Indonesian Airline Sriwijaya Air Eyes Growth, Fleet Expansion & IPO
Indonesian low-cost carrier Sriwijaya Air targets to fly 12.1 million passengers in 2017, up 10 percent year-on-year (y/y) from an estimated 11.2 million passengers in 2016. To achieve this target 17 new airplanes will be delivered to the airline next year consisting of 15 narrow body Boeing B737-800NG jets and two wide body Boeing 777-300ER jets. Chandra Lie, President Director of Sriwijaya Air, is confident that the airline will achieve next year's passenger target, specifically by increasing its focus on international passengers.
In 2016 Sriwijaya Air is estimated to carry 600,000 foreign tourists. Next year, however, the airline wants to carry at least one million foreigners. The 15 new narrow body Boeing jets that will be delivered in 2017 will be used for flights to (and from) China (as well as for domestic routes). Meanwhile, the two wide body Boeing jets will be used for direct flights to and from Jeddah (Saudi Arabia) starting from February 2017. Currently, Sriwijaya already serves the route to Jeddah using narrow body Boeing jets. These flights are not direct flights but go from Jakarta to Medan (North Sumatra) and Dhaka (Bangladesh) first before landing in Jeddah. Meanwhile, the airline already received several invitations to work together for flights to several other countries abroad, including Japan, South Korea, India and Taiwan.
Lie said Sriwijaya Air may purchase more airplanes in 2017 provided the company manages to conduct an initial public offering (IPO) on the Indonesia Stock Exchange (IDX). Any new airplanes, specifically wide body Boeing jets, will be financed through funds that are obtained from this IPO.
The reason why Lie is confident about investor demand in an IPO is that Sriwijaya Air has been posting good corporate earnings over the past three years and the company expects that earnings will continue to improve in the years ahead. Moreover, a major advantage of being a listed company is that the company becomes more transparent and efficient. Currently, only one airline is listed on the IDX: national flag carrier Garuda Indonesia.
Over the past 13 years, Sriwijaya, founded by Chandra Lie, Hendry Lie, Johannes Bunjamin, and Andy Halim, has grown into a group with various sister companies including Nam Air, Nam Training Center, Nam Flying School, and Sriwijaya Maintenance Facility (SMF). Before the arrival of the new Boeing jets in 2017, Sriwijaya owns 43 airplanes and serves 47 cities across the archipelago. Starting from 2014 the airline started flying to Beijing, Hangzhou, Guilin, Ningbo, Guangzhou, Nanking, Chengdu, Chongqing and Pudong (from Bali), while more Chinese destinations are expected to be added to the list.
Sriwijaya Air is the third-largest airline in Indonesia by market share. It commands a 13.2 percent market share in Indonesia's scheduled flights, trailing behind privately-owned Lion Air and Garuda Indonesia that have a 41 percent and 22 percent market share, respectively.
Number of Air Passengers in Indonesia 2011 - 2015:
| 2011 | 2012 | 2013 | 2014 | 2015 | |
| Air Passengers (in million) |
62.4 | 66.4 | 68.6 | 72.6 | 82.4 |
Source: BPS