Lion Air, the Jakarta-based low-cost carrier, will use Bangkok as one of its hubs to strengthen its network connectivity.
It hopes to play a bigger role the Thai and regional aviation market, drawing on Indonesia's strength as a popular tourist destination.
It has seven hubs at home - Jakarta, Batam, Surabaya, Bali, Ambon, Makassar and Manado - and one regionally in Kuala Lumpur, where it formed a joint venture with Malaysia's National Aerospace Defence Industries to establish Malindo Air, a budget carrier.
The group also runs Wings Air, a low-cost carrier flying to remote islands. The three carriers serve 76 destinations in Indonesia, far more than any other airline.
Bangkok is deemed a strategic location to link flights from the group's affiliated airlines and also regionally with cities. In the future, it plans to serve Japan and South Korea via its full service airlines. However, it's too early to reveal details.
CEO Rusdi Kirana said the launch of Lion Air in Thailand would help attract more travellers there. Even though it is newcomer there, that's not a big barrier. The market was large enough for every airline to survive, as long as they offer effective services.
It will compete head-on with AirAsia, which has a strong foothold there. It is eager to expand its network across Thailand and in the region through the years.
Last week, it said it would fly from Krabi to Chiang Mai and also to Singapore. Early next year, VietJet from Vietnam will launch its flight there and then no doubt competition will heat up.
In Thailand, Lion Group has set up a joint venture, Thai Lion Mentari Co. It has received an air operator licence from the Transport Ministry and is working to get an operator certificate from the Civil Aviation Department.
Its inaugural flight will be from Bangkok's Don Mueang International Airport to Jakarta next month, with two flights a day. It also plans to add the Bangkok-Kuala Lumpur route with a daily service and a Bangkok-Chiang Mai route with three daily services. Other Thai provinces in its sights include Phuket, Krabi and Udon Thani.
It has two new Boeing 737-900ERs in a 215-seat all-economy-class configuration. Over the next five years, it plans to build up its fleet to 50 aircraft.
Lion Group has placed orders with manufacturers for 708 planes, of which 408 are Boeings and the remainder are Airbus and ATR. In November last year alone, it ordered 201 Boeing 737 MAX and 29 737-900ER, costing US$21.7 billion. Later last year, it placed an order for 15 ATR 72s and 15 more, bringing the total to 30.
The big fleet can ensure smooth and timely expansion, especially when a potential market shows demand for travel. In Thailand, it'll offer a true "low" airfare.
Tassapon Bijleveld, Thai AirAsia's CEO, has shrugged off the entry of another low-cost carrier, saying his airline offers the best airfare deal in the market.
Kirana declined to disclose the airfare for Bangkok-Jakarta, but gave the example of Jakarta-Malando, which also takes about three hours.
That flight costs about US$90. But the Bangkok-Jakarta price would be somewhat higher since it's an international flight with additional operating cost of over 20 per cent.
However, its competitive edge is 15 kilograms of luggage for loading for free. No extra fee such as booking at the counter is charged.
To spur travel demand, it will work with travel agencies to design packages to stimulate passengers to travel more in other parts of Thailand, not only serve point-to-point service.
Lion Air was established in 1999 and launched its first flight in 2000.Now it has 98 aircraft in its fleet, operating 580 flights a day to 31 domestic and five international destinations.