Our AirInsight affiliate has published a short report in its e-newsletter (subscription only) about a new battle emerging among LCCs in Asia.
A new head-to-head battle appears to be shaping up in Asia.
Indonesia’s LionAir announced plans to create a new LCC, Malindo, which will be based in Malaysia and take on AirAsia.
AirAsia previously announced plans to acquire Indonesia’s Batavia Air—a deal that’s under regulator review and which may or may not consummate—in a bid to further penetrate the Indonesian market against LionAir.
AirAsia and LionAir are the two behemoths in the region, excluding flag carriers. AirAsia operates 100 Airbus A320s and has 272 more on order. It is poised to place an order for up to 100 more any day now. AirAsia was a launch customer for the A320neo and has been urging Airbus to proceed with a re-engining of the A330 to produce an A330neo—a move Airbus has so far resisted.
LionAir operates about 70 Boeing 737NGs and has an astounding 337 on order. It is the launch customer for the 737-9 MAX and was the first customer to sign a firm contract for the airplane. LionAir is poised to order 100 Airbus A320/A321 neos, presumably for the new venture.
“LionAir operates about 70 Boeing 737NGs and has an astounding 337 on order. It is the launch customer for the 737-9 MAX and was the first customer to sign a firm contract for the airplane. LionAir is poised to order 100 Airbus A320/A321 neos, presumably for the new venture.”
Do you really mean that LionAir is to order Airbus or should it read AirAsia?
I have not heard anything, rumors or otherwise, of LionAir considering any Airbus order.
Looks like you may have opened up a can of worms with that sentence, Scott.
Does anyone know the financial position of Lion Air? They appear to be privately held, but that’s a hell of a lot of airplanes…
He is not denying anything..
LionAir operates about 70 Boeing 737NGs and has an astounding 337 on order.
I wonder if you take 70 aircraft since during the last 5 years, how long it will take another 337 and order an additional 100. I guess those possible Airbusses wouldn’t be financed too by the US Import-Export bank would they? 😉
Note the verbs: Reuters uses “could” order. We used “is poised” to order. Never said they “have ordered”.
Never doubted your choice of words Scott. Reuters makes it sound like it is still not decided, whereas you seem to be implying that the decision has already been made. Or have I misunderstood something?
I was just wondering if you had some information that Lionair didn’t know you had?
No deal is done until the contract is signed. Therefore, strictly speaking, “no decision” is not inaccurate. But neither is “could order” or “is poised” to order.
And as Aeroturbopower points out, LionAir had an MOU for Airbuses last year.
No, he didn’t deny anything but neither did he confirm anything. Perhaps I am alone here, but I have the impression they weren’t prepared for this. That’s all.
Ahhh yes, I forgot about that.
In my opinion no deal is done until the money is transfered and then in some cases your still not sure 😉
But on the topic of lion-air ordering Airbus. Even considering the huge market in Indonesia that is just appearing. 600 extra planes in a decade for just one of the players is huge. I am worried that they might not have infrastructure available the moment the planes are delivered.
This doesn’t make sense at all to me. In the recent Lion Air order for 29 739ER and 201 739MAX, they also took 150 more options. That’s up to 380 Boeing NBs. Why would they consider Airbus NBS???
Apparently Malindo will operate with a 180 seat cabin on the 737-900ER (= 2 class), offer free meals and IFE, and run more frequencies. All this, combined with a clear widebody element in the initial business plan, indicates an intention to be more of a network carrier than a LCC. So it does not sound like Malindo is not aiming squarely at Air Asia’s market.
This makes sense when you think about it.
In Malaysia, with LCC space largely taken by Air Asia, it is the premium space which is more easily contestable. Malaysian Airline’s cost structure is high and it suffers from the usual issues experienced by legacy state-owned carriers.
It might be more expedient to talk publically about competing with ‘upstart’ Air Asia since this will not upset the Malaysian government. But if I was Malaysian Airlines, I’d be getting nervous!
The Jakarta Post has an interesting article on this, which ends with the note that Lion Air is negotiating for another 10 787s… hmm, dangle an order from Leahy to secure better pricing over all… wouldn’t be the first time
I may be wrong but as fierce as Airbus and Boeing are jostling over this region, I doubt Boeing would let its baby slip away unless it was that they needed an astronomical order like Americans (+ or – 420 planes).
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