Batik Air's foray into Indonesia's full-service market further intensifies competition in the country and will likely put the most pressure on flag carrier Garuda Indonesia.
Batik, which started operations on 3 May, now serves six routes out of Jakarta to Manado, Ambon, Balikpapan, Pekanbaru, Yogyakarta and Denpasar, alongside its low-cost arm Lion Air.
Flightglobal's FlightMap Analytics shows that two of the carrier's routes - those to Balikpapan and Denpasar - are among the top six routes in the country. On these routes, Batik mostly goes up against Garuda and private carrier Sriwijaya and to a smaller extent, Indonesia AirAsia and Merpati Nusantara.
On the Jakarta-Denpasar route, Flightglobal data shows that Garuda and its low-cost arm Citilink dominates with a 42.8% market share, offering 116 weekly services. Batik and Lion, meanwhile, hold a 35.9% share with 91 weekly services. The remaining seats are offered by Indonesia AirAsia, Merpati and Sriwijaya.
A similar picture is painted on the Jakarta-Balikpapan route where Garuda and Citilink operate 78 weekly services, with Lion and Batik following closely behind with 56 services. Sriwijaya, meanwhile, operates 21 weekly services. On the Jakarta-Manado route, the Lion Air Group leads with 49 weekly services, while Garuda has 21 services and Sriwijyaya seven.
Batik's entry into the full-service market effectively breaks the monopoly that Garuda has held in recent years. Although the flag carrier has strong support from corporate clients and wealthy Indonesians, and a larger network of international destinations, Batik has definitely put up a challenge.
The carrier's fleet of four brand new Boeing 737-900ER aircraft, together with its lower fares, makes it an attractive option. Its aircraft are configured with 180 seats - 12 in business and 168 in economy - and they compete against Garuda's 737-800s. While the two carriers' business class products are also comparable, seats in Batik's economy class are equipped with the Panasonic eX2 in-flight entertainment system, which is more superior to Garuda's common screen.
Lion Air Group already has a 52.9% market share in Indonesia and will continue to use Batik to expand its lead in the domestic market. It is interesting to note, however, that Batik has so far steered clear of Indonesia's top three domestic routes, namely those from Jakarta to Surabaya, Medan and Makassar.
Garuda, however, is also using Citilink to compete with Lion's low-cost offering - together they hold a 31.1% stake. Sriwijaya, meanwhile, is also moving towards being a full-service operator and is reconfiguring its 737-800 aircraft cabins to include eight business class seats. The airline has also applied for a flight permit and air operator's certificate for its planned new airline Nam Air.
Capacity in Indonesia, as measured by ASKs, has more than doubled over the last five years - from 31.6 billion in 2007 to 65.8 billion in 2012.
Batik's long-term plan, however, is to use Manado as a hub to connect East Asian cities with the eastern part of the Indonesian archipelago. Lion's president director Rusdi Kirana had previously told Flightglobal Pro that it aims to start services from Manado to Guangzhou and Hong Kong by the end of 2013. Batik will also add Boeing 787s in 2015, which will be used to serve North Asian destinations such as Shanghai, Beijing, Seoul and Tokyo from Manado.
In this climate, Flightglobal Ascend's head of consultancy in Asia, Paul Sheridan, says the smaller players are running the risk of being swamped by Garuda and Lion, and that smaller airlines will need to find a niche and differentiate themselves from the main players.
The challenge for Lion, however, is to manage its three different airlines - Lion, Batik and Malindo Air - effectively.