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Indonesia’s Lion Air setting up regional low-cost carrier in Malaysia in aggressive expansion


KUALA LUMPUR, Malaysia — Indonesia’s Lion Air said Tuesday it will set up a low-cost airline in Malaysia that will take off in May 2013 as part of an aggressive regional expansion.
The move will see Lion Air, which controls nearly half the air travel market in Indonesia, playing catch-up to the region’s top budget carrier AirAsia. It follows AirAsia’s recent acquisition of Batavia Air in a bid to tap Indonesia’s 230 million population.
Lion Air will own 49 percent of the new airline, Malindo Airways, and Malaysia’s National Aerospace and Defence Industries the remaining 51 percent.
Lion Air President Rusdi Kirana said Malindo Airways will start flying between the two countries with a fleet of 12 new Boeing 737 planes in May, before expanding to other cities in Southeast Asia.
Malaysian Prime Minister Najib Razak said at the signing ceremony that air traffic in Asia-Pacific is expected to grow 6.7 percent annually in the next 20 years, from 780 million passengers in 2010 to some 2.2 billion by 2030. This will make up about 34 percent of global passengers, he said.
Najib said the formation of the new airline was a timely move to meet the burgeoning market demand and provide “healthy competition” in the budget air travel industry. Malaysian officials said the joint venture will also help the country reach its aim of becoming a regional aviation hub, competing with Singapore and Thailand.
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