Indonesia's Lion Air is moving closer to completing the first phase of its new maintenance, repair and overhaul facility in Batam, which will help it handle the massive number of aircraft deliveries the carrier has scheduled and make it a player in the third-party MRO market.

The first two of the planned four hangars are scheduled to open by the end of the year on Batam, an Indonesian island just south of Singapore. These two larger hangars will quadruple Lion Air's MRO capacity, which is currently provided by its single-hangar operation in Surabaya, Indonesia's second-largest city.

Lion Technic President Romdani Adali Adang tells Aviation Week that without this new facility, the rate of aircraft deliveries would overwhelm the current capacity by next year. So far, Lion has been able to boost the use of the Surabaya facility through shift increases and efficiency improvements, but this will soon not be enough. The carrier has taken delivery of 19 Boeing 737s this year, and is due to receive another five by year-end. It has outstanding orders for almost 550 narrowbodies from Boeing and Airbus.

The new hangars will each be able to accommodate three 737s or one 747-400, compared to the two-narrowbody capacity of the Surabaya hangar. All four of the hangars are due to be finished by the end of June next year. Engine and component repair facilities are also planned for the site. The total cost is estimated at $250 million.

When all these facilities are fully established, they will require an additional 2,000 workers, of which 1,400 will be involved with the engine and component shops. These new Batam employees would almost double Lion Technic's current workforce, which now stands at 2,500.

Lion also intends to open a third MRO facility in Manado, in the eastern part of Indonesia. This would be a single-hangar operation, able to handle turboprops and narrowbodies. Construction is due to begin next year.

The location of the Batam site offers some significant advantages over Surabaya, says Romdani. The existing facility is situated within a naval base, making employee access somewhat complicated. The Batam facility will not be faced with this issue, and also has more land available for growth.

Batam is just 35 min. by sea from Singapore, which will make it easier to obtain parts via the extensive logistics network there. Lion plans to establish its own ferry service to Singapore for transporting spare parts. This would be useful in situations such as the disassembly and overhaul of an engine at Batam, when there would be certain parts and components that would be sent to the relevant original equipment manufacturer's MRO operation in Singapore.

With the planned capacity increase, Lion intends to conduct more third-party maintenance work, says Romdani. The carrier currently does a very limited amount of third-party work, mostly on behalf of the owners of some leased aircraft that it operates.

The construction of the Batam facility means Lion could potentially allocate 30% of its heavy maintenance capacity to third-party work, Romdani says. However, the carrier is emphatic that this does not mean 30% of the capacity will always be set aside—the amount of outside work will depend on demand and Lion's own maintenance needs.

Lion also may still send its aircraft to Singapore MRO providers or to Garuda's GMF AeroAsia if its own facilities are full. But this will obviously happen to a lesser extent when all four hangars are open.

The engine and component repair facilities at Batam are expected to open by the end of 2016 or the first quarter of 2017. Lion is in discussion with several companies about potential partnerships, Romdani says. On the engine side, Lion is talking with both Pratt & Whitney and CFM.

As Lion builds its expertise in this area it will handle a wider range of engine and component work. However, it will still make sense to send some parts to OEMs and specialist companies.

While the Batam operation will be controlled by Lion Technic, it will be branded as Batam Aero Technic. The different name will underline the increased emphasis on third-party work.

Gaining European Aviation Safety Agency (EASA) certification for Batam and its other maintenance facilities is a major objective for Lion. The carrier is beginning this process with its line maintenance operations at Jakarta Soekarno-Hatta International Airport. This will allow Lion to conduct line maintenance for airlines flying into Jakarta that may have policies against working with companies that do not have the EASA stamp of approval.

Lion Technic intends to employ eight EASA-certified maintenance personnel from Europe, and they will work with Lion staff in Jakarta to help them ensure they are meeting EASA standards.

After the Jakarta base is certified, Lion will concentrate on getting its other line maintenance stations approved. Then it will seek EASA certification for heavy maintenance of airframes, engines and components.

This process should be smoother with the new Batam facility, as it is being designed and built with EASA standards in mind, Romdani says. The carrier has even arranged for EASA officials to travel to Batam to look at the project and make sure it is in line with their standards. Lion believes it is important to involve EASA in the process, and develop an early relationship.

Lion's fleet is currently dominated by Boeing 737s, most of which are the -900ER variant. It also has two leased 747-400s.

The carrier is due to receive its 100th 737 on Nov. 4, and has one of the largest narrowbody orderbooks in the industry. Last year it struck a deal with Boeing for 230 737 family aircraft, primarily from the MAX range. Then in March of this year Lion ordered 234 Airbus A320s, mostly from the Neo range.

Many of the new narrowbodies will go to Lion's Indonesian-based core operation, but aircraft will also be allocated to its affiliate joint ventures in other Asian countries. So far, these include Malindo Air in Malaysia, and Thai Lion Air.

Lion also has a regional subsidiary named Wings Air. It has a fleet of 30 aircraft, mainly ATR 72-500s. It is taking delivery of new ATR 72-600s, and has about 30 still on order.

Despite the massive backlog, Lion has indicated that more orders are in the pipeline. The carrier has confirmed it is considering a “double-digit” purcase of Bombardier CS300 aircraft, and could make a decision by the end of the year. These would fill the size gap in its fleet between the ATRs and its narrowbodies.

If a CSeries fleet reached critical mass, Lion would look to perform heavy maintenance at the Batam facility, an airline spokesman says. He notes that this would align with the carrier's intention to keep heavy maintenance in Indonesia whenever practical.