Lion Air Crash: Budget carrier’s rapid rise
The Straits Times (Singapore), 3 December 2004
SOLO (CENTRAL JAVA): LION Air is a success story in Indonesia's airline industry.
Five years ago, it started out with one Russian-made aircraft, operating its office from a humble shophouse in Chinatown. Its first flight took off in June 2000 from Jakarta to Pontianak.
Now it runs a fleet of 23 planes, mostly McDonald Douglas and Boeing aircraft, serving 40 domestic and overseas routes that include Singapore, Vietnam and Malaysia. Next year, it plans to buy another 16 Boeing aircraft to expand its routes to 60. It also leased the dormant Halim Perdanakusuma airport in east Jakarta to fly to some of the country's smaller airports.
The man behind the company's success is 39-year-old little-known businessman Rusdi Kirana. He started out running a tour agency, but when the Indonesian government deregulated the airline industry in 1999, he was among the first to seize the opportunity to run an airline.
His company's rapid expansion prompted others to claim Lion Air was dumping cheap tickets and disrupting the competitive market.
Some claimed his political connections and ties with Transport Ministry officials was the key to his success in capturing domestic routes.
Observers were concerned the airline compromised safety to keep costs low. Tuesday's crash was not the first.
In January 2002, a Lion Air Boeing 737-200 skidded off the runway in Sultan Syarif Kasim III airport in Pekabaru after an aborted take-off, injuring seven people.
Mr Rusdi, who dismissed accusations by his critics, attributed his success to good managerial skills and having a strong team of employees.
In an interview with Gatra magazine last month, he said the company cut costs by building its own IT system instead of relying on foreign companies such as Abacus, as many in the industry do.
By doing this, he can lower ticket prices to enable ordinary people to buy flight tickets that in the past cost four times as much, he said.
Lion Air sells tickets that can go as low as a fourth of the prices offered by Indonesia's flagship carrier Garuda. It serves many of the routes to the outer islands.
The prices are so low they hurt businesses operating buses, ships and trains.
Mr Rusdi said in the Gatra interview: "Buses and ships are carrying cargo. People should not travel more than two to three hours at a time, not for two to three days. That is just not economical.
"Now that airline technology is more affordable, why not use it?" he said. – DEVI ASMARANI