Lion gears up for potential smaller cities market

JAKARTA. The privately owned Lion Group aims to expand its networks by entering smaller cities across the country in a bid to capture the high potential of the air travel market from destinations with shorter runways.

The group general affairs director Edward Sirait said that this market was very huge, given the fact that Indonesia was a vast archipelagic nation.

“We are a very big country and there’s a huge market for airlines that connect major cities to the smaller ones like Mentawai [West Sumatra], Banda Neira [Maluku], Jailolo [North Maluku] and many more. We want to serve this segment because it is a promising business in the future,” Edward said on Tuesday.

According to recent data from the Transportation Ministry, around 80 percent out of 207 airports across the country only have runways between 600 meters to 1,800 meters and they are located in the second tier and the third tier cities or remote areas.

There are only a few strong players that have tapped into the market such as PT ASI Pudjiastuti Aviation (Susi Air), PT Nusantara Buana Air (NBA), PT Merpati Nusantara Airlines (Merpati) and PT Airfast Indonesia.

The firm has not decided whether it is going to provide pioneering flight services, commercial services, or both.

In order to support its expansion, it plans to purchase 50 units of sub-20 N219 aircraft from the state run aircraft manufacturer PT Dirgantara Indonesia (PTDI).

Edward said that both firms have been in intensive talks to immediately realize the plan.

However, he said that Lion had not set a target on when it would start the new services.

“We have not set any specific target for this project because the plan is still in a very early stage. However, we believe that PTDI has the capability to build good aircraft for us and we are going to continue communication with them to make this happen,” he went on, adding that the talks between the two companies had started days before the Idul Fitri holiday season.

The group CEO Rusdi Kirana has also met with State Owned Enterprises Minister Dahlan Iskan regarding the plan to work with one of state run companies on Monday afternoon.

In addition, Edward said that collaboration with Bandung, West Java-based aircraft manufacturer will help the firm to reduce both the operation and maintenance costs of the 19-seat planes.

If everything goes on schedule, Lion Group and PTDI will sign a memorandum of understanding (MoU) in the near future.

The group currently operates low cost carrier Lion Air, feeder Wings Air, full-service airline Batik Air, and another full-service Malindo Airways--a joint venture carrier with Malaysia’s National Aerospace and Defence Industries (NADI) that flies in Southeast Asian destinations.

Contacted separately, PTDI commercial and restructuring director Budiman Saleh said that the firm was ready to work with Lion and the development of the 19-seat N219 plane prototype had already begun.

“We have finished some important processes to create the aircraft such as its specs, landing gear, and avionic instruments and we are optimistic to start manufacturing them on time based on our plans,” Budiman said.

However, he refused to comment on when the firm would be able to start the manufacturing process.

According to Dahlan Iskan, PTDI would be able to start the manufacturing process in 2015. Dahlan is currently lobbying the Islamic Development Bank (IDB) to help accelerate the realization of PTDI’s projects. (Nurfika Osman)