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AirAsia’s Indonesia Offshoot Enjoys Big Passenger Boom
Faisal Maliki Baskoro | July 12, 2011

Indonesia AirAsia’s fleet of 20 airplanes will grow by a further five next year. (JG Photo/Jurnasyanto Sukarno) Indonesia AirAsia’s fleet of 20 airplanes will grow by a further five next year. (JG Photo/Jurnasyanto Sukarno)
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priyarani
10:07am Jul 14, 2011

It's no wonder when other airlines like Garuda have very bad website. I like flying Garuda but I never book Garuda because website is always crashing and 'overcrowded'. Garuda have the worst online presence of any major airline I ever fly with.

Lion's website is far superior but it's always delay.

So now it's AirAsia forever for me.

Texpat
11:37am Jul 13, 2011

The current lack of quality foreign films in the theatres here probably is a bonus for all the airlines. Fly up to Singapore or KL to watch Harry Potter? :)

Penyiar
7:15am Jul 13, 2011

Punctuality may be AirAsia's other strong point compared to Indonesia's own budget airlines. Lion Air (for example) has a national schedule that is never on time, and many others (including Garuda) continue to disappoint Indonesia's growing middle-class.

The Lion Air executive's comment here proves how the domestic companies disregard service excellence: "Why should we worry about our competitors?"

Since there ARE middle-class Indonesians who expect world-class service from domestic carriers, the Malaysians have stepped in and taken that upper-crust segment.

Punctuality and Service are what the foreigners offer, so Indonesian companies should at least keep up... if not exceed them!

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Budget carrier Indonesia AirAsia says it expects its passenger numbers to skyrocket 15 percent this year with the addition of new aircraft ahead of a possible listing later this year.

The local offshoot of Malaysian airline AirAsia appears on track to smash the target, reporting that it had flown 2.35 million passengers in the first half the year, up 28 percent on the same period in 2010. Total passenger numbers for last year were in turn up 13 per cent on 2009.

The Indonesian carrier has previously flagged plans to seek up to $200 million in an initial public offering later this year, in which it will
sell a 20 percent stake in itself.

“We’re optimistic that we can fly 4.5 million passengers this year because the Indonesian domestic market is expected to keep growing until 2015,” said Dharmadi, IAA’s president director.

It was last week revealed that AirAsia was purchasing 300 Airbus A320neo aircraft in a deal valued at $27 billion. Dharmadi said  there were no plan to revise IAA’s expansion plan in light of its parent company’s growth.

IAA bought three aircraft in 2010, two this year, and will add another five next year, he said. IAA currently has 20 aircraft.
Dharmadi said the airline planned to open new routes, but he declined to reveal details. Currently, IAA serves 52 domestic and international routes.

The aircraft expansion has helped the airline to post a profit of Rp 474 billion ($55.5 million) last year, more than four times the 2009 figure. Revenue climbed 37 percent to Rp 2.8 trillion. Dharmadi reiterated a March prediction that revenue would rise 15 percent this year.

“There’s a huge potential for low-cost carriers in Indonesia,’’ Dharmadi said. “Last year, the number of airplane passengers was recorded at more than 50 million people, and we expect this to increase by about 60 percent to 77.6 million people in 2015.”

In order to offset fuel costs, the airline plans to hedge its purchases. It also sought a fuel surcharge in May.

IAA was increasing revenue from fees on baggage, in-flight meals, seat selection and sales from duty-free merchandise and travel packages, he said. That ancillary revenue accounted for 18 percent of IAA’s revenue in 2010 and the company hopes to boost that to 20 percent this year.

Rival airline Lion Air said it did not view IAA’s expansion as a threat. According to government data, air passenger traffic rose 22 percent last year to 53.4 million people from 2009.

 “Indonesia has a huge market for air transportation,” said Edward Sirait, a director at Lion Air. “Our strategy is to focus on the domestic market by increasing frequencies. Indonesia needs 600 aircraft to meet the growing demand. Why should we worry about our competitors?”

Lion Air has 88 aircraft, consisting mostly of Boeing 737-900ERs. Its order for 129 Boeings is due for delivery by 2016. The company is planning a $1 billion initial public offering next year

National flagship carrier Garuda Indonesia is also gearing up for competition. It has placed an order for 25 aircraft for its low-cost carrier, Citilink.