Lion Air Roars With New Malaysian Joint Venture

Malaysia’s National Aerospace and Defence Industries (NADI) which control MRO giant AIROD is collaborating with PT Lion Grup to establish Malaysia’s second LCC to be known as Malindo (Malaysia and Indonesia) Airways. PT Lion Grup’s Lion Air is among the big player in South East Asia region.

NADI will control 51% of stake in the airline while the remaining shares are owned by PT Lion Grup. In the beginning, 12 Boeing 737 will be operated by Malindo Airways which will connect Indonesia’s big cities with Kuala Lumpur. Malindo Airways, which is scheduled to commence operation on May 2013, will operate from KLIA2 as its main hub to ASEAN and Asian countries such as Thailand, the Philippines, India and China.The airline will also use Jakarta and Bali in Indonesia as aviation hub to Australia.

Lion Air Boeing 737MAX

Lion Air Boeing 737-900ER

PT Lion Grup is the owner of Lion Air, Wings Air and Batik Air. The Indonesian company is also set to launch its private jets arm that will operate four Hawker 900 XP. (here)This has been the company’s second attempt to penetrate Malaysian market after the failed collaboration plan with Berjaya Air in 2011. (here) It is not known though that Malindo Airways will be allocated with the new Boeing 737 MAX in which Lion Air has made huge orders in 2011 with its manufacturer, Boeing.(here). Lion Air also operates Boeing 737-900ER aircraft as part of its fleet.

Its turboprop subsidiary, Wings Air conduct scheduled flights to Melaka International Airport in Batu Berendam using ATR-72-500 aircraft. The new Manado based Batik Air, is a long haul subsidiary of the airline and will initially operate Boeing 737-900ER aircraft. In the future, the airline will also operate 5 Boeing 787 Dreamliner aircraft.

Wings Air Dash 8 turboprop

Lion Air ATR-72-500

Batik Air Boeing 787

Malaysia’s Prime Minister Datuk Seri Najib Tun Razak said the joint venture between NADI and PT Lion Grup is an innovation and a collaborative platform which will benefit both sides. He also said, aviation industry needs to be more innovative and creative to continue profitable performance and remains in the business without setting aside accountability as well as customer’s affordability.

By 2030, the numbers of passenger in Malaysia will increase to 200 million people per year while Asia Pacific’s air travelling will rise as much as 6.7% compared to 5.1% globally.

The agreement signed by both parties will cover four main scope which is to establish a Malaysian registered airline that is Malindo Airways with flight rights of 10 + 5 to Lion Air, technical agreement on total aircraft management, technical agreement on asset supply chain management excluding the aircraft and training and trained human resource supply agreement to Lion Air.

NADI’s MRO business would benefit from the recent tie up with PT Lion Grup as it will allow its subsidiary to expand further beyond the usual military MRO business. NADI’s current portfolio includes AIROD, ATSC, Aviation Design Center (ADC) and many more. PT Lion Group will also benefit by having able to penetrate the Malaysian low cost airline market which is currently being dominated by AirAsia. Consumer in general will also benefit from the tie up as prices will be going down as competition between airlines in this country become stiffer.

In response to the new Malaysian-Indonesia joint venture, AirAsia group CEO said that AirAsia welcomes the establishment of the new airline. He also said that, if more airline company is established in ASEAN, it will be better for the industry itself. Nevertheless, the establishment of Malindo Airways, according to Tan Sri Tony will give a lot of problem to MAS rather than AirAsia.

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