IATA: Lion's Batik Air to up the competition in Southeast Asia

Beijing
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Indonesia's airline market is set to get even more competitive in 2013 when Lion Air's new premium carrier begins operations.

Batik Air will launch services in 2013 with Boeing 737-900ERs on domestic and regional routes. Lion has just signed a commitment for five Boeing 787s for its subsidiary, with its president director Rusdi Kirana previously saying the airline hopes to have widebodies by 2015.

Much of the recent growth and competition in Indonesia has centred around the short-haul, and in particular, low-cost segments, and Lion's move to get widebodies signals that the upstarts are targeting the legacy carriers in Southeast Asia in the long-haul segment too.

Batik is likely to base its aircraft in Manado, a city in the northern region of the Indonesian island of Sulawesi, offering possibly easier and faster connections to Northeast Asia and other parts of the Asia-Pacific.

"Right now, if I want to go to Tokyo, [I will] have to go from Singapore or Jakarta. This will take the same time as from Manado, and the government is also keen to make this city the gateway to Asia-Pacific," Rusdi told Flightglobal in an earlier interview.

Rusdi dismissed concerns about overcapacity in Indonesia because of the fleet expansion plans of Garuda Indonesia and Lion Air. He believes that the Indonesian market has room to operate up to 1,000 aircraft.

"If you look at how many people there are in America, Malaysia, Singapore and Indonesia and compare the ASKs, we have 230 million people, but our ASKs are much, much lower than Singapore's. We have the chance to grow," said Rusdi.

While Batik will provide competition to flag carrier Garuda Indonesia in the premium segment, the entry of several long-haul, low-cost carriers in Southeast Asia could put even more pressure on the existing full-service airlines in the region.

Malaysia's AirAsia X, Qantas subsidiary Jetstar and Qantas's Singapore-based affiliate Jetstar Asia were the first to start long-haul, low-cost services, and were joined by Singapore Airlines subsidiary Scoot earlier this month. Next year, Cebu Pacific from the Philippines will also begin long-haul services.

That will put pressure on the likes of Malaysia Airlines, Thai Airways, Philippine Airlines and Garuda Indonesia to rejuvenate their fleets and raise the bar in terms of service levels in order to hold on to their existing passengers in the face of an increasingly competitive market.