Airline News
Lion Air fined for contraventions
March 9th 2015
Indonesia’s largest airline, the Lion Air Group, has had its permits suspended on 10 domestic routes as punishment for massive delays in February that left more than 6,000 passengers stranded for up to 24 hours without explanation, meals or accommodation, as mandated by the law. Read More »
Following the announcement, Indonesian Transport Ministry director general, Suprasetyo, added Lion Air was temporarily barred from applying for new route permits until it “changed for the better”. He said the carrier needed to reassure the public by preparing a standard crisis management procedure to prevent similar delays before it could reopen the routes. Lion Air’s reputation has been dealt numerous blows in its recent history, including the partial grounding of its fleet in 2011 following continuous cases of lengthy delays, and the crash of one of its aircraft off Bali. The post crash investigation discovered serious lapses in crew training and emergency response procedures.
Despite the apparent safety issues and the barrage of customer complaints, Lion Air has established itself as Indonesia’s primary air service provider. As a low-cost carrier, the Jakarta-based airline’s flexible pricing structure appeals to Indonesia’s burgeoning middle class who are eager to explore the archipelago, and the region as a whole. “We obviously can’t stop them (from operating) – how are people going to fly?” Suprasetyo summarized the dilemma. “It is impossible to shut them down.” Be that as it may, Lion Air is slated to become one of the world’s largest airlines by 2022, when it will have taken delivery of the 460 aircraft it has on order from manufacturers Airbus and Boeing.
Lion Air’s Thai offshoot – Thai Lion Air (TLA) – has been accused of price “dumping” by the competition. Senior executives at Thailand’s rival LCCs, who asked to remain anonymous because of the sensitive nature of the issue, complained to the Bangkok Post that Lion Air’s tactics were undermining their attempts to raise fares and earn meagre profit margins, particularly on routes commonly operated by multiple carriers. The executives feel TLA's fares are set without regard to costs, let alone profit, in order to quickly build up its business and exert control over Thailand's LCC market.
