Lion Air looks to accelerate international expansion by launching more JVs, starting with Thailand

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.