Lion Air to set up budget carrier in Malaysia
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Lion Air to set up budget carrier in Malaysia
The Associated Press, Kuala Lumpur, Malaysia...September 11 2012
Indonesia's Lion Air said Tuesday it will set up a low-cost airline in Malaysia that will take off in May 2013 as part of an aggressive regional expansion.
The move will see Lion Air, which controls nearly half the air travel market in Indonesia, playing catch-up to the region's top budget carrier AirAsia. It follows AirAsia's recent acquisition of Batavia Air in a bid to tap Indonesia's 230 million population.
Lion Air will own 49 percent of the new airline, Malindo Airways, and Malaysia's National Aerospace and Defence Industries the remaining 51 percent.
Lion Air President Rusdi Kirana said Malindo Airways will start flying between the two countries with a fleet of 12 new Boeing 737 planes in May, before expanding to other cities in Southeast Asia.
He said 12 planes will be added each year to bring the total fleet to more than 100 in a decade. This includes adding Boeing 787 Dreamliner jets by 2015 to fly to routes in China, Japan and Australia, he said.
Rusdi said tickets prices will be competitive, either in the same range as rival AirAsia or "even lower." The airline's planes will be fitted with a lower-than-usual 150 seats coupled with inflight entertainment and light meals, he said. It aims to offset lower revenue per plane due to fewer seats with higher frequency flights.
"The idea is to build passenger growth by giving them affordable prices and better service," Rusdi told a news conference.
Lion Air, which began operations in 2000, currently flies to destinations in Indonesia, Singapore, Malaysia, Vietnam and Saudi Arabia. It operates a fleet of 100 aircraft and has 382 planes on order.
Apart from Malindo Airways, the airline is setting up a full-service carrier in Indonesia named Batik Air, which will start operations in March next year.
Rusdi said the airline flew 27.6 million passengers last year, and expects to exceed 30 million this year.
Malaysian officials said the joint venture will provide the regional budget air travel industry with healthy competition and help the country reach its aim of becoming a regional aviation hub, competing with Singapore and Thailand.
Lion Air will manage the airline while its Malaysian partner will handle training and aircraft maintenance.
AND
Sriwijaya Air plans to launch full-service subsidiary next year
Sriwijaya Air, one of the largest domestic carriers in Indonesia, is planning to launch a new full-service airline, Nam Air, next year in a bid to tap into the country’s full-service market, which is currently dominated by national flag carrier, Garuda Indonesia.
Sriwijaya Air president director Chandra Lie told reporters in Jakarta on Tuesday that the privately owned air operator was currently awaiting a flight permit for the new airline from the Transportation Ministry.
“We are still waiting for the government to issue the flight permit [for Nam Air]. We hope that the new domestic airline, which will be our subsidiary, will begin operations in 2013,” he said.
In June last year, Sriwijaya Air inked a deal with Brazilian aircraft maker, Embraer S.A., to supply 20 Embraer 190 jets which, according to Chandra, would cost the airline around US$1 billion.
He said the company would use the Embraer aircraft for its new domestic airline, adding that the 100-seat Embraer 190s could serve airports with shorter runways. (asa/lfr)
Indonesia's Lion Air said Tuesday it will set up a low-cost airline in Malaysia that will take off in May 2013 as part of an aggressive regional expansion.
The move will see Lion Air, which controls nearly half the air travel market in Indonesia, playing catch-up to the region's top budget carrier AirAsia. It follows AirAsia's recent acquisition of Batavia Air in a bid to tap Indonesia's 230 million population.
Lion Air will own 49 percent of the new airline, Malindo Airways, and Malaysia's National Aerospace and Defence Industries the remaining 51 percent.
Lion Air President Rusdi Kirana said Malindo Airways will start flying between the two countries with a fleet of 12 new Boeing 737 planes in May, before expanding to other cities in Southeast Asia.
He said 12 planes will be added each year to bring the total fleet to more than 100 in a decade. This includes adding Boeing 787 Dreamliner jets by 2015 to fly to routes in China, Japan and Australia, he said.
Rusdi said tickets prices will be competitive, either in the same range as rival AirAsia or "even lower." The airline's planes will be fitted with a lower-than-usual 150 seats coupled with inflight entertainment and light meals, he said. It aims to offset lower revenue per plane due to fewer seats with higher frequency flights.
"The idea is to build passenger growth by giving them affordable prices and better service," Rusdi told a news conference.
Lion Air, which began operations in 2000, currently flies to destinations in Indonesia, Singapore, Malaysia, Vietnam and Saudi Arabia. It operates a fleet of 100 aircraft and has 382 planes on order.
Apart from Malindo Airways, the airline is setting up a full-service carrier in Indonesia named Batik Air, which will start operations in March next year.
Rusdi said the airline flew 27.6 million passengers last year, and expects to exceed 30 million this year.
Malaysian officials said the joint venture will provide the regional budget air travel industry with healthy competition and help the country reach its aim of becoming a regional aviation hub, competing with Singapore and Thailand.
Lion Air will manage the airline while its Malaysian partner will handle training and aircraft maintenance.
AND
Sriwijaya Air plans to launch full-service subsidiary next year
Sriwijaya Air, one of the largest domestic carriers in Indonesia, is planning to launch a new full-service airline, Nam Air, next year in a bid to tap into the country’s full-service market, which is currently dominated by national flag carrier, Garuda Indonesia.
Sriwijaya Air president director Chandra Lie told reporters in Jakarta on Tuesday that the privately owned air operator was currently awaiting a flight permit for the new airline from the Transportation Ministry.
“We are still waiting for the government to issue the flight permit [for Nam Air]. We hope that the new domestic airline, which will be our subsidiary, will begin operations in 2013,” he said.
In June last year, Sriwijaya Air inked a deal with Brazilian aircraft maker, Embraer S.A., to supply 20 Embraer 190 jets which, according to Chandra, would cost the airline around US$1 billion.
He said the company would use the Embraer aircraft for its new domestic airline, adding that the 100-seat Embraer 190s could serve airports with shorter runways. (asa/lfr)
Last edited by jetjockey696; 11th Sep 2012 at 15:00.
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PM launches new low-cost airline Malindo Airways
Prime Minister Datuk Seri Najib Tun Razak on Tuesday announced the setting up of a new low-cost airline known as Malindo Airways.
Najib said the airline, borne out of a collaboration between National Aerospace and Defence Industries Sdn Bhd (Nadi) and Indonesia's PT Lion Group, would begin operations on May 1 next year and be based in KLIA 2.
The collaboration, said Najib, not only marked another milestone in the nation's aviation industry, but also represented yet another facet of the close relationship between Malaysia and Indonesia.
"To my mind the acronym Malindo- the melodic combination of the names of Malaysia and Indonesia - has very significant historical connotations, reflecting the long intertwined history of the peoples of our two countries.
"In terms of this to be established airline, I believe the name reflects the bridging of the two countries by way of a wide network of flights that will connect various cities and towns regionally, opening new destinations for travellers from within the Nusantara and beyond," he said after witnessing the signing ceremony for the establishment of the airline between the two companies, here.
Najib said the entry of the new airline was a timely move to meet the burgeoning market demand, both for low cost flights and maximum connectivity across the region especially between different cities in Malaysia and various parts of Indonesia.
He said, with significant experience in Airline Operations, MRO (Maintenance, Repair and Overhaul) services, Supply Chain Management and Human Capital development, NADI and PT Lion Group would not only be able to provide quality services to their consumers in the region, but also to the global aviation industry.
"This will fortify the Aviation Business ecosystem both in Malaysia and Indonesia. Furthermore, the partnership will provide the regional low-cost air travel market with healthy competition, ultimately benefiting low-cost travellers in both countries," said Najib.
According to the prime minister, the Malaysian Aerospace Industry, which has grown tremendously over the last 20 years, will be well poised to meet the challenges and to seize the opportunities of the future if it was continuously nurtured.
In 2011, Najib said, the industry generated RM26bil in turnover, employing approximately 54,000 workers, 15,000 of whom were skilled in various vocations.
"This is something that we, as Malaysians, can take pride in, particularly because it is a testament to the success of the National Aerospace Blueprint (NAB) that was introduced in 1997," he said.
The Blueprint laid out 45 recommendations covering aerospace manufacturing, commercial aviation, general aviation, systems and space, to provide Malaysia with the essential framework to develop itself as technologically and competitively competent global aerospace player by 2015.
The introduction of the Government's Economic Transformation Program (ETP) further bolstered Malaysia's Aerospace industry, identifying two Entry Point Projects, namely "EPP1-Growing MRO Services" and "EPP2-Growing Large Pure Play Engineering Services", which were expected to contribute RM16.9bil to Malaysia's Gross National Income (GNI) and create over 32,000 jobs by 2020, added Najib. - Bernama
Najib said the airline, borne out of a collaboration between National Aerospace and Defence Industries Sdn Bhd (Nadi) and Indonesia's PT Lion Group, would begin operations on May 1 next year and be based in KLIA 2.
The collaboration, said Najib, not only marked another milestone in the nation's aviation industry, but also represented yet another facet of the close relationship between Malaysia and Indonesia.
"To my mind the acronym Malindo- the melodic combination of the names of Malaysia and Indonesia - has very significant historical connotations, reflecting the long intertwined history of the peoples of our two countries.
"In terms of this to be established airline, I believe the name reflects the bridging of the two countries by way of a wide network of flights that will connect various cities and towns regionally, opening new destinations for travellers from within the Nusantara and beyond," he said after witnessing the signing ceremony for the establishment of the airline between the two companies, here.
Najib said the entry of the new airline was a timely move to meet the burgeoning market demand, both for low cost flights and maximum connectivity across the region especially between different cities in Malaysia and various parts of Indonesia.
He said, with significant experience in Airline Operations, MRO (Maintenance, Repair and Overhaul) services, Supply Chain Management and Human Capital development, NADI and PT Lion Group would not only be able to provide quality services to their consumers in the region, but also to the global aviation industry.
"This will fortify the Aviation Business ecosystem both in Malaysia and Indonesia. Furthermore, the partnership will provide the regional low-cost air travel market with healthy competition, ultimately benefiting low-cost travellers in both countries," said Najib.
According to the prime minister, the Malaysian Aerospace Industry, which has grown tremendously over the last 20 years, will be well poised to meet the challenges and to seize the opportunities of the future if it was continuously nurtured.
In 2011, Najib said, the industry generated RM26bil in turnover, employing approximately 54,000 workers, 15,000 of whom were skilled in various vocations.
"This is something that we, as Malaysians, can take pride in, particularly because it is a testament to the success of the National Aerospace Blueprint (NAB) that was introduced in 1997," he said.
The Blueprint laid out 45 recommendations covering aerospace manufacturing, commercial aviation, general aviation, systems and space, to provide Malaysia with the essential framework to develop itself as technologically and competitively competent global aerospace player by 2015.
The introduction of the Government's Economic Transformation Program (ETP) further bolstered Malaysia's Aerospace industry, identifying two Entry Point Projects, namely "EPP1-Growing MRO Services" and "EPP2-Growing Large Pure Play Engineering Services", which were expected to contribute RM16.9bil to Malaysia's Gross National Income (GNI) and create over 32,000 jobs by 2020, added Najib. - Bernama
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As an unemployed pilot, a question pop-out in mind.. Who'll be flying those jets? Logically thinking they will operate 9M-registered aircraft, hence DCAM certified pilot is needed. Then I recall Lion Air own a whole flying school back in their homeland.. Wouldn't it be their best interest to keep all their cadets flying in future? And 1 part of the mou is about manpower. Anybody knows the detail of the MOU?
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their cadets in WFS, along with other flying school in Indonesia, not enough to fullfill all the right hand seats in their fleet. License won't be an issue, just like AirAsia's crew flying there with DCAM validation only.
So it is really a breeze for you and others to apply..
Just wondering,mwhich route they will be flying, other than those already flown by AK n MAS
So it is really a breeze for you and others to apply..
Just wondering,mwhich route they will be flying, other than those already flown by AK n MAS
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To be honest TF is not my favourite person in the world but he tweet-ed earlier that the new Malindo Airways will affect least to AirAsia rather than it affect Malaysia Airlines and I somehow agree with that. Malaysia Airline is losing passenger by its outdated product and bad service quality i:e in-flight meal etc. Whereas AirAsia is focusing on ASEAN whole market which makes them less reliant to Malaysian market soon..
Syukri any CEO of an airline who writes pilots are overpaid button pushers says it all. I quit that place and that was one reason. I heard about the Lionair plan years ago and hope it gives him a wake up call, He needs it for sure!
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lion air's pilot are underpaid, if you ask me. considered that they fly over 100 hrs every month....and they dont have: medical benefit, id90 ticket, free coupon, yearly bonus.
If the same scheme they are trying to apply in Malindo, well, goodluck finding desperated pilots...
If the same scheme they are trying to apply in Malindo, well, goodluck finding desperated pilots...
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brasmelzuit... I agreed with you that Lionair are underpaid.. for FOs and Local captains.. But some malaysian capts that recently joined are getting slightly better salary than there local colleagues.. 9000USD. and 10wks on 2 wks off. But all salary are TAX free.. unlike the counterparts in Malaysia.
BUT some other facts you are wrong... compared with Tony.. Lionair DO give a yearly BONUS. You get the bonus at Hari raya.. for muslim.. for non believers
1st Jan.. NOT like TONY, if he is happy and dont need money for his hobbies, (football club or F1) he pays bonus. when I was working there many moons ago. he gave out bonus around july/august/sept...there excuse was something to do about taxes etc
and then it only a week or 2 weeks bonus...
Medical insurance.. YES. 1 free coupon per year for the whole family.
OK no ID90. but lion tickets are cheap..cheaper than Air ASia no baggage charges etc...and definitely cheaper than Garuda..
Trust me there are many waiting to jump ship.. in malaysia.. from MAS etc. look at the thousands of CPL all getting excited. Malaysia aviation have not grown for many years.. sort of stuck after uncle Tony controlled most malaysian aviation, stopped many airlines from starting up. I think the government is tired of his antics, drama queen rants.
Now Tony has run out of ideas, so he decided to leave and come Indonesia and call it a new start, buying Batavia..
BAD MOVE... it like going out looking for a girl in a bar called BATS..dont want to pay premium, wait to the end of night for the scraps..it easier 
BUT some other facts you are wrong... compared with Tony.. Lionair DO give a yearly BONUS. You get the bonus at Hari raya.. for muslim.. for non believers
1st Jan.. NOT like TONY, if he is happy and dont need money for his hobbies, (football club or F1) he pays bonus. when I was working there many moons ago. he gave out bonus around july/august/sept...there excuse was something to do about taxes etc and then it only a week or 2 weeks bonus... Medical insurance.. YES. 1 free coupon per year for the whole family.
OK no ID90. but lion tickets are cheap..cheaper than Air ASia no baggage charges etc...and definitely cheaper than Garuda..
Trust me there are many waiting to jump ship.. in malaysia.. from MAS etc. look at the thousands of CPL all getting excited. Malaysia aviation have not grown for many years.. sort of stuck after uncle Tony controlled most malaysian aviation, stopped many airlines from starting up. I think the government is tired of his antics, drama queen rants.
Now Tony has run out of ideas, so he decided to leave and come Indonesia and call it a new start, buying Batavia..
BAD MOVE... it like going out looking for a girl in a bar called BATS..dont want to pay premium, wait to the end of night for the scraps..it easier
Last edited by jetjockey696; 12th Sep 2012 at 06:33.
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Lion Air will get the pilots, and yes i think they will be local. If its a malaysia AOC then it would be local reg. I dont think the will pay much, not for fo's anyway, plenty of unemployed that will prob work at half the rate just to get the rating, right now the airline has the advantage. Captains might be better paid, possibly in the same region as AA's. Is TF worried? I bet he is. Why did he close firefly jet ops down? It will effect the low cost segment, not so much into mas's as its a segregated market. Ive seen mas flights to borneo full on a daily basis, the peninsular market has never been a very strong market for mas. I think this is a way for the goverment to 'fu*#k' TF for moving out after taking everything. Im sure Tony would be throwing some tantrums!
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@jj696, what I know, is those pliots are not malaysian, but indonesian pilots who used to fly for firefly. there's a c to c agreement, and it already created jealousy problem within the company.. And they did not receive any sign on fee (normally around 25-80k usd)..cmiiw.
back in jakarta, Lion's medical benefit is 1million rupiah (usd110) per month, per pilot, to be shared with their loved ones...
once a year is reliogion allowance for hari raya. ALLL company in indonesia must pay one month sallary to their employee. IAA, GA, etc..
pay that too. Never heard lion give real bonus beside hariraya, unlike Air Asia or Garuda...except that 150mill rupiah every 5 years, to be bonded for next 5 yrs.. if the pilot accept the money..
But, hey..it's in Indonesia..not in Malaysia.. Probably they will be treated differently.
Cheap Lion ticket? how many people should you call to get it discounted?
and it's definetely not cheaper than AirAsia id90..;-)
Try to use your free coupon to Beijing, Goldcoast, Incheon...wait..Lion doesn't fly there...sorry..it's domestic only...;-)
Can it be used for your parents or friends? sorry, can't do..
Again...it maybe different with Malindo.
Jumpship is soooo normal in this cruel aviationworld.....:-)
back in jakarta, Lion's medical benefit is 1million rupiah (usd110) per month, per pilot, to be shared with their loved ones...
once a year is reliogion allowance for hari raya. ALLL company in indonesia must pay one month sallary to their employee. IAA, GA, etc..
pay that too. Never heard lion give real bonus beside hariraya, unlike Air Asia or Garuda...except that 150mill rupiah every 5 years, to be bonded for next 5 yrs.. if the pilot accept the money..
But, hey..it's in Indonesia..not in Malaysia.. Probably they will be treated differently.
Cheap Lion ticket? how many people should you call to get it discounted?
and it's definetely not cheaper than AirAsia id90..;-)
Try to use your free coupon to Beijing, Goldcoast, Incheon...wait..Lion doesn't fly there...sorry..it's domestic only...;-)
Can it be used for your parents or friends? sorry, can't do..
Again...it maybe different with Malindo.
Jumpship is soooo normal in this cruel aviationworld.....:-)
Last edited by brasmelzuit; 12th Sep 2012 at 08:09.
I'm pretty sure TF p@@@ed alot of his pilots off yeah with that article in Flight. If he is having tantrums good. As my friend says I like Big Fat Men they make alot of noise when they fall down.
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The Fatman forced MAS to ground the FireFly 737 fleet because he hates competition in all its forms. Now his dream team has to face new LCC competition that is aimed at Air Asia in its Malaysian form. Not that he can do much about it as he has packed his bags and scurried off to Indonesia, and I don't think that Lion will fold like a cheap suit like MAS did when TF told them to kill FireFly.
Now comes the fun. MAS, always a day late and a dollar short is talking up resurrecting FireFly Jets, moving their 737s back into orange and white along with the crews. There could be lots more competition come next year. Maybe even a few more jobs. Both are good for all.
Now comes the fun. MAS, always a day late and a dollar short is talking up resurrecting FireFly Jets, moving their 737s back into orange and white along with the crews. There could be lots more competition come next year. Maybe even a few more jobs. Both are good for all.
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I guess he didnt like to be told to share his toys and no more teacher's pet..so he packed up his toys into hello kitty backpack and left. but his new school is not so friendly... no one listening to his drama queen rants. It a place where you dont bend over and pick up the soap in the gym showers.
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Sounds like the old FireFly Jets, no?
Malindo Airways expected to give AirAsia a run for its money
It was a marathon meeting lasting 24 hours in a hotel in Singapore over two weeks ago that resulted in the creation of Malindo Airways.
The meeting was between Rusdi Kirana, president director of Indonesia's largest privately owned airline Lion Air and Malaysia's National Aerospace & Defense Industries (Nadi) low key businessman Tan Sri Ahmad Johan.
Both had desires to expand their empires. One to set up an airline in Malaysia the same way AirAsia has set up airlines in several countries, and the other wanted to get the regional MRO business because they had “scalability and expertise.''
All this started three months ago, according to those in the know.
It is no secret that Rusdi has been wanting to set up an LCC in Malaysia. Two earlier attempts, a courtship with Firefly and later with Berjaya Air, fell through. And Nadi wanted a slice of Lion Air's MRO business. An introduction took place and both realised that they had something to offer.
This was also about the same time Ahmad Johan was rumoured to be preparing a paper to buy over a majority stake in Malaysia Airlines (MAS), perhaps, on the hindsight, it may have been Malindo Air and not MAS.
Before the marathon meeting two weeks ago, both parties met high-ranking government officials for the official blessing. That was necessary since the Government has a golden share in Nadi and Minister of Finance Inc holds a 5.74% equity stake in Nadi. An 83.73% stake in Nadi is held by PJS Industries Sdn Bhd, a company controlled by Ahmad Johan and the remaining 10.53% is held by Rantai Wawasan.
Nadi has been involved in maintenance and provision of services for the Royal Malaysian Air Force fleet. “It is a nice fit, both had something to offer the other and both were passionate about it. So that is how Malindo Air came out but everything happened very fast,” said a source.
But the relationship does not end at just setting an LCC. There will be the MRO business where Nadi will enter into a joint venture to undertake MRO works for all of Lion Air's 100 aircraft. Plus there is also the training element.
Lion Air is the largest airline by market share and fleet size in Indonesia and although its current fleet size is 100 aircraft, it has ordered 382 aircraft. That makes Lion Air one of Boeing's biggest customers in the world with deals topping US$22bil, says an analyst in his report.
Lion Air has been in the business since 2000, and flies to 73 destinations across five countries. By March 2013, it will begin a long haul service via Batik Air. It is owned by Indonesia's tycoon brothers, Rusdi and Kusnan Kirana and corporate personalities say “the Kirana brothers are seasoned businessman and politically well-connected individuals.”
Nadi has been in the MRO business for many years and Airod is its unit. Nadi recently hired former MAS MRO chief Mohd Roslan Ismail as managing director of Airod Aerospace Technology for its regional expansion.
Under the deal, Nadi holds 51% stake in Malindo Air while Lion Air's parent, PT Lion Grup will hold the remaining 49%. The driver for the airline operations is Lion Air as it has the expertise and Rusdi's right hand man, Chandran Ramamuthy has been appointed CEO of Malindo Air. Since Lion Air has a big order of Boeing aircraft, it will push some of its aircraft deliveries to Malindo Air, which will acquire 12 B737-900ER aircraft per year to have a fleet size of 100 in 10 years or by 2023.
Both Rusdi and Ahmad Johan declined to discuss how much of money they will put into the venture and where are their sources of funding.
These aircraft will be used for short haul flights within Asean, connecting the region with Indonesia. KLIA2 will be the main hub for Malindo Air and it would have a secondary hub in Kota Kinabalu and Asean cities will be its target routes. It will also fly domestic routes in the country.
According to a Maybank Investment Bhd report, Malindo Air's fleet by 2015 will include the B787 which will be suitable for medium to long haul routes.
“Based on the management presentation, it (Malindo Air) aspires to become Malaysia's next full fledged national airline,” Maybank says.
The report adds that Malindo Air should be able to leverage on its parent's infrastructure to build an efficient operations quickly. Lion Air is a formidable opponent to AirAsia in Indonesia; its ticket fares are often more competitive and it enjoys popular support among local Indonesians.
“Malindo Air's seat pitch of 31 inch is 7% roomier compared with AirAsia's and it provides complimentary frills such as light snacks, drinks, in-flight entertainment and uses the aerobridges. In addition, we estimate Malindo Air's Boeing 737-900 aircraft has superior cost economics for flights which are above two hours against AirAsia's Airbus A320 aircraft,” Maybank says.
“We are confident that Malindo Air will be able to be profitable quickly (less than one year) on domestic Malaysia and Indonesian routes given the strong demand and existing client base to tap onto. Other international destinations may consume longer period (two to three years) to turn profitable.”
The house adds that with the entry of Malindo Air, AirAsia's virtual monopoly ceases and yields are set to decline and profit contribution from AirAsia's biggest market will recede.
Note that AirAsia Indonesia's operations are significantly less profitable compared with its Malaysian operations.
“We think this is due to Indonesia's more competitive landscape (whereby Lion Air is the key competitor), and higher cost base. What we see in AirAsia Indonesia's profit margin could possibly happen in AirAsia Bhd going forward.”
Reports have suggested that by 2030 there will be 2.2 billion passengers in Asia Pacific and from this Malaysia will have 200 million, so there is room for more players so long growth in Asia continues.
An aviation expert points out that if other Asean countries can have more than two LCCs, then there is plenty of room for Malaysia to have another LCC.
The onus now is really on Rusdi and Ahmad Johan to deliver.
By BK SIDHU
From The Star,
15Sep12
This is almost exactly what FireFly was doing before Tony and his cronies shut them down. It really bolsters the fact (commonly known at MAS and everywhere else) that the FireFly Jet operation was taking it to the Fatman's business, no matter the lies that MAS management and TF rolled out to the media. Very suspicious that a few weeks after former FireFly CEO Eddy Leong rolled out a three-year plan to increase the jet fleet to 25-30 aircraft, that the boys from AA moved to ground the only true LCC competition they had in Malaysia. This time, though, it looks like the Fatman will have little say in the matter, not that it matters as he has packed up his toys and moved across the Java Sea. Won't be near as easy to manipulate the government south of the equator big boy.
It was a marathon meeting lasting 24 hours in a hotel in Singapore over two weeks ago that resulted in the creation of Malindo Airways.
The meeting was between Rusdi Kirana, president director of Indonesia's largest privately owned airline Lion Air and Malaysia's National Aerospace & Defense Industries (Nadi) low key businessman Tan Sri Ahmad Johan.
Both had desires to expand their empires. One to set up an airline in Malaysia the same way AirAsia has set up airlines in several countries, and the other wanted to get the regional MRO business because they had “scalability and expertise.''
All this started three months ago, according to those in the know.
It is no secret that Rusdi has been wanting to set up an LCC in Malaysia. Two earlier attempts, a courtship with Firefly and later with Berjaya Air, fell through. And Nadi wanted a slice of Lion Air's MRO business. An introduction took place and both realised that they had something to offer.
This was also about the same time Ahmad Johan was rumoured to be preparing a paper to buy over a majority stake in Malaysia Airlines (MAS), perhaps, on the hindsight, it may have been Malindo Air and not MAS.
Before the marathon meeting two weeks ago, both parties met high-ranking government officials for the official blessing. That was necessary since the Government has a golden share in Nadi and Minister of Finance Inc holds a 5.74% equity stake in Nadi. An 83.73% stake in Nadi is held by PJS Industries Sdn Bhd, a company controlled by Ahmad Johan and the remaining 10.53% is held by Rantai Wawasan.
Nadi has been involved in maintenance and provision of services for the Royal Malaysian Air Force fleet. “It is a nice fit, both had something to offer the other and both were passionate about it. So that is how Malindo Air came out but everything happened very fast,” said a source.
But the relationship does not end at just setting an LCC. There will be the MRO business where Nadi will enter into a joint venture to undertake MRO works for all of Lion Air's 100 aircraft. Plus there is also the training element.
Lion Air is the largest airline by market share and fleet size in Indonesia and although its current fleet size is 100 aircraft, it has ordered 382 aircraft. That makes Lion Air one of Boeing's biggest customers in the world with deals topping US$22bil, says an analyst in his report.
Lion Air has been in the business since 2000, and flies to 73 destinations across five countries. By March 2013, it will begin a long haul service via Batik Air. It is owned by Indonesia's tycoon brothers, Rusdi and Kusnan Kirana and corporate personalities say “the Kirana brothers are seasoned businessman and politically well-connected individuals.”
Nadi has been in the MRO business for many years and Airod is its unit. Nadi recently hired former MAS MRO chief Mohd Roslan Ismail as managing director of Airod Aerospace Technology for its regional expansion.
Under the deal, Nadi holds 51% stake in Malindo Air while Lion Air's parent, PT Lion Grup will hold the remaining 49%. The driver for the airline operations is Lion Air as it has the expertise and Rusdi's right hand man, Chandran Ramamuthy has been appointed CEO of Malindo Air. Since Lion Air has a big order of Boeing aircraft, it will push some of its aircraft deliveries to Malindo Air, which will acquire 12 B737-900ER aircraft per year to have a fleet size of 100 in 10 years or by 2023.
Both Rusdi and Ahmad Johan declined to discuss how much of money they will put into the venture and where are their sources of funding.
These aircraft will be used for short haul flights within Asean, connecting the region with Indonesia. KLIA2 will be the main hub for Malindo Air and it would have a secondary hub in Kota Kinabalu and Asean cities will be its target routes. It will also fly domestic routes in the country.
According to a Maybank Investment Bhd report, Malindo Air's fleet by 2015 will include the B787 which will be suitable for medium to long haul routes.
“Based on the management presentation, it (Malindo Air) aspires to become Malaysia's next full fledged national airline,” Maybank says.
The report adds that Malindo Air should be able to leverage on its parent's infrastructure to build an efficient operations quickly. Lion Air is a formidable opponent to AirAsia in Indonesia; its ticket fares are often more competitive and it enjoys popular support among local Indonesians.
“Malindo Air's seat pitch of 31 inch is 7% roomier compared with AirAsia's and it provides complimentary frills such as light snacks, drinks, in-flight entertainment and uses the aerobridges. In addition, we estimate Malindo Air's Boeing 737-900 aircraft has superior cost economics for flights which are above two hours against AirAsia's Airbus A320 aircraft,” Maybank says.
“We are confident that Malindo Air will be able to be profitable quickly (less than one year) on domestic Malaysia and Indonesian routes given the strong demand and existing client base to tap onto. Other international destinations may consume longer period (two to three years) to turn profitable.”
The house adds that with the entry of Malindo Air, AirAsia's virtual monopoly ceases and yields are set to decline and profit contribution from AirAsia's biggest market will recede.
Note that AirAsia Indonesia's operations are significantly less profitable compared with its Malaysian operations.
“We think this is due to Indonesia's more competitive landscape (whereby Lion Air is the key competitor), and higher cost base. What we see in AirAsia Indonesia's profit margin could possibly happen in AirAsia Bhd going forward.”
Reports have suggested that by 2030 there will be 2.2 billion passengers in Asia Pacific and from this Malaysia will have 200 million, so there is room for more players so long growth in Asia continues.
An aviation expert points out that if other Asean countries can have more than two LCCs, then there is plenty of room for Malaysia to have another LCC.
The onus now is really on Rusdi and Ahmad Johan to deliver.
By BK SIDHU
From The Star,
15Sep12
This is almost exactly what FireFly was doing before Tony and his cronies shut them down. It really bolsters the fact (commonly known at MAS and everywhere else) that the FireFly Jet operation was taking it to the Fatman's business, no matter the lies that MAS management and TF rolled out to the media. Very suspicious that a few weeks after former FireFly CEO Eddy Leong rolled out a three-year plan to increase the jet fleet to 25-30 aircraft, that the boys from AA moved to ground the only true LCC competition they had in Malaysia. This time, though, it looks like the Fatman will have little say in the matter, not that it matters as he has packed up his toys and moved across the Java Sea. Won't be near as easy to manipulate the government south of the equator big boy.
Last edited by Hogger60; 16th Sep 2012 at 02:32. Reason: Appearance