Lion Air to join the Australian jungle

“We’ll have 51 per cent and Lion Air 49 per cent, SAW’s CEO David Charlton told Australian Aviation. “It’s a great opportunity for us and I think for Lion Air as well.

They were looking to expand and we made them a great offer. It’s a good airline with a great operations team, and I think we’ll be bringing the right aircraft in for the routes we want to operate. ” Under the arrangement, SAW will facilitate Lion Australia getting its AOC (air operator’s certificate).

Although it will only hold 49 per cent of the company, Lion Mentari will have management control.

The airline will initially operate six new Boeing 737‑900ERs which will have a three class layout with business, premium economy and economy seating likely for 180 passengers, compared to 215 in a two class layout.

No route announcements are expected to come until a timeline for the AOC is established.

Dates for a launch have also not been given, except to say that it will be some time “later this year”.

The airline will initially focus on flying international routes from Australia to ports in Southeast Asia, with the priority to connect these ports with Lion’s hubs at Denpasar and Jakarta. Recent quotes from Lion Mentari CEO Rusdi Kirana point to 10 unnamed cities in Australia from which it will fly to Indonesia. Lion will also use its aircraft to open up new domestic routes which are currently not served by the existing four airlines. “The -900ER opens up so many possibilities that no-one else is currently operating at the moment,” says Charlton.

There has been no decision on a base for the airline yet, Charlton says, and it is expected that there will be a major bidding war between both major and secondary airports for the privilege.

Airports such as Cairns, Gold Coast and Newcastle may hold some advantage as most of Australia’s bilateral agreements have unlimited traffic rights from these secondary cities.

Unlike the other recent entrant Tiger Airways, Lion Australia will enjoy the full entitlements of an Australian airline as it will be majority owned by an Australian company. This may allow it to open up other routes to cities such as Manila, Kuala Lumpur, Singapore and Bangkok as an Australian carrier.

Using the 737‑900ER’s 3250nm (6000km) range could open up a number of destinations.

The Australian operation is the first part of a wider strategy by Lion to establish a pan-Asian network using the 122 737-900ERs it has on firm order (with plans to buy more). Another affiliate is expected to be announced shortly in Thailand, which will reportedly start with four aircraft. Kirana has said that Australia and Thailand were chosen to be the first places to expand the Lion brand to as obtaining operating permits was relatively easy. It is believed that Lion is also looking to establish operations in Vietnam, Bangladesh, the Philippines and Malaysia.

Jetstar, which also has plans to build up a strong Asian presence, does not believe that it is likely to face any more challenge from Lion Australia than it already faces from its other competitors.

“We live in a very competitive market and it’s always been competitive and a new kid on the block doesn’t change our thinking,” spokesman Simon Westaway said.

“I think what we’re doing is in many ways well ahead of the pack or most of the pack in terms of a true pan-Asian operation. ” The announcement has brought about some concern and questions about Lion’s safety record in Indonesia.

Since 2004, the airline there has had four serious aircraft accidents, including the loss of an MD-80 in 2004 which resulted in 25 fatalities. Lion is also on the list of airlines banned from the EU as are all other Indonesian airlines.

Questions have also been raised about the source of Lion’s financing for its aggressive expansion plans and the 122 aircraft it currently has on order. Some sources believe that the airline has been financed by the Indonesian military. Kirana denies this aggressively and claims that the airline has become a success due to his hard work, not military money.

The announcement indicates that it will be a big year ahead for SkyAirWorld. Since having a largely quiet year last year, SAW is now preparing to take its first Embraer 190 which will be put into service on the Brisbane-Honiara route, for which it has traffic rights. The company is also planning to take delivery of two 50-seat ERJ-145 jets around the middle of the year. It is not expected that any of these events will be impacted by the Lion announcement.