Sunday, April 14, 2013

Bali Crash Highlights Risks of Lion Air Expansion: Analysts

The dramatic crash of a Lion Air plane into the sea off Bali has raised fears Indonesia’s fastest-growing carrier may be putting passenger safety at risk with its huge expansion plans, analysts said on Sunday.

Experts also warned Saturday’s crash, in which all 108 on board survived but the Boeing jet split in two, highlighted a “ticking time bomb” under the country’s aviation sector with a lack of experienced crew to meet fast-growing demand.

A little-known carrier launched 13 years ago with just one plane, Lion Air has struck two of the world’s largest aircraft orders in a staggering $46 billion bet on Indonesia’s air transport boom.

France announced last month that the carrier had agreed to buy 234 medium-haul A320 jets worth $23.8 billion from European aerospace giant Airbus.

It came after Lion Air astounded the industry with a $22.4 billion agreement for 230 Boeing 737 airliners, inked in 2011 as a visiting US President Barack Obama looked on.

The company is betting big on the formidable expansion of air transport in Indonesia, which is experiencing passenger growth of around 20 percent every year.

But Saturday’s crash has heightened fears the plans are overambitious for an airline that already has a poor reputation, suffered a string of accidents, and is banned from EU and American skies over safety fears.

The Boeing 737-800 missed the runway entirely as it came into land at the airport on the resort island of Bali, slamming into the water and splitting in two, causing dozens of injuries but no fatalities.

Officials have given no indication as yet what may have caused the plane, which was brand new and delivered to Lion Air just last month, to ditch. There were 101 passengers and seven crew on board.

On Saturday, investigators said they had located one of the plane’s black boxes and were questioning the pilot.

“I do question whether Lion Air’s exponential growth... will put safety at risk,” Daniel Tsang, an analyst at Hong Kong-based consultancy Aspire Aviation, told AFP. “When an airline is too focused on growth and puts an emphasis on cutting costs, safety could be compromised.”

Tom Ballantyne, chief correspondent of Orient Aviation magazine, added: “There are always dangers with rapid expansion.

“Airlines have to be very careful when they grow so quickly, and Lion Air has to make absolutely sure that their safety systems are... improved as quickly as the growth of the fleet.”

Lion Air suffered a string of accidents between 2004 and 2006.

The worst was in December 2004, when at least 26 people died after one of its passenger planes skidded off the runway after landing and crashed in heavy rain in the central Indonesian city of Solo.

Wawan Mulyawan, an aviation expert at the University of Indonesia who specializes in crew health issues, said that since the plane was new, a cause of the accident could have been that the pilot was exhausted. 

Edward Sirait, general affairs director of Lion Air, said the pilot of Saturday’s flight was healthy, experienced and had not exceeded the maximum amount of flight time for the day.

Pilots being rundown and overworked could become more of an issue for the country’s aviation sector as a whole, he said, as airlines expand rapidly and there are not enough qualified crew.

“Yesterday’s crash was the tip of the iceberg,” said Mulyawan. “If the number of pilots cannot grow as fast as the number of planes and flights, we can expect worse cases in the future. It’s a ticking time bomb.”

Lion Air has had problems with pilots in the past. It has been randomly drug testing its crews since several pilots were arrested in recent years for possession and consumption of crystal meth.

No one from Lion Air could be reached on Sunday to comment on whether the crash would affect their expansion strategy.

While the accident may have cast a shadow over the expansion plans of Lion Air, Indonesia’s first private airline founded in 1999 by brothers Kusnan and Rusdi Kirana, analysts doubted it would hold it back in the long term.

It has huge ambitions to expand its network from the current 72 routes, most of which are in Indonesia, and is betting on support from a burgeoning middle class which is keen to abandon travel by bus, ferry and train.

With both its recent mega-purchases in place, Lion Air would boast more than 600 aircraft by 2025, making it among the top 10 of the world’s biggest airlines in terms of fleet size.

“Lion Air will have little difficulty in attracting middle class passengers continuously,” said Aspire Aviation’s Tsang. (Jakarta Globe)

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