0 Airbus to Set up a Workshop in Batam

French aircraft manufacturer Airbus SAS has agreed to establish a workshop on Batam island in Riau Islands province at the request of Lion Air, just a day after the airline agreed to purchase 234 single-aisle aircraft from the plane maker on Monday. Lion Air president Rusdi Kirana said on Tuesday that the airline has sought support from Airbus as part of the $24 billion deal, including the French company setting up an airplane workshop on Batam. 

The 16-hectare workshop is expected to begin the first stage of operations by the middle of this year. “Domestic airlines will not only sell tickets but can also maintain their aircraft within the country,” Rusdi said. “[The workshop] is not only for domestic-owned aircraft, but also for foreign airlines.” Rusdi said the workshop was expected to create jobs in Indonesia. “This creates job vacancies as well as giving foreign exchange to our country,” Rusdi said on Monday at the Airbus Delivery Center in Toulouse. 

Rusdi said some Airbus technicians will work at the facility so that it can acquire European certification in aircraft maintenance. With the certification, he expects foreign airlines to send their aircraft to the Batam facility for maintenance. Lion Air has also asked Airbus to start a joint company for the training of pilots and technicians. As the company behind Airbus’s biggest-ever order, Lion Air also encouraged Airbus to order aircraft components from Indonesia’s own aircraft manufacturer Dirgantara Indonesia, Rusdi said. 

“We have the power to lobby them because we are their biggest buyer and they [Airbus] have been really cooperative about this idea,” Rusdi said. Monday’s record $24 billion deal will be financed by the European Credit Agencies. Rusdi said the ECA could loan the company 85 percent of the total value of the deal, with the remaining 15 percent financed by a commercial syndication. Lion will have no share in the financing. Lion is expected to cover the loan within 12 years through installments. 

“In 10 to 12 years we can cover the finance. I am sure because of technology, cheaper aircraft maintenance, efficient fuel as well as a growing market,” Rusdi said. When asked what collateral Lion Air has to receive such a large loan, Rusdi said with a smile “Rusdi Kirana [is the collateral].” “The loan is to encourage Europe exports and imports and for them, Lion has a good track record. So our capital is trust,” he said. The 234 aircraft ordered will increase the number of planes in Lion Air’s fleet to 727. 

The company has said it aims to have 1,000 aircraft by 2027. The company has hinted at plans to establish new airlines in the Asia-Pacific region. This expansion has started with Lion Air’s Malaysian low-cost carrier Malindo Air, which has its first flight scheduled for Friday. With the new planes, Lion Air will be able to provide a varied range of services, ranging from low-cost to full service. In 2011, Lion ordered Boeing aircraft worth $21.7 billion. John Leahy, chief operating officer-customer at Airbus, said the airline industry is growing fast. 

He said air travel globally doubled every 15 years despite economic conditions, while in the Asia-Pacific region, it doubled every 10 years. Air transport growth, Leahy said, is highest in expanding regions like China, India, Indonesia, the Middle East, Asia, Africa and Latin America. He added that the aviation industry matched advancements in emerging economies. He added that Indonesian was a key growth market for air travel because of the big population, vast travel distances and economic growth. 

“Despite the big population, less than 10 percent of the population has flown on a commercial aircraft and that is something that Rusdi wants to change,” he said, referring to the deal between Airbus and Lion Air. Leahy said that in Indonesia, one in five people take a trip once a year, one-10th of the rate of travel in more developed New Zealand. “With the economic development in Indonesia, air traffic will be dramatically increased,” he said. In January, Indonesia’s Batavia Air went bankrupt, and some commentators have said some airlines in Southeast Asia have already overcapitalized.

source : the jakarta globe