Mon, Mar 25, 2013 - Page 15 News List

Planemakers turn gaze to Indonesia


A new rivalry between the world’s biggest planemakers is heating up in Indonesia after a record deal for Airbus SAS in a market with huge potential that until now has been a “fortress” for Boeing Co.

The European company in the past consistently lost contracts to its US rival in Southeast Asia’s top economy, but budget carrier Lion Air’s 18.4 billion euro (US$23.8 billion) order last week for 234 medium-haul Airbus jets may be a game-changer in the feud for market share.

“This is a major deal for Airbus because, generally, Indonesia has been a fortress for Boeing,” Ravi Madavaram, an aerospace analyst for Frost & Sullivan in Kuala Lumpur, told reproters.

“I think the moment Airbus comes into the picture, more and more low-cost carriers will want an Airbus A320. Then it becomes challenging for Boeing to catch up,” Madavaram added.

Lion Air’s A320 deal with Airbus announced in Paris on Monday last week was the most valuable commercial order booked in history. The second-biggest was also made by Lion Air in 2011, in a US$22.4 billion order for 230 Boeing jets.

Boeing last year overtook Airbus as the world’s biggest planemaker in terms of aircraft delivered for the first time in 10 years.

“Lion Air was in fact one of the few airlines in the region that had never ordered an aircraft from Airbus. But we never gave up,” Jean-Francois Laval, executive vice president of sales for Airbus Asia, told reporters.

“We have not exactly been absent from Indonesia. The new order from Lion Air will significantly increase our presence in the important Indonesian market,” he added.

However, Boeing says the Airbus deal has not ruffled its feathers as it works to deliver more than 300 jets ordered from Lion Air and its offshoot carriers.

“Lion Air has ambitious growth plans and no one airplane manufacturer can meet its needs,” Boeing spokesman Ken Morton told reporters.

While slow growth in Western economies is hitting the aviation industry, Asian countries are booming with an emerging middle class keen to take to the air.

Indonesians are increasingly relying on air travel to link the archipelago of 17,000-odd islands, with up to 900 new planes set to be delivered to Indonesia in the next decade, according to the government.

The potential is huge — only 6 percent of Indonesians have traveled by air, according to officials, in a nation of 240 million people that has consistently clocked annual economic growth above 6 percent.

By 2021, about 180 million passengers are expected to fly domestically in Indonesia, triple the 2011 number, the CAPA Centre for Aviation said.

Lion Air, Indonesia’s biggest private carrier, has ordered more than 460 planes in just 16 months, a dramatic expansion that has raised doubts about how it will find the financing, pilots and landing slots.

The airline is banned from the EU and US over safety concerns. However, it says it plans to broaden its regional horizons, and observers think it wants to take on AirAsia.

It now operates 92 planes — all Boeings except for one older McDonnell Douglas — to 72 destinations, mostly in Indonesia.

The furthest it flies is to Saudi Arabia, a route packed with domestic workers and construction laborers.

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