AirAsia accelerates fleet expansion as battle with Indonesia's Lion Air moves up a gear

The AirAsia Group has followed through on promises to order another 100 A320s, enabling it to accelerate expansion at its fast-growing portfolio of low-cost carriers. The new order, announced on 13-Dec-2012, means the group is now committed to more than 350 A320/A320neo deliveries over the next 14 years. While adding aircraft at an average pace of 25 aircraft per year may seem ambitious, the reality is that even faster expansion is potentially sustainable given the fact that AirAsia now comprises of five A320 airlines in five distinct markets, all of which are rapidly growing. Indeed, the real issue is more about keeping ahead of the field in Asia's booming short-haul low-cost market.

Indonesia's Lion Air Group, which has quietly overtaken AirAsia as the largest LCC group within Southeast Asia (albeit mostly domestic), captured headlines in late 2011 when it one-upped AirAsia's order for 200 A320neos from mid-2011 by committing to 201 737 MAXs.

AirAsia is taking the threat of increased competition with Lion, which is planning to launch a new affiliate in AirAsia's home market of Malaysia in 2013, very seriously. It's no surprise AirAsia is using the latest order in part to accelerate expansion in Malaysia, where it will aim to beat new Lion subsidiary Malindo into oblivion, and in Lion's home market of Indonesia.