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Air travel in Asia is expected to grow 6.7 percent annually in the next 20 years, from 780 million passengers in 2010 to some 2.2 billion by 2030. Budget aviation now has a quarter of the air travel market in Asia, and growing. AirAsia flew nearly 34 million passengers last year, while Lion carried 32 million people. Lion is eyeing potential affiliates in other Southeast Asian countries and Australia, similar to AirAsia's model. CAPA however, warned establishing such ventures may be challenging as its brand is not well known outside Indonesia. "AirAsia has a more powerful pan-Asian brand and also has first mover advantage in every market except Indonesia," it said. CAPA said air travel in Indonesia has nearly doubled since 2008, hitting 72.5 million passengers in 2012 and is expected to reach 100 million passengers in 2015 and 180 million in 2018. It said Lion Air can easily absorb another 300 planes to grow its fleet in Indonesia to 400 by 2018 to cater to domestic demand. Dozens of airlines have emerged in Indonesia since it deregulated its aviation industry in the 1990s, making air travel affordable for the first time for many of the country's people, and luring passengers away from ferries and trains. With only a five percent share of seat capacity for Indonesian international flights, compared with about 25 percent for AirAsia and about 16 percent for national carrier Garuda, Lion can close the gap with its rivals internationally while keeping the big gap it enjoys domestically, CAPA said. Standard and Poor's Shukor said Lion also appeared to be entering the lucrative aircraft leasing business with the establishment of an affiliate company in Singapore called Transportation Partners.
"Lion Air has secured plane delivery slots for the next decade. The game plan is to expand their airline business and at the same time, capture potential business in the leasing market," he said. However, he said Lion Air has to first ensure it is able to secure trained pilots and other aviation professionals and grapple with the issue of how Indonesia's creaky airports can keep up with its growth. At Malindo, Lion seeks to be a step above its competition. Malindo's tagline -- "Not just low cost" -- reflects its aim to win market share by offering free checked-in baggage, in-flight entertainment and light meals. It is also flying out of Malaysia's main international airport where aerobridges offer convenience to travelers, compared with AirAsia which is operating out of the country's low-cost terminal. Tickets prices will be competitive and planes are fitted with a lower-than-usual 180 seats, offering more legroom. "It will not be easy to challenge a strong incumbent. Pricing is everything. It will depend on their strategy, and their luck," Shukor said.
[Associated
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