Lion Air looks to fill ‘thin’ routes with Bombardier C300s

(Reuters) – Indonesia’s Lion Air is looking to fill “thin” routes with Bombardier Inc’s C300 jets, as it challenges Malaysia’s AirAsia Bhd in Southeast Asia’s quick-growing market for budget travel.

Chief executive Rusdi Kirana told Reuters the airline is in talks to buy a “double-digit” number of C300s, rather than more narrow-body Boeing Co 737s or Airbus A320s, because their size offers lower operating cost per trip on so-called thin routes where passengers don’t quite fill the larger planes.

Lion Air is considering issues such as after-sales support, and could place an order by the end of the year, a spokesman said.

The airline has been on a shopping spree as it looks to capitalize on Indonesia’s rising consumer class who are increasingly hopping between myriad islands of the world’s fourth-most populous country, whilst it competes internationally with the likes of AirAsia.

Lion Air has a fleet of 737s and ATR’s 72-seat ATR 72, and has over 500 A320s and 737s on order. Another aircraft type will add only “minimal” cost, CEO and co-founder Kirana said after visiting a CSeries factory at Mirabel, Quebec, on Thursday.

The CS300, which has a list price of around $80 million, can seat up to 160 passengers. This makes it ideal for routes where demand isn’t enough to fill the 189 seats of a 737-800, but exceeds the capacity of an ATR 72, a spokesman said.

The plane is suitable for routes such as Southeast Asia to Hong Kong or Guangzhou, as well as for domestic Indonesian routes, the spokesman said.

“Definitely we are in discussions with them, so hopefully we’ll be able to finalize a deal in a few months,” said Marc Duchesne, director of public affairs and communications for Bombardier’s commercial aircraft division.

Lion Air is increasing its international scope by setting up affiliate airlines. It owns 49 percent of Malaysia’s Malindo Air and hopes to set up a Thai joint venture this year with two aircraft, increasing that to around 70, said Kirana.

It is creating a second hub on the Indonesian island of Batam near Singapore, to avoid congestion at Jakarta’s main airport, Kirana said. It is also building a large maintenance, repair and overhaul facility at Batam’s airport.

Kirana also said the airline is on track to list on the stock exchange in 2015, and that he wants more time to weigh market dynamics and “the liquidity of money in the world.”