Indonesia’s Lion Group pounces on SIA’s booming Jakarta routes

Batik Air will encroach on SIA’s market share.

Singapore Airlines has already been struggling with intense competition on its long-haul routes. Now, even its lucrative short-haul flights from Singapore to Jakarta are under threat from the entry of a dangerous new contender.

Data from market watcher Centre for Aviation (CAPA) showed that Lion Air, the largest privately-owned airline in Indonesia, has recently clinched permission for its subsidiary Batik Air to operate from Singapore to Jakarta.

According to OCBC, Batik Air’s entry will definitely impact SIA’s short-haul operations. Batik Air's entry takes Lion Group above Garuda as the second largest carrier operating on the Singapore-Jakarta route by capacity share, while SIA remains the largest.

Although SIA has significantly more capacity with its 34% market share, Batik Air’s expansion will affect the national carrier because it provides a cheaper alternative for full-service flights in the Singapore-Jakarta market.

"According to data from CAPA, Singapore-Jakarta is the second largest international route in the world based on seat capacity. In our view, similar to gulf carriers’ expansion, we expect Lion Group’s aggressive capacity expansion on SIA Group’s market to affect SIA’s results, sooner or later,” OCBC said.