Profile of Lion Air Group.
PT. Lion Mentari Airlines (Lion Air) was established in 1999 by two brothers Rusdi Kirana and Kusnan Kirana. Earlier Rusdi Kirana was known as the owner of tour and travel service company Lion Tours.
Lion Air started operation with a capital of US$10 million used for aircraft procurement. In June 2000 Lion Air started maiden flights with a Boeing 737200 serving domestic routes.
Until mid 2005, together with other international airlines were placed at Terminal 2F of the Soekarno Hatta International Airport with airliners serving domestic flights were placed at Terminal One. The arrangement was to facilitate the passengers and the airliners. Later, however, Lion Air was moved to Terminal 1A and flights to Sumatra, Batam, Pangkalpinang, and Palangkaraya were based in terminal 1B starting October 2010 until now. All international flights by Lion Air are served from Terminal 2E.
In 2005, Lion Air had only 24 units of aircraft including 19 units of the McDonnell Douglas MD-82 series and 5 units of DHC-8-301, operating as budget airline.
Currently Lion Air has expanded to become the largest privately owned airline in the country serving more than 36 cities in Indonesia and abroad such as Singapore, Malaysia and Vietnam using brand new aircraft of Boeing 737 900ER.
Lion Air made a mind boggling announcement ordering 201 units of Boeing 737 MAX and 29 units of Boeing 737-900ER. It was a record breaking deal worth US$22.4 billion. The previous record was made by the Emirates of the United Arab Emirates.
Lion Air also placed an order for 27 units of small turboprop ATR 72-600 aircraft from ATR of France at a price of US$610 million with delivery in 2015. It has also ordered 5 units of Boeing 787 Dreamliners at a price of US$967.5 million with delivery starting next year.
Lion Air planned to launch initial public offering (IPO) early last year floating shares worth US$1 billion at the Indonesian Stock Exchange. However, the plan has remained in the pipeline until now as the market is considered not conducive.
Lion Air Group has four members--Lion Air, Wings Air, Malindo Airway and Batik Air. Lion Air Group also has units operating in other sector including aircraft charter service, aircraft pilot education, aircraft maintenance service, integrated aviation area and bus assembling industry.
Aviation Industry as the Locomotive
Currently Lion Air is the country's largest airline in term of the number of passengers. The airline has an ambitious plan for expanding operations.
Lion Air and its subsidiary Wings Air recorded the highest flight frequency in Indonesia. Everyday the two airlines serve 600 flights with Lion Air accounting for 90% or 540 flights and Wings Air for 60 flights. Lion Air Group has led on domestic flights such as in Surabaya, Medan, Makassar, and other areas. In Makassar, Lion Air recorded 50 flights per day, Medan 40 flights per day, Surabaya 60 flights per day, Denpasar and Balikpapan 25 flights per day each.
Lion Air is the first user of Boeing 737-900ER aircraft in the world. It started using the aircraft in 2007. Currently Lion Air operates other types of aircraft such as Boeing 737-300, 400, 800 and B747-400. Its 4 units of MD-90 have been handed over to Wings Air.
Based on data at the Communications Ministry, in the first half of 2012, Lion Air had a market share of 41.48% or the largest followed by Garuda Indonesia with a market share of 22.76%, Sriwijaya Air 12.26%, Batavia Air 11.22%, Merpati Nusantara Airline 3.63%, and Wings Abadi Airline 3.32%.
Lion Air, however, has poor record in on time performance (OTP). Garuda leads in OTP, followed by Wings Air, Sriwijaya Air and Batavia Air. Lion Air languishes at the fifth.
Lion Air plans to operate 30 new units this year. With the addition, Lion Air would increase its total seat capacity by 4 million to 32 million passengers.
Six of the 30 units to be bought by Lion Air Group will be for Wing Air, 12 for Batik Air and 12 for Lion Air. Currently the Group operates 115 units of aircraft.
The Lion Air Group has signed a contract with Boeing early 2012 for the procurement of 230 units of Boeing 737-900 ER of which 74 already delivered. Its order for ATR aircraft is 33 units of ATR 72-500 made in 2010.
Lion Air received the first delivery of Boeing 737-900ER in April, 2007. Currently Lion Air has received 11 units of Boeing 737-900ER.
Lion Air will use a number of airport bases for its aircraft as one airport could not accommodate its entire fleet. It will place some of its aircraft in Batam, Manado, Kupang, Ambon and Jayapura as airport bases where it would build hangars.
In 2013, there will be an increase in flight frequency and additional routes to be served such as from Soekarno Hatta airport to Abdul Rachman Saleh airport of Malang and the Balikpapan-Semarang, Yogyakarta-Surabaya, Surabaya-Banyuwangi, and Denpasar-Bima routes.
Currently Lion Air has a flight market share of 51 percent in Indonesia, with 13.97 million domestic passengers in the first half of 2012. Garuda has the second largest share with 7.8 million passengers, followed by Sriwijaya Air 3.9 million passengers, Batavia Air 3.51 million passengers, Wings Air 1.21 million, Merpati 1.13 million, Air Asia 882,000, Trigana 466,000, Kalstar Aviation 269,000 and Travel Express Air 164,000 passengers.
PT. Wings Abadi Airlines, the operator of Wings Air was established by Lion Air Group in 2003, as a budget airline serving domestic flights with base in Jakarta. Since 2010, Wings Air has served flights to Malaysia from Medan to Penang and from Pekanbaru to Malaka. The two routes were earlier served by Lion Air.
Wings Air operates 24 units of aircraft consisting of ATR 72-500 of Avions de Transport Regional, De Havilland Canada DHC-8-301 and McDonnell Douglas MD 82.
At the end of 2012, Wings Air signed an agreement with the regency of Wakatobi, Southeast Sulawesi. Under the agreement the district administration will provide subsidy for unoccupied seat of Wings Air aircraft serving the Wakatobi--Kendari route three times a week. Subsidy would not be given if 55 of its 72 seat are occupied. Subsidy is given if occupation is less than 55 seat. The ticket price for Kendari-Wakatobi route is Rp400,000 to Rp600,000 per passenger.
The policy is support the promotion of Wakatobi's Sea Park tourism, the second largest sea park after Bunaken in North Sulawesi.
Wings Air also plans to serve the Wakatobi- Ambon and Wakatobi--Denpasar, Bali routes. The opening of the two routes will make the Wakatobi port as a transit airport for Eastern Indonesia along with Makassar in South Sulawesi.
The district administration, therefore, is extending the runway of Wakatobi's Matahora airport to 3,000 meter to be able to accommodate wide bodied aircraft like Boeing.
By the end of 2012, Wings Air opened new route of Banyuwangi-Surabaya and Surabaya-Banyuwangi, using ATR 72-500 aircraft to follow the commissioning of the Blimbingsari airport of Banyuwangi. Previously the Banyuwangi-Surabaya route was served only by PT Merpati Nusantara Airlines in the afternoon.
This year, Wings Air is expected delivery of 12 new units of ATR 72-600. The procurement of the new aircraft was financed with credit from BNP Paribas and CIC of France..
The ATR 72-600 is a new generation of ATR 72-500 of which Wing Air already has 20 units. The airline expects to receive 40 units of ATR 72-600 until 2015 as part of its plan to purchase 60 new units of ATR aircraft. Wings Air will be the largest operator of ATR aircraft in the world--to use 33 units of ATR 72-500 in the process of delivery since 2010 and 27 units of ATR 72-600 with delivery starting in November 2012 until 2014.
Lion Charter Biz Jet is the operator of jet chartered flights. The airline uses small jet aircraft for charter. There are a number of big mining companies as regular users.
Lion Biz Jet has bought 4 units of Hawker 900XP aircraft with a capacity of 8 passengers at a price of US$ 64 million from its factory Hawker Beechcraft Corporation in the United States. Two units of Hawker 900 XP already arrived in the country in May 2012, and two units to follow this year.
Malindo Airway was established toward the end of 2012 as a joint venture between PT. Lion Mentari Airlines and National Aerospace and Defense Industries Sdn Bhd (NADI) with a share split of 49% and 51%.
NADI Group of Malaysia has a number of companies operating in aviation industry like Airod, Airod Techno Power, Aerospace Technology System Corp and SME Aerospace which offer aircraft maintenance and repair and aircraft engine and spare part manufacture.
The joint venture company has also allocated US$15 million for the training of pilots for Malindo Airway and US$1.08 billion for aircraft procurement.
Malindo Airway which is based in Malaysia will made its maiden flight in May 2013 serving routes between Malaysia and Indonesia. Malindo will have a hub port in Kota Kinabalu. The main routes of Malindo Airway will be between Indonesia and Malaysia and domestic such as Sabah and Sarawak. Later Malindo Airways will expand operation to other cities in Southeast Asia such as Manila, Bangkok, and Hanoi and Australia and China. Malindo Airway will compete with low cost carrier Air Asia.
In the beginning the airline will operate 12 units of Boeing 737-900ER aircraft. Malindo Airways plans to have a total of 100 units of Boeing 737-900ER to be used to serve routes in Asia Pacific region and Europe. The establishment of Malindo Airways is a strategy of Lion Air Group to utilize the 408 units of Boeing 737-900 ER and 737 Max 9 aircraft in 2015 it already ordered.
The transport ministry issued new operation license in August 2012 for Batik Air a new subsidiary of Lion Air to operator as full service carrier.
Batik Air will be the fourth airline owned by Lion Air Group to come on line in March 2013 to compete with Garuda Indonesia and the new airline Pacific Royale Airways which started operation in June 2012 as a full service airline. The airline will serve premium class with operation in this region. Around 40% of its services will be regional flights including to Australia and India.
Batik Air will operate from two hub ports--Medan in western region as hub for West Asia and ASEAN and Manado in eastern region as hub for East Asia to and from Indonesia.
In the first phase, it will need 12 units of aircraft of Boeing 737-900 ER. Lion Air Group already ordered 5 units of Boeing 787 Dreamliner, for delivery in 2015. Boeing 787 Dreamliner will compete with Airbus A 330.
Batik Air, which will be luxuriously designed will have the facility of Wi-Fi and TV monitors in each seat. A passenger could use telephone while in flight.
Aircraft Maintenance Facility
Lion Air Group has a 4-hectare Lion Village for aircraft maintenance and to support its hangar facility in Bandung.
Lion Village is located near airport and provides training facility like Boeing 737-900ER simulators. The complex has one stop store of spare parts, wheels, brake, cabin interior and avionic equipment. It also has dormitory for female crew members and airport staff.
Lion Village provides safety programs like ALAR, CRM, SMS, FOQA and FLOE has been fully implemented and ACARS equipment will be fix in Boeing 737-900ER aircraft.
Lion Air Flying School
Lion Air Group will open a pilot school called Lion Air Flying School (LAFS) in 2013. LAFS is expected to turn out around 200 pilots per year.
LAFS will have 35 units of training aircraft of Cessna. Currently Lion Air Group has six units of Cessna aircraft based in Cirebon, owned by Wings Flying School. Lion Air also has four simulators of different types of aircraft.
The educational center will be built over a 46 hectare plot of land in Subang area, West Java with an investment of US$7 million, West Java.
Integrated Area of Lion City
Lion Air Group will build an integrated area called Lion City, which will have office complex, warehousing area, education center, and housing complex. All the facilities will be given free to the workers of Lion Air Group.
Lion City will be built over a 30 hectare plot of land in Telaga Bestari, Banten, to be commissioned in August 2013. The office complex will occupy 12,000 square meters, warehousing area 25,000 sq.m. and education center 10,000 sq.m.
It will also have dormitories for female and male flight attendants 1,000 rooms, dormitory for pilots 200 rooms and houses for workers 1,047 units, schools, sport center, health care facility and swimming pools. Development of Lion City facilities is estimated to cost Rp500 billion.
Bus Assembling Facility
Lion Air Group has ambition to enter into the business of land transport. In cooperation with the producer of Leyland buses from India the company group would build bus assembling plants in Indonesia.
The project is to be operational in the middle of this year. The plants will be built in a number of cities in cooperation with cooperatives. Under the cooperation scheme offered by Lion Air Group, the cooperatives buying the buses will be the owners of the buses in five years.
Members of Lion Air Group:
--Lion Mentari Airlines, PT (Airlines Service)
--Wings Abadi Airlines, PT (Airlines Service)
--Malindo Airway (Airlines Service)
--Batik Air (Airlines Service)
--Lion Air Flying School (Flying Centre)
--Lion City (Flying Integrated Area)
Table--19 Fleet of aircraft operated by Lion Air, 2012 Seat Number Aircraft capacity (unit) Description B737-300 149 2 No longer used in 2013 B737-400 158 7 No longer used in 2013 B737-800 189 12 Replacing 900ER series given to Batik Air B737-900ER 220 67 126 more units to be delivered gradually B747-400 506 2 Total 90 Source: ICN processed Table--20 Types of aircraft operated by Wings Air, 2012 Seat capacity Number On order Types (passengers) (units) (units) ATR 72-500 72 20 -- ATR 72-600 72 -- 40 DHC Dash 8-301 52 2 -- MD 82 172 4 -- MD 83 172 1 -- Total 27 Source: ICN processed Table--21 Aircraft to be operated by Malindo Airway Seat capacity Number Types of aircraft (passengers) (units) B737-900ER 220 12 Table--22 Aircraft to be operated by Batik Air Seat capacity Number of aircraft Types (passengers) (units) B737-900ER 190 12 B787 Dreamliner N.a 5 Total 17 LION AIR GROUP Parent company PT. Lion Mentari Airlines Address Lion Air Tower Jl Gajah Mada No.7 City Jakarta Phone(s) (021) 63798000 Fax. (021) 6348744 Website www.lionair.co.id Number of companies 7 Companies Lines of business --Airlines service --Flying School --Flying Integrated Area --Bus Assembling Industry
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|Title Annotation:||COMPANY PROFILE|
|Publication:||Indonesian Commercial Newsletter|
|Date:||Aug 1, 2012|
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