Airbus, Boeing vying for Indonesian Market

TEMPO.CO, Kuala Lumpur - The competition between two global aircraft manufacturers; France's Airbus S.A. and US' The Boeing Company, intensifies. Both companies are now vying for a share in the Indonesian market after PT Lion Mentari Airlines (Lion Air)--Indonesia's budget carrier, bought 234 medium-haul Airbus A230 jets worth US$ 23.8 billion.

Aerospace analyst for Frost & Sullivan in Kuala Lumpur, Ravi Madavaram, said the deal with LionAir is one of Airbus' tickets to winning the market feud with Boeing. "This is a major deal for Airbus because, generally, Indonesia has been a fortress for Boeing," Madavaram said on Monday, March 25.

He predicts Airbus will come out as a winner as "more and more low-cost carriers will want an Airbus A320. Then it becomes challenging for Boeing to catch up."

Lion Air's A320 deal with Airbus last week was higher than any record ever set by Boeing. In 2011, Lion Air ordered 230 Boeing jets worth US$ 22.4 billion.

"The order from Lion Air will significantly increase our presence in the Indonesian market," said Jean-Francois Laval, executive vice president of sales for Airbus Asia.

Airbus and Boeing are seen as having a duopoly over the large-airliner market. Competition between the two is fierce, with each regularly accusing the other of unhealthy competitive behaviors. Last year, Boeing for the first time in 10 years overtook Airbus as the world's biggest plane manufacturer in terms of aircraft delivery.

Boeing spokesman Ken Morton said that Lion Air's ambitious growth target encouraged a large order of aircraft to Airbus. "Lion Air has ambitious growth plans and no one airplane manufacturer can meet its needs."

With the economic slowdown in European countries, the aviation industry shifted their attention to the Asian market with its booming middle class. "There are three billion people in Asia, there are 300 million people in America. America has about three times more planes right now than Asia," said Tony Fernandes, founder and CEO of AirAsia Bhd, Asia's biggest budget carrier from Malaysia.

Indonesians will rely on air travel to link the archipelago of 17,000 islands. By 2021, some 180 million passengers are expected to fly domestically in Indonesia, three times more than in 2011, according to the CAPA Centre for Aviation.

CHANNEL NEWS ASIA | AMANDRA MUSTIKA