Malindo Airways to challenge AirAsia

Flickr image by vectorkalkulus

JUST a few weeks after Malaysia’s budget carrier AirAsia announced acquisition of Indonesian carrier Batavia Air, Indonesia’s largest low-cost operator Lion Air inked an agreement with Malaysia’s National Aerospace and Defense Industries (Nadi) to launch Malindo Airways. The shareholding is 51/49 in favour of Nadi.

Malindo plans to operate across Asean and to China (including Hong Kong), India and Japan. In the longer term, it is also thinking of Australia and Europe. Now that’s ambitious. The long haul has not really been a tested terrain for budget carriers, but if AirAsia X could do it, why not Malindo? However, it is to be noted that AirAsia X has ceased its European (London and Paris) and New Zealand (Christchurch) operations.

Photo courtesy Reuters

It looks like the stage is set for a bout between Lion Air chief Rusdi Kirana and AirAsia chief Tony Fernandes as the two carriers compete in the same market. Some analysts think it is almost a tit-for-tat counter strategy for Lion Air, in light of AirAsia spreading its wings in Indonesia. Mr Fernandes has dismissed Lion Air’s threat (through Malindo) citing AirAsia’s strong brand and positioning as Asia’s largest budget carrier in the region

Mr Rushdi, however, intends Malindo to go one-up on AirAsia by offering some frills that will include in-flight entertainment. The hybrid model has been tried by other airlines and failed in the case of Singapore’s Valuair (which was subsequently subsumed by Jetstar) and Hong Kong’s Oasis Airlines (which went bankrupt). .Will Malindo get it right this time?

While it looks like Lion Air and AirAsia are engaging in a duel, they are really also gearing up for the planned implementation of Asean Open Skies by 2015. Both airlines are expanding their operations – AirAsia setting up joint-venture bases across the region and Lion Air looking to make Singapore its major hub. They are not alone. Singapore Airlines has introduced Scoot and is expanding SilkAir and positioning Tiger Airways for growth with stakes in Indonesia’s Mandela Airlines and the Philippines’ SEAir. And Qantas continues to push and strengthen the Jetstar brand. The early bird catches the worm, so it goes

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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