion from Mandala could also result in Tigerair overtaking Lion as a larger LCC group in Indonesia’s international market.
Southeast Asia airline market sees more rapid growth & high international low-cost penetration rates
Southeast Asia continues to post some of the highest growth rates in the global aviation industry, driven primarily by expansion in the region’s booming low-cost sector.
LCCs now account for over 50% of capacity in Southeast Asia’s four largest domestic markets – Indonesia, Malaysia, the Philippines and Thailand. Even more impressively, LCCs have been able to rapidly claim about a 50% share in the intra-Southeast Asia international market.
But there has also been growth in 2013 at nearly all of the region’s flag carriers. A large portion of this growth has been on regional routes as full-service operators have been able to join the LCCs in taking advantage of the generally favourable economic conditions in Southeast Asia.
Lion Air Group is planning further expansion at its Batam hub with several new domestic routes by early 2014 followed by the launch of international services by the end of 2014. Flights to Bangkok, Guangzhou, Hong Kong, Kuala Lumpur and Jeddah are part of an ambitious plan by Lion to position Batam as its major Indonesian hub for domestic to international connections.
Batam, an Indonesian island located close to Singapore, has quietly emerged as a Lion domestic hub with 13 routes and a large volume of transit passengers. Batam is currently the ninth largest hub or base for Lion but the island’s Hang Nadim Airport, which will also host a new Lion maintenance base, could become the group’s largest transit hub.
Lion is keen to position Batam as an alternative transit point to congested Jakarta. The group is also planning to acquire a ferry to shuttle passengers between Batam and Singapore, avoiding the congestion and higher cost of Changi Airport.
Indonesia’s Lion Air Group is aiming to launch a new affiliate in Thailand by the end of 2013 with an initial fleet of two 737-900ERs based at Bangkok Don Mueang Airport. The new carrier, Thai Lion, will follow the low-cost model and, unlike Lion’s Malaysian subsidiary Malindo, provide an all-economy no-frill service.
Thai Lion will initially serve two international routes – Kuala Lumpur and Jakarta – and Thailand’s second largest domestic route, Bangkok-Chiang Mai. With Kuala Lumpur and Jakarta, Thai Lion will be able to leverage the hubs of its sister carriers.
The new carrier will compete primarily against Thailand’s two existing LCCs, Thai AirAsia and Thai Airways' low-cost affiliate Nok Air. Both are based at Don Mueang and serve Chiang Mai while AirAsia is the market leader between Bangkok and Kuala Lumpur and also serves Bangkok-Jakarta.
Lion Air Group new full-service subsidiary Batik Air is planning further expansion as it starts to focus on longer routes, including international services.
Two medium-haul domestic routes will be added in Dec-2013 as the carrier takes delivery of a fifth and sixth 737-900ER. More domestic and the start of international expansion is expected in 2014 as Batik takes the first batch of A320s from the landmark 234-aircraft deal signed by Lion and Airbus in Mar-2013. In 2015 Batik intends to start operating 787s, supporting further international expansion.
Batik is also preparing to move its base from Jakarta Soekarno-Hatta to closer-in Halim Airport, which Indonesian authorities are opening up for commercial jet services in a bid to relieve congestion at Soekarno-Hatta. Halim will provide further differentiation and product segmentation for Batik as the main Lion brand will focus on operating aircraft in single-class configuration from Soekarno-Hatta.
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