Lion Air Group rate of fleet expansion kicks into a higher gear while AirAsia slows down

[flee 5]

Lion Air Group’s pace of expansion is about to accelerate as it takes delivery of its first A320 and increases its 737 delivery rate. The group plans to add over 30 aircraft in 2H2014 as it increases its overall average monthly intake from three to five aircraft – a rate it will maintain in 2015, resulting in a staggering 60 deliveries next year.

At the same time AirAsia Group is slowing its fleet expansion, particularly in the Southeast Asia market. AirAsia is growing its Southeast Asian fleet by only six aircraft in 2H2014 and may not add any aircraft in 2015 as the focus will be on spooling up new affiliates in India and Japan.

If Lion does not follow AirAsia in slowing down growth in Southeast Asia it will quickly shoot past AirAsia. There is a risk market share gains will come at the expense of yields and profitability as several Southeast Asian markets are already suffering from overcapacity - but there is a larger strategic game being played out now.

AirAsia and Lion operate over 300 aircraft - with almost another 900 on order

The AirAsia and Lion groups (excludes AirAsia X) currently account for about 60% of Southeast Asia’s LCC fleet and about 20% of the total Southeast Asian fleet. The two groups also have nearly 900 aircraft on order, which accounts for over half of the 1,600 aircraft on order by the entire Southeast Asian airline sector, according to the CAPA Fleet Database.

The rapid growth of AirAsia and Lion over the last decade have driven up the LCC penetration rate within Southeast Asia from about 4% in 2003 to almost 60% in 1H2014.

AirAsia currently operates 159 single-aisle aircraft in Southeast Asia while Lion has 150 aircraft in its single-aisle fleet (including 144 at LCC subsidiaries or affiliates and six at full-service subsidiary Batik Air). These tallies exclude widebody aircraft – Lion has two 747s while AirAsia’s sister long-haul LCC group AirAsia X has a fleet of 20 A330s.

Southeast Asia’s widebody LCC segment is growing rapidly but from a small base and competes in a market which is relatively unpenetrated. The LCC penetration rate to and from Southeast Asia is still less than 20%. This report specifically analyses Southeast Asia’s short-haul sector and the planned growth rates of AirAsia and Lion.

Lion Air Group will have larger fleet than AirAsia Group by end of 2014

The AirAsia-Lion battle is now approaching a major fork in the road as the two groups adopt radically different growth strategies.

Full analysis here: http://centreforaviation.com/analysis/lion-air-group-rate-of-fleet-expansion-kicks-into-a-higher-gear-while-airasia-slows-down-177353

 

[Sharil Abdul Rahman 0]

I wonder if Malindo will be getting all of the 739 orders or they will dip into the A320s as well.

[flee 5]

I think A320s will, for the moment, be for Batik due to its FSC model. The A320 cabin is wider and more spacious.

 

Malindo's jet operations are struggling and they are still stuck on 6 aircraft. I am not sure if the fleet will be expanded further later this year. I think they are finding the domestic market unprofitable and are looking at international routes carefully before their next stage of expansion.

[kandiah k 0]

I wonder if KUL would be able to handle ATRs on scheduled flights. Perhaps they could feed their international routes well with the ATRs at KUL instead of the B739?

[Y. J. Foo 0]

I wonder if KUL would be able to handle ATRs on scheduled flights. Perhaps they could feed their international routes well with the ATRs at KUL instead of the B739?

I would think that any ATR72 international routes by OD would be from SZB instead - doesn't KUL forbid turboprop scheduled operations?

[Amirul Mazlan 0]

Really strange when KUL forbids turboprop operation whilst Changi welcome it with open arms. No conflict whatsoever with jet traffic, just not a wise decision on our authority side.

[Adrian M 0]

Does KUL forbits turboprop aircrafts? Because a few years ago, Riau Air operated Fokker 50 into KUL.

Edited July 16, 2014 by Adrian M

[kandiah k 0]

I think they should allow it in view of growth on short routes that require the turboprop aircrafts. IMHO, SZB airport should be just for private jets and limited commercial aircrafts. Perhaps KUL could prosper at a higher rate than it already is. Destinations like IPH, KUA, MKZ, MES and so on can attract good traffic to onward flights from KUL, regional or long/medium haul. Just a thought.

[Chris Tan 0]

I think A320s will, for the moment, be for Batik due to its FSC model. The A320 cabin is wider and more spacious.

I doubt the "spaciousness" is the reason for choosing the A320s.

 

The difference is marginal and not quite as obvious as the A330 vs B777 difference, for instance. If they want a more "spacious" plane, it should be the longer 739, no?

[Adam Lawrence 0]

I think they should allow it in view of growth on short routes that require the turboprop aircrafts. IMHO, SZB airport should be just for private jets and limited commercial aircrafts. Perhaps KUL could prosper at a higher rate than it already is. Destinations like IPH, KUA, MKZ, MES and so on can attract good traffic to onward flights from KUL, regional or long/medium haul. Just a thought.

SZB is a very convenient and closer airport to residents who live in Subang, PJ,Shah Alam and other nearby areas. They shouldnt restrict SZB to private jets and limited commercial flights only. Anyway, KUL have connections to KUA and MES.

[JuliusWong 0]

I think reason for separating the turboprop services from KLIA is to ensure that they don't clogged up the operation at latter as right now it is pretty congested.

[V Wong 0]

SZB is a very convenient and closer airport to residents who live in Subang, PJ,Shah Alam and other nearby areas. They shouldnt restrict SZB to private jets and limited commercial flights only. Anyway, KUL have connections to KUA and MES.

Not just these areas. Made it in record time last Sunday during off peak hours. From aircraft door to home in Cheras - including baggage collection and taxi journey : 35min

[flee 5]

Really strange when KUL forbids turboprop operation whilst Changi welcome it with open arms. No conflict whatsoever with jet traffic, just not a wise decision on our authority side.

Changi isn't exactly turboprop friendly - they allowed it because they don't want props at Seletar. So now, Berjaya Air also flies into Changi.

 

However, no new turboprop slots are available any more as they claim that they cause air traffic congestion due to their slow approach and take off speeds. However, there is a campaign to reverse this policy going on. Not sure if Changi will change its mind before its 3rd runway opens in 2020.

[kandiah k 0]

Interesting. But with three runways, will the turboprop still cause delays during take off/landing?

[Kee Hooi Yen 0]

Correct me if I am wrong, I think in the early 2000 the restriction to turboprop only in SZB was used as a tool to block AK from operating in SZB after MH has moved to KLIA