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International Expansion Route of Batik Air Indonesia

Indonesia-based Batik Air has announced its first international route, an addition of 12 new domestic routes and a projected 10 new aircraft this year.

Batik, the full-service subsidiary of Lion Air, will open its first international flights on a daily basis from Jakarta Soekarno-Hatta to Singapore Changi at “the end of 2014,” Batik Air CEO Achmad Luthfie said.

 Batik Air Boeing 737-900ER

Batik Air Boeing 737-900ER

Luthfie said the airline will also extend its fleet with six new Airbus A320s and four Boeing 737-800s to be delivered by the end of this year. The aircraft will come from Lion Air’s previously placed orders for 737s and A320s, and will help expand the airline’s coverage to a total of 100 daily flights to 22 destinations—previously 36 flights to 10 destinations.

“It is not easy for any airline to keep running [in current conditions], but we are relying on the latest aircraft to give us a technology advantage,” Luthfie said. The CEO underlined the airline’s current healthy load factor of “around 90% to date,” but declined to give a yield per passenger across the fleet.

“We are covering our costs,” he said, adding that Indonesia’s strong economy and growing desire to travel should give plenty of room for growth. “We are all in the same boat [regarding] the value of the rupiah and the cost of fuel anyway,” he said.

Batik is emphasizing its quality, full-service product with roomy cabin ergonomics and high-tech optical fiber inflight entertainment (IFE) provision flying out of localized hubs at Jakarta’s Soekarno-Hatta, Hang Nadim International on Batam and Sam Ratulangi Airport on Manado.

This dispersal of hubs will allow a greater range for its projected international expansion, Luthfie said.

“We intend to fly to China from Batam and to Perth in Australia from Jakarta maybe in 2015,” he said, although did not commit to the aircraft to be specified in the permit applications to be filed at the end of this year. Batik planned to purchase five Boeing 787-800s to service its expansion plans in 2012, but canceled the order in January.

Batik said it would start services to Kuala Lumpur in January 2015 and Hong Kong in “early 2015.” The company also hinted at further possible partnerships, in addition to those already set up by the Lion Group. “We intend to set up affiliates, in addition to those already established, but are in no hurry at the moment,” a spokesperson said.

However, with competitors like AirAsia and Scoot running widebody services to similar destinations—as well as Garuda with a full-service offering—the competition on the routes Batik is planning will be tight.

Luthfie admitted Batik would be looking to the new inflight system to both cut costs (the Lumexis-sourced IFE system weighs 33% that of a conventional system, allowing lower fuel burn) and also to increase yields. “We will definitely be looking to increase ancillary revenue,” he said.  via ATW
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