AirAsia boss Tony Fernandes has vowed to give Indonesian rival Lion Air “a real run for their money” after it announced plans for a new low-cost carrier, a report said Thursday.
Indonesia’s Lion Mentari Airlines and a Malaysian partner called NADI said Tuesday their Malindo Airways would launch flights around the region from Kuala Lumpur in May, a direct assault on AirAsia’s home turf.
AirAsia has long been based near Kuala Lumpur but Fernandes, a Malaysian, recently opened a regional headquarters in Jakarta and purchased Indonesia’s Batavia Air for $80 million.
“We are thrilled that they are coming here as this means taking away capacity from Indonesia. We can give them a real run for their money in Indonesia,” he was quoted by Malaysia’s The Edge Financial Daily as saying.
Analysts have said Malindo could threaten fast-growing AirAsia’s profit.
AirAsia’s share price dropped to an 11–month low on the Kuala Lumpur stock exchange Wednesday.
Fernandes, a former record industry executive, took over insolvent AirAsia in 2001 and quickly turned it into one of the aviation sector’s biggest success stories.
It has come to dominate budget travel in Asia with a business model based on flying into secondary airports in major cities, with their lower landing costs.
But analysts have warned that it must contend with a host of upstart challengers emboldened by Fernandes’ pioneering success.
Malindo will launch with a fleet of 12 Boeing 737s flying to regional destinations but hopes to expand to 100 planes in a decade and fly to Europe by 2015.
Lion Air is Indonesia’s largest privately run airline. Malaysia’s National Aerospace and Defense Industries (NADI), which specializes in maintenance, repair and overhaul services, will own 51 percent in the joint venture.