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Lion Air eyes ever greater expansion with aircraft purchase
The country’s largest private carrier Lion Air Group has said it will continue expanding its network and fleet until 2035, both for domestic and international routes, to take advantage of a passenger boom
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he country’s largest private carrier Lion Air Group has said it will continue expanding its network and fleet until 2035, both for domestic and international routes, to take advantage of a passenger boom.
The airline has some 1,273 aircraft on order to be delivered until 2035, with the most recent being the purchase of 50 of the latest Boeing 737 Max 10, worth US$6.24 billion.
This takes the company’s total Boeing order to around 480 aircraft. The airline currently operates a total of 308 planes.
Lion Air Group founder Rusdi Kirana said the reason Lion Air continued to place orders for new aircraft was the business potential in the Indonesian and regional aviation industries in the years to come.
“If people ask me, why get more aircraft? Because we see a future, not only for Indonesia but also other countries,” he said on Tuesday.
Rusdi said the company would soon launch a new airline company in another country, to complement its existing Malindo Air in Malaysia and Thai Lion Air, its subsidiary in Thailand.
The new subsidiary is likely to be located in Cambodia, where the airline is seeking to cooperate with either another airline or some other corporation.
The plan is slightly altered from a previously cited possible expansion into Australia and Vietnam, among other options.
“As an airline, we have to keep growing, to be bigger and more economical,” he said, adding that the expansion would also help reduce aircraft spare part costs and maintenance.
Apart from the regional expansion, Rusdi said Lion Air was also still optimistic about the growth of the aviation industry in Indonesia.
The archipelagic country, with 17,000 islands that often require air transportation to get around and a potential market of 250 million people, has provided double-digit growth almost annually.
Rusdi added that Lion Air would also make Silangit Airport in North Sumatra an operational hub, with the possibility of being connected with South Asian countries.
Silangit Airport is near the scenic Toba Lake, an emerging tourist destination, aligning with the airline’s focus on riding the tourism wave in the country.
“If Silangit [airport] only expects [the growth] to come from Toba Lake, point-to-point, the development will take a while compared to being turned into a hub [for Lion Air],” he said.
He said the airline envisioned the routes from New Delhi and Mumbai in India, for example, to be connected to the airport.
Last year, Lion Air Group recorded 50.8 million passengers, an increase from 44.7 million in 2016, its data shows.
Similar sentiment also came from Lion Air Group CEO Edward Sirait who quoted the International Air Transport Association’s (IATA) 20-year passenger forecast, where Indonesia is expected to have 355 million air passengers by 2036, the fourth-fastest growing aviation market.
“With the current 100 million passengers, there are only around 857 aircraft now. If [the passenger boom] is threefold, this means it will require 2,400 aircraft. If we order 1,000 aircraft, it might not be enough,” he said.
Transportation Ministry data show that international flights to Indonesia last year reached 12.4 million passengers, 20.4 percent higher than the figure in 2016 of 10.3 million passengers.
The growth in international air passenger traffic was higher than the domestic passenger traffic, which grew by 8.4 percent in 2017 compared to 2016 with 89.3 million passengers.
Edward said the increased capacity was also aligned with the operation of new airports such as Kulon Progo International Airport in Yogyakarta as well as Kertajati Airport in West Java in the near future.
