Rusdi Kirana is a latecomer to the regional aviation scene, so he is a man in a hurry to build an empire across Southeast Asia where rivals such as AirAsia rule.
With an eye on open-skies agreements expanding across Asean, the Indonesian tycoon set up his first venture outside his home country in Malaysia last year, and now he has established a joint venture in Thailand.
Thai Lion Air is expected to take off by the end of this year, starting with two aircraft and growing to a sizeable fleet over two to three years. It will offer flights from Bangkok to Kuala Lumpur and Jakarta, and also plans connections out of Chiang Mai into Southeast Asia.
But before the first flight can take off, Rusdi already has his sights set on Myanmar, which would give him another market to serve from Malaysia, Indonesia and Thailand.
To do so he will have to compete with the big boys including AirAsia, Nok Air and even Jetstar to set up partnerships in Myanmar.
Vietnam is a market he has in mind as well. Despite its high potential Vietnam is a tough market and others have failed there; in any case it is still not clear whether the government will give him the approvals he needs.
Rusdi and his older brother Kusnan set up PT Lion Group more than a decade ago with seed capital of US$1 million. They bought a Boeing aircraft and began serving the Indonesian domestic market by offering low fares.
Today, Lion Air controls nearly 50% of the domestic air market in Indonesia. It has been profitable from day one as Rusdi is very conscious of unit costs and spending.
Last year he set up Malindo Air in Kuala Lumpur in a 49:51 partnership with Malaysia’s Nadi Group. Malindo made its maiden flight in March this year with two aircraft and today has nine aircraft.
While other airlines such as AirAsia cannot seem to get rights to fly turboprops out of Subang Skypark near Kuala Lumpur, Malindo began flying from the secondary airport a few months ago. Of the nine aircraft, three are turboprops serving destinations that include Langkawi, Penang, Kota Baru and Johor Baru.
The airline plans to have a fleet of 20 aircraft by the end of next year and at least two dozen more routes, compared with 10 now.
In seven months Malindo has carried half a million passengers and it targets one million passengers by March 2014.
That is a tall order but since its arrival, other airlines in Malaysia have been dumping fares to stay in the competition. Malindo’s fares across East and West Malaysia are seen as reasonable and it is recording a load factor of nearly 80% system-wide. Its 20-kilogramme free baggage allowance, free snacks and inflight entertainment attract travellers.
In Indonesia, Rusdi started with Lion Air, the domestic carrier and now has Wings Air serving rural areas. In March this year he launched Batik Air, a full-service airline that serves domestic routes.
Batik Air was originally planned to serve international routes but Rusdi decided the group is better off using Malindo as its international extension.
Now Malindo flies from Bali and Jakarta to Dhaka, its first medium-haul destination, and by year-end it hopes to fly into Mumbai, Kochi and New Delhi.
Flights to Dhaka are recording a high load factor of over 90% and its entry has forced Malaysia Airlines (MAS) to drop fares to keep its market share in Bangladesh.
Rusdi is also using Malaysia as his base to fly Indonesians travelling from Jakarta to other points around the world because Lion Air is still banned from European Union and UJS airspace because of its poor safety record in the past.
But the airline now has one of the industry’s youngest fleets and has placed the biggest order ever made from Asia for more than 700 aircraft with Boeing and Airbus.
To use these planes Rusdi needs to secure more partnerships and more destinations to fly passengers all over the world.
Lion Air now flies 100,000 passengers a day. It also has a business jet operation out of Jakarta.
For Thai Lion Air he has approval to fly domestic and internationally. He is after the tourism market for he sees huge potential.
Sceptics point out that the Thai aviation market is intensely competitive, but Rusdi believes his customer base in Indonesia will give him an edge. For example, he can use Wings Air to provide connectivity for people in rural areas to Thailand.
He believes the Bangkok-Jakarta flights will be a hit and that Thai Lion Air can survive in the competitive market.
His Thai partners, who have not been identified, are not airline people. The long-term plan is for Thai Lion Air to ply the Bangkok-New Delhi routes and also to make inroads into China.
Unlike Malindo which offers economy and business classes, Thai Lion Air will focus on economy class because tourists will be the biggest target market.
Given the speed of its expansion and the size of Lion Air’s aircraft orders, there is every indication that Rusdi intends to become the region’s next aviation mogul on par with Air Asia’s Tony Fernandes, although the question is when that will happen.
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