Lion Air, Malaysian partner launch Malindo Airways

Indonesian low-cost carrier Lion Air will start a hybrid airline in Malaysia in a joint venture with the country's National Aerospace and Defence Industries (NADI).

The new carrier, named Malindo Airways, will start operations in May 2013 with a fleet of 12 Boeing 737-900ER aircraft.

The airline will offer a "hybrid product" using aircraft with a two-class configuration – 12 in business and 168 in economy. The aircraft will also be equipped with in-flight entertainment systems and in-flight connectivity, Lion Air president director Rusdi Kirana said at a press event in Kuala Lumpur, ahead of the signing ceremony.

Under the agreement, NADI will hold a 51% stake in the new carrier and Lion Air 49%. The airline has named Kirana's personal assistant, Chandran Ramamuthy, as its chief executive.

Malindo will be based at Kuala Lumpur International airport's terminal two and focus on routes between Malaysia and Lion Air's hub in Indonesia before operating to other cities such as Bangkok, Manila, Hanoi and Guangzhou. It will also operate on domestic routes.

The carrier intends to add 12 aircraft to its fleet each year, including the Boeing 737 Max and 787. These aircraft will come from Lion Air's current order book, says Kirana.

The five 787s Lion Air has on order – originally set for its premium carrier Batik Air – will instead go to Malindo in 2015. Lion Air is now in talks with Boeing to order an additional 10 787s, said Kirana.

To compete as a newcomer, the new airline will offer ticket prices lower or at least on par with that of Malaysian low-cost carrier AirAsia, said Kirana, adding that Malindo will have a low cost base owing to the involvement of NADI.