Competition between Indonesian market leaders Lion and Garuda to intensify as Batik Air launches

Competition in Indonesia's dynamic domestic market will further intensify in May-2013 as market leader Lion Air launches its new full-service subsidiary, Batik Air. Batik will initially serve three domestic routes alongside budget brand Lion and operate 737-900ERs in two-class configuration. Several more domestic routes are expected to be launched by the end of 2013 with international service to follow in 2014 or 2015.

Garuda will be most impacted by Batik's launch as the flag carrier's biggest competitor becomes stronger and more diversified. All of Batik's initial routes are already served by Garuda and most are also served by Indonesia's second largest full-service carrier, Sriwijaya. Batik will also face indirect competition from Garuda budget subsidiary Citilink, AirAsia Indonesia and Tiger Airways' affiliate Mandala but the Lion Group will mainly use its powerful budget brand to compete with these rapidly expanding LCCs.