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- IATA Code
- Date established
- Corporate Address
- N1, Level 4, Airlines Office
Main Terminal Building
Kuala Lumpur International Airport
64000, Sepang, Selangor Darul Ehsan
- Main hub
- Kuala Lumpur International Airport
- Business model
- Low Cost Carrier
- Domestic | International
Malindo Air is an LCC formed as a joint venture between Malaysia's National Aerospace and Defence Industries (NADI) (51%) and Lion Air of Indonesia (49%). The carrier launched in mid Mar-2013 starting with domestic services and plans to launch a number of international routes to India and Bangladesh in future. The carrier operates a fleet of Boeing 737-900ER and ATR72-212 aircraft from its Kuala Lumpur hubs.
Location of Malindo Air main hub (Kuala Lumpur International Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Malindo 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.
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Malaysia Airlines (MAS) plans more rapid expansion over the short to medium term albeit at a slower rate compared to the torrid 20% capacity growth recorded for 3Q2013. The carrier – which has been expanding its domestic, short-haul international and long-haul international operations at similar rapid clips in 2013 – will focus in 2014 primarily on regional international growth.
MAS has been able to grow passenger traffic so far this year by 28%, including a 37% jump in 3Q2013, easily outstripping the large increase in capacity. But the load factor improvements have come at the expense of yield, pushing MAS back into the red in 3Q2013.
The flag carrier hopes it can eventually improve yields across both cabins, leveraging the improvements in its product and new membership in oneworld. But the intense competition in Southeast Asia could make it difficult to achieve higher yields, clouding the carrier’s outlook.
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.
Indonesia’s emergence as one of the largest and fastest growing markets in Asia will be reinforced over the next couple of months as Garuda and Lion Air surpass Singapore Airlines (SIA) to become the largest carriers in Southeast Asia based on fleet size. As groups, Garuda and Lion will also end 2013 with more aircraft than the SIA Group and the AirAsia Group.
Garuda took delivery of its 100th aircraft in late Aug-2013 while Lion plans to take delivery of its 100th aircraft in late 2013. Currently only one airline in Southeast Asia, Singapore Airlines (SIA), has over 100 in service aircraft. But SIA’s fleet, which currently stands at 102 aircraft, will shrink to 101 aircraft over the next few months while Garuda and Lion will continue to rapidly expand.
Reaching the 100-aircraft milestone is a significant achievement for both Garuda and Lion. The other major flag carriers in the region, Malaysia Airlines (MAS) and Thai Airways, also currently operate over 90 aircraft.
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.
Lion Air Group’s Malaysian affiliate Malindo Air plans to pursue rapid international expansion with several routes to be launched to Indonesia and India shortly after Dhaka in Bangladesh becomes its first international destination on 28-Aug-2013. Malindo could quickly become the largest international carrier in the Lion Group as Kuala Lumpur is positioned as a transit hub for international connections.
Malindo launched services at the end of Mar-2013 and currently operates 11 domestic routes. But Malindo will now turn its attention to Malaysia’s international market, where it sees more opportunities.
Malindo will also start to leverage network synergies with its Indonesia-based sister carriers. Malindo and Lion’s three Indonesian subsidiaries will offer joint itineraries on hundreds of city pairs connecting Indonesia, where the group serves about 50 destinations, with Malaysia and South Asia. Malindo is particularly keen at tapping the under-served Indonesia-India market.
Lion Air has embarked on the first phase of an aggressive international strategy which is starting to see the fast-growing airline group diversify away from its roots in the Indonesian domestic market. The Mar-2013 launch of an affiliate in Malaysia, Malindo Air, is expected to be followed by joint ventures in other Asian markets, starting with Thailand. A low cost, but hybrid operator, Lion over time will also look to grow its now tiny international network from its home market of Indonesia.
Internationalisation with a focus on Southeast Asia is the right strategy for Lion as it cannot continue to rely almost entirely on the Indonesian domestic market. Indonesia has emerged as one of the world’s largest and fastest growing emerging markets. But with nearly 600 aircraft on order Lion needs to hedge its bets and not limit its growth to Indonesia, particularly given the threat that growing infrastructure constraints could lead to slower growth over the medium to long-term.
Lion, however, faces huge challenges as it starts to dip its paw in other markets. Establishing a strong brand and distribution network outside Indonesia will be Lion's biggest challenge. Competition in any new market Lion enters will be fierce as it will not have the first low cost mover advantage it had in Indonesia. Pan-Asian low cost airline groups like AirAsia, Jetstar and, to a lesser extent, Tiger, already occupy the high ground.
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