Crouching Tiger Airways, hidden Lion Air

"We cannot put that many airplanes in Indonesia alone" was the remark made last week by Hasyim Alhabsi, the Head of Public Relations of Lion Air, one of Asias fastest growing airlines. The Jakarta-based carrier has firm orders for 122 B737-900ERs 23% more firm orders than the recent Qantas/Jetstar firm order combined. Lion Air, which currently has a fleet of 40 jets, plans to join the likes of Tiger Airways, Jetstar and AirAsia to stake a claim of Asia’s burgeoning travel market, declaring last week that it plans to invest in or launch JV airlines in up to six countries in the region within five years. After replacements of ageing aircraft and providing for growth of its Indonesian operation, Lion Air could have up to 50 narrowbody aircraft available to deploy in ventures around Asia. Tiger Airways has a similar number (if it exercises options for aircraft up to 2014), assuming 20 aircraft enter its Australian fleet. Jetstar, after helping its parent defend its 65% market share at home, could unlock around 40 narrowbody aircraft for Asian operations. Meanwhile, AirAsia’s 175 A320s are all bound for its Asian operations, including 40 for Thai AirAsia. The Thai offshoot, with 12 aircraft currently, last week stated it has exhausted the domestic market and will be expanding rapidly on international routes from Thailand next year. Southern China is a key growth target. Thailand is a key investment target for Lion Air, along with Vietnam and Bangladesh. Malaysia and the Philippines were also listed by the Lion Air spokesman. The airline envisages investing USD50-100 million in each venture, to be funded from “internal and external sources”. Lion Air began taking delivery of its new B737-900ERs in the first half of this year, so the pressure is rising for some offshore deal making in an increasingly crowded market. Qantas/Jetstar has already linked with Pacific Airlines in Vietnam, creating some difficulties for AirAsia in developing its own JV in that market, let alone another approach by Lion Air. Bangladesh has considerable potential as a budget airline market, though other foreign attempts to crack the market have encountered problems. Another potential challenge is gaining access rights. Thailand has a fairly liberal aviation policy and the region generally is moving towards a more open access regime, although progress could be patchy. However, the weight of numbers of new aircraft ordered by the new breed of Asian carriers will put further pressure on governments in the region to liberalise. This is the avenue through which liberalisation will be achieved. The mounting pressure from new entrant airlines to change archaic government restrictions is the way ahead. There are planty of crouching Tigers, hidden Lions and others juest waiting to launch across the region. "The mounting pressure from new entrant airlines to change archaic government restrictions is the way ahead," said Peter Harbison, Executive Chairman of the Centre for Asia Pacific Aviation. "There are plenty of crouching tigers, hidden lions and others, just waiting to launch across the region." Meanwhile, a new Indonesian contender has entered the high-stakes future Asian aviation market. Lion Air is ready to pounce. Note to editors: About Centre for Asia Pacific Aviation The Centre for Asia Pacific Aviation (CAPA) was founded in 1990 and has since built an international reputation as the leading specialist aviation consultancy in the Asia Pacific, the Indian Subcontinent and Middle East regions. CAPA Consulting’s strategic advisory services are supported by the extensive information and data services provided by the Centre’s Market Research Unit to aviation industry leaders every day. The Centre also holds regular Aviation Leadership Summits, which provide unique opportunities for the exchange of ideas and experiences. Head Office, Sydney: Derek Sadubin, Chief Operating Officer Aurora Place, Level 4, 88 Phillip St Sydney PO Box N777, Grosvenor Place Sydney, NSW Australia 2000 Email: [email protected] Southeast Asia Regional Office: Richard Pinkham, Regional Director, Southeast Asia Email: [email protected] Indian Subcontinent and Middle East Office: Kapil Kaul, CEO Indian Subcontinent & Middle East Email: [email protected] UK/Europe Office: David Bentley, UK Associate Email: [email protected] North America Regional Office: Martti Raito, Regional Director, North America Email: [email protected] North Asia Representatives: Korea: Kyung-sup Lee. Email: [email protected] Japan: Reiko Sonoyama. Email: [email protected] More information is available on the Centre’s website: www.centreforaviation.com

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