Business

Wednesday March 20, 2013

Lion Air likely to allot some of its latest A320 aircraft to new Malindo Air

By B K SIDHU
bksidhu@thestar.com.my


<B>Big order:</B> Rusdi (left) and Fabrice Bregier, the CEO of Airbus, pose with a Airbus 320 model for the media while France President Francois Hollande stands behind during a signing ceremony at the Elysee Palace in Paris, France. - EPA Big order: Rusdi (left) and Fabrice Bregier, the CEO of Airbus, pose with a Airbus 320 model for the media while France President Francois Hollande stands behind during a signing ceremony at the Elysee Palace in Paris, France. - EPA

PETALING JAYA: Lion Air group is likely to allot some of its latest A320 family aircraft to Malindo Air, which is set to take to the skies this Friday in an inaugural flight to Kota Kinabalu.

How many and when these aircraft would be allotted would depend on Malindo's network strategy.

Lion Air group co-founder and chief executive officer Rusdi Kirana told StarBiz that “it depends on the market”.

For now, Malindo has taken delivery of two B737-900ERs and will receive its third next week.

By year-end, it would have a dozen Boeing aircraft and its fleet will grow to over 100 in five years' time. Its aircraft will come from Lion Air, which had in late 2010, ordered 230 B737 and B787 aircraft.

Lion Air group owns Lion Air, Wings Air and Batik Air (to be launched later this year) and a 49% stake in Malindo Air.

Malaysia is the group's first hub out of Indonesia. The remaining 51% stake in Malindo Air is held by Nadi Sdn Bhd, a company led by low-profile businessman Tan Sri Ahmad Johan.

Those in the know claim that apart from Malindo Air, the A320 might also be used by Batik Air.

Rusdi believes that the fuel-efficient A320 family would enable Lion Air to achieve the lowest possible operating cost and enable the airline to continue offering the most competitive fares in the Asian region.

Malindo Air has big plans to scale heights up to China and even India, and for that, it needs the right aircraft to enable it to offer low fares amidst a competitive landscape.

The airline is starting with three daily flights to Kota Kinabalu, and a day later, will start flying four times daily to Kuching from the KL International Airport. Other routes planned for take-off some time in the near future include Bintulu, Sibu, Sandakan and Miri.

Lion Air has the lion's share or about 45% of the domestic air passenger market in Indonesia by offering low fares.

That is the strategy that Malindo Air is deploying.

Malindo Air's one-way, all-in promotional airfare starts from RM38 to Kuching and RM68 to Kota Kinabalu till October.

Malindo Air chief executive officer Chandran Ramamuthy said there was an “encouraging'' trend in bookings for the first two routes and he is hoping for full loads.

Lion Air group placed the latest order of 234 aircraft, worth US$24bil (RM74.94bil) , on Monday, following the order for the earlier 230 Boeing 737 and 787 jets for US$22bil it had placed in late 2010. The A320 family aircraft would comprise of 109 A320neo, 65 A321neo and 60 A320ceo aircraft.

With both the mega-purchases in place, Lion Air group can boast of more than 600 aircraft by 2025, making it among the top-ten of the world's biggest airlines in terms of fleet size, a report said.

Currently it operates 92 planes - all Boeings except for one McDonnell Douglas - which makes it number nine among regional carriers in terms of fleet size.

Brendan Sobie from the Centre for Asia Pacific Aviation said in a report that the vast potential of Indonesia's aviation market, and the scope for offshoot carriers, supports the scale of Lion Air's orders.

“They see an increase in demand that is brought on by the conditions in the home market. If you look at the projections for growth in Indonesia, assuming that Lion maintains its current market share and leading position, they are going to need a few hundred more aircraft just to keep that position,” he said.

“They also have an ambition to play more in international markets and to open up affiliates in other countries,'' he added.

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