Lion Air's decision to drop its Boeing 787 orders in favor of acquiring another twin-aisle type represents a major shift in the role the carrier envisages for its widebody fleet.

The Indonesian low-cost carrier is talking to Boeing about converting its five 787-8 orders to 737s, Lion Group CEO Rusdi Kirana said during the Jan. 27 launch of a new maintenance facility on the island of Batam. The carrier intends to place a new widebody order in 2015, but will be looking for something larger than the 787-8.

This airline's original plan was to use the -8s on long-haul international routes. However, Kirana now says the carrier needs widebodies to serve Indonesia's increasingly busy domestic trunk routes. A Lion spokesman stresses that whatever twin-aisle Lion selects will still be used for some international operations, but the need for high-volume domestic service was a major reason for seeking a bigger widebody.

While Lion has a massive narrowbody orderbook—more than 540 aircraft from Boeing and Airbus—it has lagged behind the other major Asian LCCs when it comes to widebodies. The only larger aircraft it operates are two Boeing 747-400s, which it uses on flights to Jeddah and other Saudi Arabian destinations, and industry sources say the carrier intends to phase these out.

In contrast, AirAsia affiliate AirAsia X operates a fleet of 16 Airbus A330-300s on international routes, and last December it placed an order for 25 more of these aircraft. Jetstar Airways flies nine A330-200s on domestic and international routes and also has taken delivery of three of its 14 787-8 orders.

Lion is not considering ordering anything as large as 747s or Airbus A380s, the Lion spokesman says. Rather, it will probably be targeting either a different variant of the 787, or the A330 or A350.

While the airline is still in discussions with Boeing, it is not expected to have to pay penalties if it converts the 787 orders to narrowbodies. Lion is not disclosing how many 737s—or what variant—it is seeking. The carrier already has a backlog of more than 300 737-family aircraft due for delivery.

Lion had previously said it was considering placing the 787s with its full-service subsidiary Batik Air, although executives with Lion's Thai and Malaysian joint venture affiliates have been pressing for 787s to be assigned to their carriers too. However, the changed mission description indicates that whatever widebodies are ordered will probably be used in the core Lion operation.

Using higher-capacity aircraft on domestic routes would help alleviate congestion headaches at Jakarta's slot-constrained Soekarno-Hatta International Airport. There are already about 20 flights a day on routes such as Jakarta-Medan, so putting a larger aircraft on these routes could be more attractive than adding more frequencies.

Congestion at Jakarta is another reason behind Lion's move to develop Batam as its second major hub. In recent months the carrier has increased the number of domestic destinations it serves from Batam to 15, and the carrier says it intends to boost this to 20. It also has announced that it will launch international flights from Batam next year. The first routes are expected to be to Southern China, with Bangkok, Jeddah, Mumbai and New Delhi likely to be next.

Batam is well situated to be a connecting hub, as it is considerably further north than Jakarta, which makes it more convenient to connect east-west domestic traffic. It is also closer to India and many Asian destinations.

Lion also has big plans for its new heavy maintenance center in Batam. The facility's first hangar is now ready, one is set to open soon and two more will follow by June. These four hangars will house 12 aircraft bays; the carrier eventually would like to have enough hangars for 36 bays.

The first priority after the initial four hangars will be building engine, component and landing gear maintenance facilities, the Lion spokesman says. The carrier intends to have a fifth hangar under construction by 2018.