Taste of own medicine

Loudmouth low class carrier operator Tony Fernandes is getting a real slap of his face, on top of a run for his money. The NADI-Lion Air new joint venture hybrid budget airliner Malindo Airways is set to be a major airlines in the region.

Reuters take on this:

Lion Air to launch Malaysia-based budget airline

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A brand new Boeing 737-900 ER series plane is seen before take off during its official launch by Indonesia's Lion Air at the Halim Perdana Kusuma Airport in Jakarta April 30, 2007. REUTERS/Crack Palinggi

By Siva Sithraputhran

KUALA LUMPUR | Tue Sep 11, 2012 3:37pm IST

(Reuters) – Indonesia’s Lion Air will set up a new low-cost airline based in Malaysia, it said on Tuesday, a challenge to dominant budget carrier AirAsia Bhd as Southeast Asia’s growing middle class fuels demand for cheap flights.

The new carrier, Malindo Airways, will begin flights between Indonesia and Malaysia next May with a fleet of 12 Boeing 727 aircraft which it plans to expand to 100 planes within a decade, Lion Air President Rusdi Kirana told reporters in Kuala Lumpur.

The move is the latest in a burgeoning rivalry between Lion Air and Malaysia-based AirAsia as strong economic growth and rising incomes spur rapid passenger growth among Asian low-cost carriers, helping to shield Western planemakers from the malaise gripping developed economies.

“Malindo is an opportunity to tap a robust market that is right for the entry of a new low-cost carrier,” Malaysia’s Prime Minister Najib Razak said at the launch event.

AirAsia (AIRA.KL) has made inroads into Lion Air’s home market, announcing in July it would make its first major acquisition by buying Indonesia’s Batavia Air.

AirAsia chief executive Tony Fernandes said in May his group was looking to list its Indonesian operations by the first quarter of next year as it moves its regional base to Indonesia.

In contrast with other budget carriers, Malindo Airways will have in-flight entertainment, extra legroom and free light meals, as well as low fares, Kirana said. Its hub will be Malaysia’s new budget terminal, KLIA 2, which is currently under construction.

“I should be selling at what AirAsia is selling, or I may sell lower,” Kirana told reporters, referring to ticket prices. He did not say how much Lion Air was investing in the new carrier.

Lion Air has a 49 percent stake in the airline, a joint venture with Malaysia’s privately held National Aerospace & Defense Industries Sdn Bhd, which holds the majority 51 percent

Despite Asia’s increasingly crowded budget carrier field, Kirana said there was still a need for “two or three more airlines with specific business models” by 2013.

The two firms’ rivalry is also part of a battle between dominant manufacturers Boeing (BA.N) and Europe’s Airbus (EAD.PA), which are favoured by Lion and AirAsia respectively.

Lion Air ordered 230 Boeing short-haul jets worth $22 billion last November to take its total orderbook to more than 400 planes. Sources told Reuters last week that AirAsia is close to a deal to buy up to 100 Airbus jets, closely on the heels of its record order for 200 last year. (Writing by Stuart Grudgings; Editing by Daniel Magnowski)

***************

Lion Air would be the largest airlines operation in the region. CEO Pak Rusdi Kirana is hinting that they could offer cheaper tickets but with much better products, compared to AirAsia. Naturally, the now bullish Malindo Airways would be a major threat against AirAsia, even when Fernandes says its not.

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11 September 2012 | last updated at 09:46PM

‘Malindo Airways will not pose threat to AirAsia’

AirAsia Chief Executive Tan Sri Tony Fernandes has welcomed the new low-cost airline in Malaysia, Malindo Airways, but dismissed that the new budget carrier will be a potential threat to AirAsia Bhd, Asia’s largest frills-free airline.

He said the formation of Malindo Airways clearly indicated the growing importance of budget carriers in the global aviation industry, particularly in Malaysia and in the Asean region, in tandem with the Asean Open Skies Policy, which will come into force in 2015.
“I welcome Malindo Airways’ establishment. AirAsia had always wanted Asean to be opened up. This is a good step,” he told Bernama.
Fernandes quashed claims that Malindo Airways would force AirAsia to bow to pressure due to the keen competition in Indonesia.
He said neither the airline nor the joint-venture partners of Malindo Airways posed any threat to AirAsia’s vast airline network in the Asian region.
“The new airline is not an issue for us in AirAsia. We have competed in a country like Malaysia which has a strong airline such as the Malaysia Airlines (MAS).
“We also have in hand a strong team for AirAsia, AirAsia X and AirAsia Indonesia. I am proud of what we have and we will continue to grow.
“We are building a global brand and I don’t think that something like this (the new airline) will slow us down,” added Fernandes, who is now based in Jakarta, overseeing AirAsia’s Asean region operations.
AirAsia Malaysia is now headed by Aireen Omar.
National Aerospace and Defence Industries Sdn Bhd (NADI) and PT Lion Grup today signed a joint-venture agreement to form Malindo Airways which will begin operations on May 1 at KLIA2 in Sepang.
The signing was witnessed by Prime Minister Datuk Seri Najib Razak.
The budget carrier will take off with a fleet of 12 Boeing 737-900ER aircraft to destinations between big cities in Malaysia and Indonesia before expanding to other Asian countries.
Malindo Airways is considering offering low fares, even lower than AirAsia, in addition to the in-flight entertainment systems and in-flight connectivity in all of its aircraft. — Bernama

*******************

Malindo’s initial investment of 12 world’s most popular and reliable airlines workhorse, the most recent B737 model from Boeing; B737-900. It could fly 160-170 passengers from this region to any East or West Asia destination in a single hop. In time, it would not be a surprise if Malindo Airways starts to fill-in the gap on point-to-point markets, against Malaysia Airlines’ or Garuda’s traditional hub-to-hub operations.

A promising bullish market for budget airlines market, but offering better products against current low regional low cost carriers would probably see Malindo Airways expand to 100 aircrafts within ten years.

As a full service airliner with state-of-the-art entertainment system, wifi and mobile phone connectivity (coupled with a choice of  business class option) but at budget ticket price, definitely the highly popular regional low cost carrier AirAsia  would be a lesser choice for passengers. Malindo will be operating from KLIA2 from May next year. At this point of time, AirAsia has yet to confirm their date and schedule to move their operations from KLIA LCC Terminal.

Lion Air B737-900. Malindo Air would be operating this model

This joint venture is very strategic for Malaysia Airports. Lion Air soon will be operating 220 B737s and would be the largest airlines in Indonesia. Eventually it would number 400. The market for the fourth most populated nation in the world is tremendous. If some of this market is being channeled through KLIA for a third destination, it would add more business for Malaysia Airports and indirectly, Malaysia’s tourism earnings.

Analyst already predict that Indonesian air travelers would increase by 52% by 2015. The steady promising growth is projected in Lion Air’s order of 22o aircrafts from Boeing.

Lion Air’s growth and potential is really promising. The airlines is serving Jakarta-Jeddah sector with 500 seater B747-400s. As the market grow, it is expected that Lion Air acquire suitable aircrafts which include wide body to serve  right destinations. This is unlike AirAsia which intercontinental AirAsia X is already showing problems and has been canceling what deemed to be lucrative routes such London and Paris.

Prime Minister Dato’ Seri Mohd. Najib Tun Razak’s strong endorsement to a competitor against AirAsia, Malindo Airways

Prime Minister Dato’ Seri Mohd. Najib Tun Razak officiated the new hybrid-budget airlines this afternoon. It is a demonstration of a strong endorsement, in the spirit of Malaysia-Indonesia brotherhood and regional ASEAN co-operation ahead of the Open Sky policy beginning 2015.

“This will fortify the airlines business in the region”.

This is also a strong message to the arrogant and incurably annoying Fernandes for his grandstanding upon the ‘AirAsia-Malaysia Airlines share-swap’ last August where the latter was suckered to pay RM 18 million for lousy Queen’s Park Rangers sponsorship.

This serves Fernandes well. Especially after Fernandes’s sordid attempt to do an ‘Airport Spring’ against Malaysia Airports, which is a GLC under Khazanah Holdings Bhd. last December. And recently in May when the ‘share-swap’ signed on 9 August last year was overturned in a scheme which only lasted 36 weeks, Fernandes threatened to take his operations to Jakarta. It is obvious soon to be largest airlines in Indonesia has better faith in Malaysia compared to Fernandes.

‘Airport Spring’: Fernandes’s morbid attempt for passengers ‘uprising’ against MAHB

This is a third slap on Fernandes’s face as he tried to grow bigger into the Indonesian carrier’s market by acquiring a much lesser carrier Batavia Air.

Fernandes also failed in his attempt to hoodwink everyone for his failed Formula One team, once upon he wanted to be known as Team 1 Malaysia and ‘Lotus’.

The acid-test for Fernandes is straight forward. AirAsia placed a huge order of 200 A320 Neos. If any aircrafts from this order is passed over to another carrier, is a sign that the confidence for their ultra-bullish market growth projection is threatened. AirAsia X already has problems on routes assignment with their current order of A330s.

Even Virgin Supremo Sir Richard Branson quit on AirAsia X.

This is the way forward where Fernandes lost. For those who are bullish about AirAsia under Fernandes’s watch, the ‘good old days’ and as Datuk Rockey put it, “Honeymoon years” are numbered. Prime Minister Najib has never lend this much support for AirAsia, nor Fernandes. Not even when Fernandes was grand-standing for the Batavia Air acquisition.

*Updated Wednesday 12 September 200am

Wall Street Journal just reported that Pak Rusdi announced in Kuala Lumpur that Lion Air increased the order of B787-8 Dreamliners by ten. Some of these planes would be in the service of newly formed Malindo Airways.

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Published in: on September 11, 2012 at 22:30  Comments (26)  

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26 CommentsLeave a comment

  1. Padan muka keling pariah tak sedar diri tu.

    • Months earlier (When this Keling Pariah was still in MAS BOD), he wanted to introduce a premium jet charter based in Subang, to be known as Caterham Jet.

      Now with this Malindo Airways development, Tony Greedy Ular would be hard pressed to defend his highly lucrative Indonesian market & won’t hv time for anything else

  2. I don’t understand the logic. So much so you all want airasia to go under but by having another competitor which offer full service flight with budget price is another coffin nail for MAS. This is definitely good for the customers as severe price war will happen and the first to tumble will
    Definitely MAS unless gov promise to use tax payer money again to bail them out. Why not let MAS allowed to have this license to run this airline? I guess this is another example that UMNO cronies stand to gain and MAS interest is totally neglected!

    • Yeah… For most of the commentators here, their consideration is limited to Kick-Tony-Fernandes-butt. A thinking that is driven more by emotions rather than logic.

      • Are you exconomist or excon?

        You state economic arguments lah so we can discuss here. Not just chiding with nothing.

        Me? I’m only here for the cheer. Or jeer.

        Haba haba.

      • This Kling has been very viral in his attacks against MH, MAB for the past ten yrs.

        Of course there would be people who loathe him to the point of vomiting at the mention of this Kling’s name!

        They find their turf to lunge against an ungrateful Kling in blogs such as this.

      • Txs for the support, Anti-Keling Karam.

        The attacks and lunge are justifiable. Ungrateful is the right word. More than that, subversive to the national interest. MAS is the national flag carrier and is therefore a national interest.

      • Seriously, what has this Keling Karam done for Malaysia?

        How did his acquisition of Batavia Air or incorporation of AirAsia Thai & AirAsia Indonesia helped Malaysia?

        The very least, Ahmad Johan’s venture Malindo Airways would be the opening for Airod to do eventually do MRO for Lion Air’s 400 Boeing fleet.

        In contrast, this Keling Karam send away his A320 for engineering/MRO in Singapore.

  3. More competitors is good for passenger when ticket will be sell cheaper

  4. Malaysian,

    Get your facts right!

    MAS suffered not becoz of competition from AirAsia. MAS suffered becoz in 2006 Slumberjack gave away almost all domestic routes in favour of AirAsia.

    That gave Tony Greedy Ular the ultimate book building opportunity & on the same stroke kill MAS! Those lucrative domestic routes also enabled him to expand fast in so short of time & even convince capital exercises.

    Back then when MAS wanted to do flexible ticket pricing & online booking system, it was also prohibited by Level Four administration, in favour of AirAsia! MAS can’t even reschedule some of their highly popular routes’ departure/arrival, coz Tony Greedy Ular would complain to MOT!

    So MAS had to depend on intercontinental sectors. When fuel soared like mad few years back coupled of reduced world travelers, thats when the bleeding started. What Slumberjack & Level Four did earlier, spiraled MAS into a very vicious cycle.

    MAS already hv a budget Airlines; Firefly jet service. In a short time, it was very popular & most importantly posed a serious threat against AirAsia. The minute Tony Greedy Ular went in as BOD & exco, he killed Firefly!

    You must be a bleeding idiot!

    Ahmad Johan is a Sibu native. And bloody proud of his beginings. How could a proud Sarawakian be an UMNO crony? There’s no such thing as UMNO in bumi kenyalang!

    • I think Airasia will more likely to benefit from this. Malindo airline will help to bring in even more customers to KL to take Airasia to other parts of the world. But MAS will definately affected as Malindo offers aerobridge and meals like MAS but with cheaper price. WIth that Malindo is also unable to offer lower average price compare to Airasia. Even Firefly can’t match the price with AIrasia. Don’t believe, you can check Firefly price anytime for any route during non promotion period and comapre it to Airasia non promotion price, Firefly price is usually 2-3x more expensive. Look at MAS stock price yesterday, it is ALL TIME low at RM1! UMNO is only interested in helping their cronies, MAS should have this piece of cake not given to other competitor to compete their full service sector.

      • I dunno where’s your logic. If they can fly to KUL in full service airlines, why would they wanna suffer in a crummy lost class carrier on next sectors.

        Esp when Malindo flies them onboard B787 Dreamliners. Soon, all other premium destinations would be served from KUL as this Rusdi Kirana already said that Malindo Airways will hv 100 aircrafts within the decade.

        Most of these passengers would want to continue their journey from KUL on five star premium airlines such as MAS, Emirates or Etihad, NOT a crummy low caste carrier with is perpetually late & passengers feel that they are treated like pariahs!

        There is a case now. Someone is suing Tony Fucker’s low caste carrier for RM 20 million & will get his out of court judgment soon. AirAsia workers open the aircraft door & there’s a gap between the stairs & aircraft door. This passenger fell & broke his leg & hip.

        I hope Mr Big Dog dig this case up & goes to town with it. Seriously!

        Firefly don’t need to sell cheap like Tony’s low caste carrier. Its about supply & demand. The demand for Firefly seats are tremendous. Try to get seats for their popular flights!

      • QED’s comments I cheer. So-called Malaysian’s comments I jeer.

        Obviously the “Malaysian” bloke is a Oppo hippo. He makes wild, unsubstantiated allegations. Like all Oppo hippos always do. Even after QED has pointed out that Ahmad Jihan is a Sibu native and no UMNO in Sarawak, he still labours on cronyism. He is guilty conscious of Lim Guan Eng’s cronyism in Penang, etc.

      • Yes if they can fly to KUL full service so why fly malindo airline or even airasia? The fact is customers who opt for airasia are at different segment, they choose not to fly full service in exchange of cheaper fare. So following this principle malindo is actually competing for MAS customers by offering them full service buy budget pricing. Airasia is not ging to be affected unless malindo airline offer something cheaper than airasia in term of fare. If they can do so I will be very happy cos I would be benefited as well.

      • Aiyoyo Malaysian, you no read ha, that the Malindo boss said he’d sell seats as cheap as, if not cheaper than, Air Asia. But with perks on Malindo aircraft. Wat man, lu.

        Of course lah, you’d fly the cheaper airline, no care about anythin’ else, innit.

      • *Comments deleted

        Your thoughts and opinion are no longer welcome here. Pls take it elsewhere

  5. This Tony Focker wanted his low class eternally-late-budget-carrier to hv a ‘national carrier’ status. For the longest time, he refused to settle the airport taxes dues!

    This fucker already threatened to take his low caste carrier for Operations to be based outside Malaysia, twice!

    That’s so UNMALAYSIAN!

    The very least, Malindo has part of the word ‘Malaysia’.

    There is nothing Malaysian about Air Asia!

    P/S: I hope Malindo’s aircrafts would carry the ‘Nine Mike’ registration.

  6. In this competition of airlines (Malindo vs AirAsia vs MAS), the least efficient will suffer the most.

    My take is that it won’t be that easy for Malindo to compete on an equal basis with AirAsia and MAS, at least in the first year or two, as it is common for any new setup in a new market. However, if they do not get killed by AirAsia and MAS in the first few years, definitely there will pressure on the other two airlines.

    In my view, MAS will struggle more in this situation compared to AirAsia, as AirAsia has a efficiency-driven culture, while MAS has not.

    • Any dumbfuck school dropout can be an economist. Go shove it up where the sun dont shine.

      • Even if he is still conomist, he’d be talking rubbish. What more an ex.

        He forgot the synergistic operations Malindo and MAS will have. One feeding the other. Or he simply doesn’t know.

        Call himself conomist. ex or watever. Next he’d say he has PhD. Beli from the Internet or the Kampar, Subang Jaya or Cheras degree factories that were exposed in the papers a few weeks ago.

  7. Firefly will revive jet services next year. With Firefly & Malindo Airways making KLIA2 their base, look like good news for MAS long haul services.

    Now more people will fly Firefly & Malindo Airways, however less will fly Airasia.

  8. i do not know the background of most commentators here, but for me, if malindo manage to deliver as they promised that is super good news. im definitely not rich, but i dont mind paying xtra 20 or 30% from airasia price if i know ill be treated as a customer, not like a beggar, begging to get on their plane. As tht how i felt during my first flight with airasia. bye bye airasia.!!!!

  9. Full fledged service with low cost carrier price?? Sounds like drivel to me, but we’ll see.

  10. [...] dos, Malaysians are still laughing at Tony Fernandes for getting the egg thrown to his face due to rapid approval and Prime Minister Dato’ Sri Mohd. Najib Tun Razak’s support on upcoming … launch [...]

  11. [...] In some quarters, many believed that Prime Minister Najib’s support for Malindo Airways is about teaching Tony Fernandes and his arrogance a lesson. [...]

  12. [...] yang mempunyai nilai politik, terutama dalam kawasan strategik seperti Pulau Pinang. Sebelum ini, beliau memberikan sokongan kuat bagi entiti baru walaupun ianya akan memberi persaingan kepada entit… yang amat popular dikalangan [...]


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