Lion Air Pricing Structure

Last updated: March 14, 2011

News on Lion Air, their pricing structure, and how competitors might be faring.

PT Lion Mentari Airlines, operating as Lion Air, was founded in 1999 and begun operating in July 2000 with a single route, Jakarta-Pontianak. It has since grown to be Indonesia’s largest domestic carrier and even flies internationally, and today has sixty planes in operation and does 3300 flights a week, and is about to add four more routes to the dozens it currently runs domestically, they being: Yogyakarta – Balikpapan, Palangkaraya – Surabaya, Tarakan – Balikpapan, and Tarakan – Jakarta (Cengkareng).

Lion has grown so strongly in such few years partly due to its aggressive, but flexible, pricing structures, which win over bargain hunting Indonesians; for each flight Lion has 12 classes of ticket, with the stated goal of such a system being to ensure that no flight runs at a loss. Lion boss Edward Sirait explains:

Whether there are 200 passengers on a flight, or only 150, we aim to make the same return; with a single fare system that is not possible.

Lion management gives their marketing staff upper and lower pricing limits for each route, in between which they can ‘play’, says Edward:

For Jakarta to Surabaya the price maximum is 900,000, it can’t be more than that, while at the low end you can buy a ticket for 350,000. Our marketing have a lot of room to move.

Meanwhile a commentator in the New Straits Times [subscription required], John McBeth, worries that Lion Air’s ultra cheap fares are driving competitors to the wall, or out of the market. John says Air Asia has cut back on its Indonesian domestic routes in favour of international flights, because it sees little profit potential in competing with Lion Air’s budget offerings.

Mandala Air recently stopped operating temporarily due to debt and cashflow issues; Batavia Air, he says, is barely surviving; Sriwijaya Air, he says, is trying to keep out of everyone’s way by choosing less popular routes to run.

2 Comments on “Lion Air Pricing Structure”

  1. timdog says:

    Hey all y’all – another Lion pilot busted today in Surabaya with crystal-meth in his hotel room. High is Cheap, as they say…

    All said, I flew again with their subsidary Wings, on one of their new twin-props today, and it was very nice indeed. What was more, the pilot appeared to be a dashingly handsome young bule.
    The fact that that gave me a sense of confidence threw me into a bout of liberal soul-searching turmoil – could I, timdog, be… prejudiced? Was I, timdog, engaging in some kind of wicked orientalist reductivist cultural supremicism by feeling better about being flown by a bule than by an Indonesia? Was my general fear of flying any excuse at all for this?
    My liberal soul was wracked with guilt the entire flight, so much so that I scarcely noticed the wet season bumps.

    Then, once I touched down, I flicked on the TV, and what’s the first thing I see? A non-bule Lion pilot busted with crystal-meth, and the wicked little Rudyard Kipling-reading monkey on my right shoulder roared with laughter and thumbed its nose at the bed-wetting, Edward Said-reading fairy on my left shoulder…

    Anyway, any thoughts on the proposed high speed north coast rail line? Jakarta to Surabaya in three hours by 2014, they claim… Lie is Cheap, as they say… (that’s the monkey speaking, that is…)

  2. asri says:

    In the case of domestic flights in Indonesia, even though there are some good local pilots, but it’s a common sense, I guess, that foreign pilot is more reliable than local pilot. However, this news about Lion pilots with their drug cases, should be treated more than an individual rotten ethics, but it is more about the poor management of Lion Airlines (and so here we come again with the complain about government’s lousy control on transportation safety). But seriously, Lion should be responsible for their unprofessional pilots.

    And for me, who hate flying, high speed rail line sounds promising, but yeah, as that lie, life is also cheap here since there’s no concrete guarantee for passengers safety in this beloved country. Like recent circulated joke (after Tugu Tani massacre by Ms. AS – no, not the other AS who is the former Miss Indonesia turned (corrupt) politician one): “naik angkot diperkosa, naik bis masuk jurang, naik kereta di atas gerbong, jalan kaki ditabrak mobil, ngesot ditendang satpam” and now we have pilot nyabu for traveling by plane. >_<

    But, everything has blessing in disguise (especially Indonesian, who amazingly still can find any "untungnya" in every crazy situation – grateful for being Indonesian :p), for those who believe in God, it can be a good way to be closer with God by spending the whole time praying (sesuai agama dan kepercayaan masing-masing) before and during (and after) traveling with any of those available choice of transportation vehicles. Amen.

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