Malindo's main competition in the Brisbane-Bali market comes from Jetstar Airways and Virgin Australia. Jetstar currently serves the route four times weekly with 335-seat two-class 787-9s while Virgin Australia offers 10 weekly fights using 176-seat two-class 737-800s.
Malindo's daily service with 162-seat two-class 737-800s has provided an additional 1,134 weekly one-way seats in this market. This equates to a 26.8% share of non-stop capacity, compared to 31.6% for Jetstar and 41.6% for Virgin Australia. Some of Malindo's passengers continue beyond Bali to Kuala Lumpur - and to other Indonesian destinations served by other Lion Group airlines - but this traffic should be roughly similar to the number of passengers Jetstar and Virgin Australia carry beyond Brisbane.
Brisbane to Bali one-way seat capacity by airline: Sep-2011 to Aug-2017
Source: CAPA - Centre for Aviation & OAG
Virgin Australia had a monopoly on the Brisbane-Bali route until mid-2013, when Garuda launched services to Brisbane. Jetstar then also entered the market in April 2014, leading to overcapacity and Garuda's eventual exit in early 2016. Malindo's entry could again lead to overcapacity particularly during off peak months.
Malindo is trying to stimulate demand and grab market share with fares which represent good value given its full-service product. The airline offers more legroom than Virgin Australia and in-flight seatback entertainment monitors at all seats, meals, drinks, seat assignments and checked bags.
As previously explored by Blue Swan, Malindo has been relatively successful with its initial foray in the Australia market. It has been serving the Kuala Lumpur-Perth route since late 2015 and currently offers 12 weekly frequencies to Perth. Sister Indonesia-based airline Batik Air is aiming to launch Bali-Perth services in 2Q2017.
See related article: Malindo shakes up Perth market with low fares and South/Southeast Asia connections
Malindo is offering return fares in the Brisbane-Bali market starting at AUD600 including taxes. Fares on Virgin Australia are similar. Jetstar's starting fares are slightly less than AUD600 however do not include bags, meals or seat assignments.
Malindo's return fares in the Brisbane-Kuala Lumpur market start at approximately AUD700. Emirates, Qantas and Singapore Airlines fares in this market start at similar levels. The Emirates and Qantas product is via Singapore using Jetstar Asia or Malaysia Airlines for the Singapore-Kuala Lumpur leg.
There have not been any nonstop flights from Brisbane to Kuala Lumpur since Aug-2015, when Malaysia Airlines dropped the route. Brisbane was the only Australian destination axed by Malaysia Airlines during its restructuring as most of its Brisbane passengers were flying beyond Kuala Lumpur to Europe. With Malaysia Airlines suspending most of its European routes it did not think it would be viable to maintain Brisbane.
However, AirAsia X noticed increased demand for its Gold Coast-Kuala Lumpur route after Malaysia Airlines withdrew from Brisbane, which is located 100km north of Gold Coast Airport. AirAsia X currently operates 11 weekly flights from Kuala Lumpur to the Gold Coast with seven of the frequencies continuing to Auckland.
AirAsia X's fares from Gold Coast to Kuala Lumpur start at less than AUD300 - less than half the price of any of the one-stop full service products from Brisbane to Kuala Lumpur. Low fares and the convenience of a nonstop product likely attract a large portion of local Brisbane-Kuala Lumpur traffic who use Gold Coast Airport. However, a majority of AirAsia X's Gold Coast-Kuala Lumpur passengers originate in Auckland or are heading to destinations beyond Kuala Lumpur.
While Malindo is now selling Brisbane passengers destinations beyond its Kuala Lumpur hub, they are banking on sufficient local demand in Brisbane for Bali to make the new route viable. It is a relatively big gamble given that Malindo does not have an established brand in Queensland and it is an uncompetitive two-stop product.