Lion Air is moving faster to get a bigger share of the huge Malaysia-Indonesia air market. The airline just announced the creation of a new carrier based in Kuala Lumpur, Malindo Airways. It will be a joint venture with Malaysia’s National Aerospace & Defence Industries.
KUALA LUMPUR – it took just three months to think about it and just a day in a Singapore hotel to finalize the creation of a new airline. At the end of August , a meeting between Rusdi Kirana, CEO of the private Indonesian low fare carrier Lion Air and Ahmad Johan, head of Malaysia’s National Aerospace & Defense Industries (Nadi) conducted to the creation of a new airline, Malindo Airways, specially dedicated to serve the fast growing Malaysian-Indonesian air market.
Both businessmen received the blessing from both Indonesian and Malaysian governments. Especially in Malaysia where the government has a golden share in Nadi due to the fact that the company provides maintenance and service for the Malaysian air force. Malaysia’s Prime Minister Nasjib witnessed the signature of the joint venture where Nadi and Lion Air Group officialized their partnership: Nadi will have 51% of the capital and Lion Air the rest. No information was given about the total investment into the airline.
Lion Air is Indonesia’s largest airline and then its biggest LCC as well. It has a fleet of 100 aircraft and ordered another 382 airliners, being the Boeing’s largest curstomer. Althouth Lion Air flies to 73 destinations, they are mostly located in Indonesia with less than ten destinations being flown abroad (Singapore, Malaysia, Saudi Arabia and Australia).
The carrier has now the ambition to expand abroad. It has inline the creation of a long haul carrier, Batik Air, which is due to start flying in March 2013. Malindo Air will take off with a fleet of 12 Boeing 737-900ER aircraft to destinations between big cities in Malaysia and Indonesia before expanding to other Asian countries. KLIA 2 will be the main base of the airline with a second hub envisioned in Kota Kinabalu. Malindo could also in the longer term acquire the Boeing 787 Dreamliner to serve medium and long haul routes. With the clear ambition expressed by both CEO to turn Malindo into Malaysia’s newest full-fledged air carrier.
The carrier is also seen as becoming AirAsia strongest competitor in the low cost arena. So far, AirAsia flies to many cities on a monopoly basis and competition is likely to be revived in Malaysia. Financial experts expect a decline in fares and yields of AirAsia Bhd once the carrier starts flying. Especially as Malindo will offer a slightly better comfort with a larger seat pitch (31 inch, 7% larger than AirAsia) and small snacks onboard. It also indicated to use the airbridges installed at KLIA 2, due to open in May next year.
Commenting on the arrival of Malindo Air to Malaysia news agency Bernama, AirAsia Chief Executive Tony Fernandes welcomed the new low-cost airline in Malaysia but dismissed that it could turn into a potential threat to AirAsia Bhd. I welcome Malindo Airways’ establishment. AirAsia had always wanted Asean to be opened up. This is a good step,” he told Bernama. “ The new airline is not an issue for us in AirAsia. We have competed in a country like Malaysia which has a strong airline such as the Malaysia Airlines (MAS).We also have in hand a strong team for AirAsia, AirAsia X and AirAsia Indonesia. I am proud of what we have and we will continue to grow. We are building a global brand and I don’t think that a new player will slow us down”, he added.
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.
