ANALYSIS: Lion's full service offspring up pressure on domestic routes

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Following their launches earlier this year, Malaysia's Malindo Air and Indonesia's Batik Air are starting to have an impact on select domestic routes.

Both full-service carriers are the offspring of Indonesian low-cost giant Lion Air. Batik is wholly owned by Lion. Malindo is 51% owned by Malaysia's National Aerospace and Defence Industries and 49% by Lion, but its chief executive Chandran Rama Muthi is the former right-hand man of Rusdi Kirana, president director of Lion.

Malindo, Batik route networks in July 2013

FlightMaps Analytics

At its launch in March, Malindo operated on just two domestic routes, Kuala Lumpur-Kota Kinabalu and Kuala Lumpur-Kuching.

After launching with two Boeing 737-900ERS, it has steadily grown its fleet. According to Flightglobal's Ascend Online database, Malindo now operates four 737-900ERs and a single ATR 72-600. The company has said that it plans operate 18 aircraft by the end of 2013.

According to Flightmaps Analytics, Malindo's two biggest routes by seat capacity are still the original routes of Kuala Lumpur-Kuching and Kuala Lumpur-Kinabalu.

On Kuala Lumpur-Kuching, in July 2013, Malindo will provide 9.3% of total capacity, or 14,000 seats. This places it in third position behind the two incumbents. AirAsia has 57% (84,000 seats) of monthly capacity on the route, while Malaysia Airlines (MAS) has 34% (50,000 seats).

On Kuala Lumpur-Kota Kinabalu, Malindo has made a slightly smaller impact, providing 7.4% (11,000 seats) of total capacity. AirAsia has 55% (84,000 seats), while MAS has 37% (56,000 seats).

Ascend shows that Batik also operates four Boeing 737-900ERs. Since its launch in May, it has grown to provide seven direct services from its Jakarta hub: Pekanbaru, Balikpapan, Manado, Ambon, Jayapura, Denpasar-Bali, and Yogyakarta.

Flightmaps Analytics indicates that its primary routes by seat capacity are Jakarta-Pekanbaru, Jakarta-Manado, and Jakarta-Denpasar Bali.

On Jakarta-Pekanbaru, Batik competes against four carriers: Garuda, Lion, Mandala Airlines, and Sriwijaya Air. In July 2013, it will be the third largest player on the route, with 13% of capacity, or 14,000 seats. Sister carrier Lion is the leader with 44% share (45,000 seats) followed by Garuda with 28% (28,000 seats).

Flightmaps Analytics indicates that Jakarta-Manado is less crowded with only three players: Batik, Garuda, and Lion. In July 2013, Batik will operate 20.5% of capacity (9,114 seats). Garuda barely pips Batik for second position, with 21.3% share (9,486 seats). Lion dominates Jakarta-Manado with 58% capacity share (26,000 seats).

Lion, via Batik, has stated ambitions to eventually use Manado as an eastern hub into Indonesia for travellers from North Asia. Jakarta-Denpasar Bali is a highly-fragmented route operated by eight players, according to FlightMaps.

On this popular route, Batik has a 3.8% share of capacity, with 9,114 seats per month. This puts it fifth behind Lion with 35% (84,000 seats), Garuda with 33.5% (81,000 seats), Indonesia AirAsia with 14% (33,000 seats), and Citilink Indonesia with 6.1% (15,000 seats).