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Established in 2003, Sriwijaya Air is an airline based in Jakarta, Indonesia. From its main base at Soekarno-Hatta International Airport, the carrier operates domestic service to major cities in Indonesia as well as international service to Penang and Singapore.
Location of Sriwijaya Air main hub (Jakarta Soekarno-Hatta International Airport)
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Competition in Indonesia’s dynamic domestic market has increased another notch with the launch of Sriwijaya full-service subsidiary Nam Air. Sriwijaya, Indonesia’s third largest airline group after Lion and Garuda, is using Nam to expand its presence in the fast-growing regional market.
Nam Air commenced operations on 10-Dec-2013 and is currently operating one daily Boeing 737-500 flight between Jakarta and Pangkal Pinang, a trunk route also served by Lion, Garuda and Sriwijaya. Six more domestic routes are planned as part of Nam’s initial phase, including five routes connecting secondary markets which are new to the Sriwijaya group. Four of these routes are currently not served by Lion or Garuda.
Sriwijaya could have used Nam to enter the budget end of the market, which has accounted for most of the recent growth in Indonesia but has become fiercely competitive. The group has instead positioned Nam as a full-service carrier with a similar product to Sriwijaya Air but a different network strategy, targeting point-to-point markets which are relatively thin but are underserved and have big potential.
Sriwijaya Air is seeking to renew its fleet, expand its network and launch a new full-service subsidiary in a bid to maintain its position as the third largest airline in Indonesia’s fast-growing market. The low-profile airline group, which is already one of the 30 largest in Asia, has big ambitions to expand domestically and to a lesser extent internationally with new Boeing 737-800s and Embraer E190s in two-class configuration. But the group plans to stay away from the faster-growing Indonesian budget airline sector and, in a rather odd strategy, have two full-service brands with one positioned at the premium end and one in the middle.
Sriwijaya risks getting squeezed out as much larger Lion and Garuda pursue rapid expansion in both the budget and full-service sectors while the Indonesian affiliates of AirAsia and Tiger grow rapidly at the low end of the market. But within Indonesia’s large group of second tier full-service carriers, Sriwijaya has the strongest position and stands to benefit in the likely event of consolidation.
The major beneficiaries of this week’s frenetic (public relations) activity just outside Paris live half a world away. They are Asia’s emerging travellers – the millions that have never stepped inside an aircraft, but for whom air travel is becoming attainable. That opportunity took a major step forward as Asian carriers – many of whom the world had never heard of a decade or even five years ago – stepped up in front of the world’s media to order narrowbodies for the mass markets they see blossoming at home.
Indonesia’s potential for more rapid aviation growth is expected to fuel a surge in new aircraft orders beyond those announced at this week’s Paris Air Show.
Sriwijaya Air is responding to intensifying competition in the Indonesian market by committing to become the first Indonesian customer for E190s. The new type will allow Sriwijaya to differentiate itself from some of its low-cost competitors and expand into some of Indonesia’s many fast-growing secondary routes.
Indonesia is a nation with very impressive statistics that still remains somewhat off the beaten path and away from much global notice. Yet it is the world’s most populous Muslim nation and ranks fourth globally in total population. It is the largest nation in Southeast Asia and stretches from west of Malaysia to the north of Australia.
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