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Indonesian Lion Air gives some competition to AirAsia

With the first flights opened from Malindo Air linking Kuching and Kota Kinabalu to Kuala Lumpur, low cost giant AirAsia is finally facing serious competition on its own market.

KUALA LUMPUR- There is not one single week currently passing without headlines created by Indonesian low carrier Lion Air. The carrier just ordered last week some 234 medium haul jets from the Airbus A320 family, prompting even French President François Hollande to assist the official signature between both CEOs of Lion Air and EAS in Paris. And now it launched its first flights out of Kuala Lumpur moving into a Malaysian domestic market which was until now fully under the control of AirAsia- at least for the low cost segment.

Lion Air has so far concentrated mostly in Indonesia, serving a huge domestic market of 240 million inhabitants and a middle class already estimated by Bank Indonesia at 17% for those having a ‘high income’ of more than US$7,000 (data from 2011 out of Bank Indonesia Economic Report). Another report from McKinsey Global Institute released earlier this year points to 45 million the total number of people entering the “consuming class”. With some 150 million passengers in Indonesian airports last year, Indonesia is a driving force to reckon with and Lion Air is today well positioned to benefit from a booming consumption in travel.

Lion Air currently controls a little bit less than 50% of the domestic market while AirAsia Indonesia remains a rather small player, preferring to concentrate on international regional routes. Lion Air must now spread its wings regionally if it wants to gain a more international stature. The airline is currently only present in Singapore, Malaysia, Vietnam and Saudi Arabia.

Malindo Air is then a first step. The carrier is a joint venture with Malaysia and plans to integrate in its fleet a total of 12 aircraft Boeing 737-900 and to operate flights from Kuala Lumpur to Indonesian provincial cities as well as potential to Mainland China, Bangkok and Manila. A far more serious competition waits then AirAsia that the low cost carriers flying currently out of Kuala Lumpur (Tiger Air, Jetstar and Cebu Pacific).

Full steam for the airline is expected once the new low cost terminal KLIA 2 is opened, most probably by June. Lion Air is also currently studying a possible move into Singapore. The carrier just set up an aircraft leasing company in Singapore named “Transportation Partners”. A first step into a larger presence in the City State?

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Luc Citrinot a French national is a freelance journalist and consultant in tourism and air transport with over 20 years experience. Based in Paris and Bangkok, he works for various travel and air transport trade publications in Europe and Asia.

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