Lion Airâ€™s new full-service carrier, Space Air, appears set to launch in 2012.
Industry executives familiar with the situation say the Indonesian carrier has applied for an air operatorâ€™s certificate for the new full-service carrier. The new airline will operate, Lion Air President Director Rusdi Kirana said in a local report. Lion Air executives told Aviation Week that Rusdi wants the new premium outfit to compete head to head with and that the move is partly a response to Garudaâ€™s Citilinkâ€™s moving into the low-cost carrier (LCC) market.
Rusdi is also aware that in Indonesia there is relatively little competition in the premium segment. Garuda is the countryâ€™s only premium airline, so margins are higher.
â€śIn Indonesia there is a large, wealthy population. There are a lot of Indonesians that simply will not fly a LCC. So he sees thereâ€™s a lot of business that goes to Garuda,â€ť says an industry executive who has leased aircraft to Indonesian carriers. â€śThereâ€™s also a lot of wealthy Indonesians who fly(SIA) when traveling internationally, and that is why SIA still has a first-class cabin on its Jakarta route,â€ť adds the executive. SIA charges $1,300-1,600 for a first-class, roundtrip ticket for Jakarta-Singapore, a 90-minute flight.
Lion has plenty of 737s it can use for this new business because on Nov. 18 it agreed to order 201737 MAX aircraft and 29 737-900ERs. Before this agreement, Lion had 114 737-900ERs and 12 Boeing 737-800s on order, according to Boeingâ€™s figures. A Boeing spokesman declines to say if any of the aircraft from the earlier order will be canceled as a result. â€śThis is an agreement to order. Boeing and Lion Air are [still] working to finalize the details,â€ť says the spokesman.
Some industry executives say the new deal will replace some of the earlier aircraft orders. There is no way Lion can make use of 143 new 737-900ERs on top of the 52 it has already taken, they say. Signing a new aircraft deal with Boeing enables Lion to delay aircraft deliveries and take the more fuel-efficient 737 MAX, so it can remain cost-competitive, they add.