Lion Air president Rusdi Kirana runs the budget carrier in his home country and is also the driving force behind the new Malindo Airways joint venture in Malaysia.
Of the 66 million passengers on scheduled flights in 2011, a total of 58.85 million were flying domestically, according to data from the Ministry of Transport.
Currently international routes are served only by local carriers such as Garuda Indonesia, Lion Air, Sriwijaya Air, and Indonesia AirAsia.
The market for domestic passenger airline service is still dominated by low-cost carriers (LCCs) led by Lion Air with 41.59%, Batavia Air (11.25%), Air Wing (3.21%) and Indonesia AirAsia with 2.18%.
Among full-service airlines, Garuda Indonesia controls 22.85% of the domestic market, Sriwijaya Air 12.3%, and Merpati Nusantara 3.52%
Bambang S. Ervan, head of the Center for Public Communication at the Ministry of Transport, says LCCs in Indonesia are not only focusing on developing domestic routes, but regional routes have also become a target, wherever reciprocal rules open an opportunity.
“Many airlines from other countries are asking for additional routes that can be offset by local airline flights,” he said. “Some LCCs such as Lion Air, Indonesia AirAsia and Batavia Air are quite aggressively developing their regional routes, besides competing with full-service airlines such as Garuda Indonesia.”
To tap this growth market, AirAsia has moved its Asean regional headquarters to Jakarta from its Kuala Lumpur home, and is also completing the acquisition of the local carrier Batavia Air.
Indonesia AirAsia will try to double its capacity by adding new aircraft annually to build up its fleet now at 40.
“We are ready to offer many international routes from Surabaya, Medan and Bandung, and we will be aggressive in the domestic market. If we do not understand the local market, then we will learn,” said Tony Fernandes, the founder and CEO of AirAsia Group.
The growing number of budget carriers in Indonesia has prompted Mr Fernandes to suggest that Indonesia build an LCC airport, like Don Mueang in Bangkok and KLIA2 in Kuala Lumpur. It doesn’t have to be in Jakarta — Surabaya and Medan are good candidates.
The needs of full-service airlines like Garuda and low-cost airlines like AirAsia are different he says. “It’s like a car — there is a low-cost car and there is a luxurious one. I hope to strengthen economic growth in Indonesia with the existence of an airport for LCCs.”
AirAsia is not alone in the market as Indonesia-based Lion Air is now seeking opportunities in the region as well.
Lion has entered Malaysia by establishing Malindo Airways, in a 49:51 venture with National Aerospace & Defence Industries Sdn Bhd (Nadi).
Malindo will start flying next may with mid-level services and competitive tariffs, said Rusdi Kirana, the president of Lion Air.
Malindo Airways is planning to spread its wings across cities in Indonesia, as well as to Manila, Hanoi, Australia and China.
The new airline will use 12 Boeing B737-900ER aircraft initially and eventually will operate 100 aircraft, including five Boeing 787 Dreamliners, which are due to enter service in 2015, when Malindo hopes to start flying to Europe.
*published 10/10/2012, Bangkok Post
Update:
Airbus has signed its biggest deal ever, an order from Indonesian's Lion Air worth US$24 billion for 234 planes that President Francois Hollande said should inspire the struggling French economy and all of Europe.
The CEOs of both companies signed the contract in a ceremony at the French presidential palace, a sign of its importance to the government.
Lion Air is buying 169 A320s and 65 A321 jets. The first planes will be delivered in 2014 and most of them will be outfitted with a new, more fuel-efficient engine that Airbus has recently developed.
The airline is a major player in the Indonesian market and also gave Boeing its largest-ever order when it finalised a deal last year for 230 planes from the Chicago airplane manufacturer.