Who the F*&@ is Lion Air?

You may have heard the name Lion Air before, but chances are you’ve never flown the airline, a low cost carrier based in Jakarta, Indonesia. Lion has been known for a few things over its decade-long history; some good and some bad. The bad? Naturally, it’s safety-related. And the good? Well, it’s debatable if it’s good, but Lion Air is known for having the two largest aircraft orders in history. This is one interesting airline.

Lion Air Orders

Operating in Indonesia is no easy task. The frequent stormy tropical weather makes for some challenging flying, especially around the often mountainous terrain. That shouldn’t mean it’s unsafe, but Indonesia has a terrible accident record across most airlines. In fact, all but a handful of Indonesian airlines are on the European Union’s blacklist of airlines you shouldn’t fly for safety reasons. That list includes Lion Air.

Lion Air started flying in 2000, and since that time, it has had 7 accidents, though most avoided fatalities. The most recent was in April when a 2-month old 737 ran off the runway in Bali. Nobody was hurt, but the preliminary report shows some very serious pilot training issues.

The accidents, however, are just the most visible sign of a stressed operation. Lion has struggled with on time performance, only achieving around 65 percent on time in 2011. (I can’t seem to find a more recent report, but hopefully it’s improved by now.) Oh, and there was that whole “pilots with crystal meth” thing.

In other words, this sounds like a lot of Indonesian airlines. You would think this would mean Lion Air was on the ropes, right? Well, we have no idea. It’s a private airline and says nothing about finances, but there are some very public signs that this airline has plenty of cash if it needs it. This is one of the fastest growing airlines in the world. As the airline approaches 100 airplanes in its fleet (including a couple 747s that it uses to fly to Saudi Arabia), it prepares for another… 500+. Yeah, I’m serious.

Last year, Lion Air ordered 230 airplanes from Boeing. That’s an order for 29 more 737-900ERs and 201 737 MAX aircraft. Then this year, it ordered 234 airplanes from Airbus. This time, the order was for 60 A320s, 109 A320neos, and 65 A321neos. This is in addition to the aircraft already on order.

Not quite blown away yet? This airline has its fingers in a million different things. It started a regional airline, Wings Air, back in 2003. This airline is now on track to operate 60 ATR-72s within the next couple years. Last year it said it would launch a private jet company called Space Jet, though I can’t figure out if that actually happened. It’s also said to be working on a pilot training academy.

Just this month, Lion launched a new full service airline called Batik Air in the city of Manado. I’ll admit, I needed a a little help from Google Maps to find Manado. It lies in the northeast of the country, a thousand miles closer to Davao in the Philippines than it is to Jakarta. Manado only has about 400,000 people, but they better be rich for this full service airline to work.

Unfortunately, what’s public is pretty much all we know about Lion Air. The last press release the airline posted on its website was from 2006. And the “Contact Us” link just gives me a server error. This is one strange airline. But in the next few years, it might be one huge, strange airline. There’s no question that Southeast Asia is going to see tremendous growth in air travel, but what role with Lion play? It could be a big player or it could just be a blip on the radar depending upon what happens in the next few years.

[Original photo via Flickr user IMAM HARTOYO/CC 2.0]


45 Responses to Who the F*&@ is Lion Air?

  1. I get the growth of air travel in Indonesia. There is a growing middle class, and while distances between cities are not really all that far, it is an archepelego, and the road/rail infrastructure ain’t the greatest. I never thought that these numbers made sense. Air Asia has a lot of planes coming in the pipeline (264 320neos per wikipedia), but that is spread over all their subsidiaries across SE Asia. Plus that have a lot more name recognition than Lion. I am usually pretty optimistic (I think PeoplExpress will fly again (!)), but I just cannot see this happening as they plan.

    • Ron says:

      Distances between cities are not that far?! Jayapura to Banda Aceh is just a tad bit longer than Vancouver to St. John’s. And Indonesia has 7 times as many people as Canada.

    • Nathan says:

      Many times airlines place huge orders for 737 and A320 aircraft to effectively block the competition from getting them. Boeing and Airbus can’t ramp-up production overnight, so if Lion gets a large chunk of deliveries over the next few years then their competitors in Asia can’t. This is a very effective way to monopolize a region with emerging air travel needs.

      Lion can always sell unneeded aircraft to an airline outside of the region where they compete (Ryanair, easyJet, Southwest .. ).

      • Thats got to make Boeing and Airbus happy. Wouldn’t this order be pretty deeply discounted? Then doesn’t the manufacturer have to support the planes depending on whomever bought them form Lionair?

      • Doesn’t that also mean that if an airline wanted some planes (say 3) they could pay Lion Air to jump ahead in line (so to speak) and get three of Lions deliveries and Lion then take their place farther back in the position where they had ordered three? Lion Air could then get some money just to wait a bit longer for some of that order. The other airline would then I assume pay whatever price they had contracted Boeing for.

        Did that make sense?

        • CF says:

          David – I don’t know this part of the world very well, but I can’t imagine Boeing would be ok with airlines selling off delivery slots without Boeing getting something out of the deal. What I do know is that if good customers want good slots, they always seem to become magically available. So I’m sure there is horse-trading that goes on behind the scenes.

          • CF wasn’t pre-merger Delta selling off 737-800 immediately after delivery for a while and buying MD-90s? (AFAIK the planes were being painted and configured for the carrier they were selling them to, so Boeing was fully in on it.)

          • CF says:

            Nick – I don’t recall Delta selling off 737-800 deliveries, but airlines do modify orders and delivery times regularly. I just imagine they all require dealing with the manufacturer and not directly with another airline.

          • I might’ve picked up airline rumor scuttlebutt, but I ran across this: http://news.delta.com/index.php?s=43&item=73 They didn’t specifically mention that they were leasing back the airframes so maybe they were a flat out sale?

  2. Eric C says:

    The preliminary report doesn’t show serious training issues, because it doesn’t show much of anything! The full CVR transcript, autopilot mode, and engine power settings are missing, for example. We have no idea if the crew attempted a missed approach at minimums or if they continued, only that a transfer of control occurred and that the words “go around” were stated 1 second prior to impact. That information that could be exonerating for the crew was omitted is perhaps as damning as any facts would be, but until more data is released this is all speculation.

    Some of the pilot forums have alleged first-hand accounts of gross safety violations within Lion Air, to include complete disregard of flight time, rest, and duty regs and the use of expired, photo-copied approach plates.

  3. Does it make sense to order 200+ planes from each of the big two manufactures?

    Are they looking at starting airlines in different parts of the world and for some odd reason 737’s work better in one part of the world and A320-types in another?

    If I were Boeing and Airbus, I wouldn’t plan on filling my wallet to much with Lion Air money since that’s a lot of planes for down the road delivery, and a lot can happen before then.

    • Konstantin says:

      Maybe they just split the deal and maxed it out in order to benefit from the available export financing (Eximbank and whatever the European one is called).

    • CF says:

      David/Konstantin – The deals came in a year apart, so I don’t imagine it was a split order but rather just incremental. I can’t imagine that the A320 or 737 is needed in particular for any specific operational reasons, but I don’t really know for sure. I assume the plan is for a bunch of regional airlines as you see with Air Asia.

  4. What kind of Low Cost Airline flies 747s… A dumb one how in the world do they make Money on 747 flights to Saudi Arabia

    • Konstantin says:

      If the 744 were dirt-cheap, and in a market where the product doesn’t matter that much – transporting laborers, maids and pilgrims – it could be a viable alternative to new 777s/330s.

    • Ron says:

      A lot of airlines in Muslim countries fly their biggest aircraft to Saudi Arabia, often older airframes in a dense configuration. Some of these are only used during the Hajj season. It’s a huge pilgrim destination.

    • CF says:

      Ron – During the Hajj, I can definitely understand it, but this operates year-round. It seems awfully expensive to run a 2 aircraft 747 operation just for that on a year-round basis.

    • Haj is a big 747 reason. Also the whole middle east uses what some would call ‘slave labor’ from India/Pakistan/Bangladesh/the Phillipines and Indonesia. I believe Indonesia has the largest Muslim population outside the middle east so those aircraft could be well used.

      • CF says:

        David – Maybe others know better, but I didn’t think there was much of that in Saudi Arabia. I always think of the UAE and maybe Qatar as being the hubs of that – places where the economy is growing and work is plentiful. Anyone know if there is much migrant labor in Jeddah?

        I do know that both Garuda and Saudia fly the route, so there is demand there. It just seems like a strange route for a low cost carrier.

        • Sanjeev M says:

          Saudi is big for Filipinos working as house help. Oil fields is mainly Indians and pakistanis. The sheer numbers plus Hajj traffic make it easily ok year round

          Aren’t they also starting a Singapore subsidiary called Malindo?

          • CF says:

            Sanjeev – Ok, but none of those are Indonesian and I don’t think Lion is connecting people from outside Indonesia at this point.

            As for Malindo, I did miss that one. It’s actually Malaysia-based. Lion owns 49%, which I assume is the max allowed. It has the same screaming lion logo.

        • Stephen says:

          CF – you may recall a while back you booked a Riyadh-Singapore itinerary for us on Saudia. Singapore was a stop on the way to Jakarta. It was a 747 with coach upper deck, and was full. At the stopover in Singapore, about 12 people deplaned. The rest were Indonesian housemaids who stayed in their seats to go on to Jakarta. I believe most of the housemaids in Saudi Arabia are Indonesian, so this kind of traffic probably goes on every day, both ways; the return flight was the same, although they made the Indonesians deplane and then emplane in Singapore.

      • Reeco says:

        David – Indonesia is the largest moeslim population in the world. The 747 to Jeddah was bought exclusively for Hajj (Lion is the only airline -other than the Flag Carrier Garuda Indonesia- given the rights to serve Hajj Flights).
        The rest of the season, the 747 is filled with Indonesian workers going back and forth to Arabs countries.
        Lion is Indonesian Migrant workers first choice when it came to air travel. Try to Fly Lion KUL – CGK or any other KUL – Indonesia routes, and you’ll understand.

  5. Have flown Lion a few times. The one major point that is being overlooked is that many other low-cost carriers also fly in Indonesia and are making large investments in aircraft, many of which I have also flown on.

    The problem is the Indonesian government is expanding airports and infrastructure at a far lower rate. The current round of expansion at Jakarta will help to accommodate current traffic volumes and Bali is still decades away from having their new airport.

    Where are all these aircraft going to land? The capacity just doesn’t exist.

  6. Oliver says:

    I thought the “run off te runway” claim for the Bali crash was bad initial media reporting and the plane landed short of the runway, based on flight paths I saw.

    • CF says:

      Oliver – Well, it technically was off the runway…. But yes, it does appear that they just missed the runway entirely.

  7. John says:

    Batik Air didn’t launch _in_ the city of Manado, but _to_ the city of Manado as its first destination from Jakarta. Since then, Batik Air has started flights from Jakarta to Ambon, Balikpapan, and Pekanbaru and by the end of the month to Denpasar and Yogyakarta.

  8. Bravenav says:

    Indonesia has been the fastest growing air market for several years now. Consider that it’s the world’s fourth largest country (just behind the US), composed of thousands of islands spread out over an area as large as the US, has lots of natural resources including oil and precious metals (i.e. lots of business travel), and has only been truly open to competitive independent airline operations since Suharto’s departure in 1998. They don’t have a large Air Force to rely upon for experienced pilots like many other countries do, so finding qualified pilots has to be challenging.

    One of my flights on the Indonesian flag carrier Garuda, which is also growing, was on a brand spanking new 737-800 with the Sky interior and it was quite nice. Garuda is supposed to be joining SkyTeam soon, although I don’t know when. I’m a bit surprised that neither Garuda nor a US airline has started Indonesia to US flights yet, but it’s probably just a matter of when.

  9. JA says:

    How to simulate what Lion is doing:

    1) Pull the dollar bills from your wallet.

    2) Drop them into your washing machine mid-cycle.

    3) Think about it.

  10. RICH says:

    Brett
    Sent this to my business associates in Jakarta..
    They all fly Lion Air…. They were laughing,
    I think… but, on 2nd thought
    maybe that was controlled crying…I heard

    • CF says:

      RICH – The funny thing is, I’d probably fly Lion Air as well. But I’d probably be a little nervous about it when I got on the airplane… just a little.

  11. Ed Kelty says:

    Many countries have a 747 on hand in case the leader needs to go somewhere. It also confers some prestige.

    If I were a business selling planes, I would want a major deposit on this order before offering a volume discount.

    • CF says:

      Ed – Yeah, but Lion Air is privately owned so I can’t imagine these are ever used for state purposes. I really think it’s just a Jeddah shuttle.

  12. docjames says:

    Whilst I wouldn’t fly Lion air due to safety concerns, i wanted to point out re: the 500 orders.

    The order may be for 500, but they are spread over a number of years (obviously), and a decent chunk will be aircraft replacement as they shed their current frames are maintenance (and thus, cost) falls due. ie. buy a new one instead of maintaining the ‘old’ one.

  13. John U. says:

    @Cranky, Their goal is to take on Air Asia – which I regularly fly (Air Asia has also made an aggressive push into Lion’s Indonesia turf) and I have flown Lion as well. Lion is better in a sense that when you book a flight on them, they give you a matrix of dates and FINAL PRICES (just remember the exit tax can vary from city to city in Indonesia) where as with Air Asia, the final price of your flight can easily be double or more when you buy a seat (huh?), buy some KG for your checked-in luggage and jump through other hoops etc.

    While I have not been to Manado yet, the roads of even secondary provincial Indonesian cities are clogged with much nicer cars and motorbikes than you see in the USA. So someone there has money or rather the ability to borrow it as those vehicles are bought on credit… Alot of Indonesians also work in Singapore. Malaysia and the Middle East. So 747s, at least to the Middle East, makes sense…

    • CF says:

      Thanks for all the background info, John. Interesting.

      • John U. says:

        One other thing, Manado is in Suluwesi – the spice islands. That city is also kind of isolated because of past (recent?) fighting between Christians and Muslims in the central part of the island plus Sulu (where Abu Sayyaf operates) and Mindanao in the Philippines are just to the north of there. So its a bit of a dodgy neighborhood best entered and exited by plane.

        I was thinking of going to Makassar, the main city at the other end of Suluwesi, in a couple of months (There is an old Dutch fort there and some hill tribes known for giving elaborate funerals) but taking a bus from that city to Manado would take to long and may not be safe. Also, if you think airlines in Indonesia have a safety problem, read up on their ferry industry!!!! :)

  14. Nico says:

    Living in Indonesia I travel with Lion Air quite a lot, and there are a w issues with pilot training as I pointed out in this article based on recent articles in national paper about the aviation industry: http://atravellersjourney.com/air-safety-in-indonesia/ Training civil servants as pilots is just the tip of it.

    As for Manado: it’s got a thriving tourist industry as well as plenty of mining that goes on in the region and with terrible infrastructure in Sulawesi there is definite demand.

  15. Matthew says:

    I just flew Lion Air last weekend. While the tickets were bought post-Bali incident, I still felt very safe. I flew CGK-DJJ-UPG-CGK (Jakarta-Jayapura about 2000nm) in a new 738 with the Sky Interior. The planes were comfortable and clean the staff were efficient enough and customers were definitely happy with the price (about 40% cheaper than Garuda). One thing that surprised me is how little they push BoB. I might just be comparing it to AirAsia but they weren’t pushing at all. While this was my first trip on Lion and all flights departed and arrived on time, my fellow travelers said it was the first on-time flights they had experience on Lion. Not the greatest reputation in that department.

    I’ve read that the Airbus order is for Malindo the Malaysian subsidy (with Malaysia’s air department or something) and Batik Air will be getting 787s. I hope to try out Batik sometime in the next year. Anyway, I just think aviation in Indonesia is very exciting at the moment. Possibly made more so by the occasional sense of danger.

  16. Munding says:

    …. And they started as a TRAVEL AGENT. What a success story *_* (source: http://traveloka.com/lion-air )

    • Reeco says:

      Munding – the big question is. Who really owned Lion Air. it created Wings air, Batik Air, Malino Air (JV with NADI of malaysia)

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