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All 189 aboard crashed Lion Air flight feared dead

Accident deals huge blow to fast-expanding low-cost carrier

Lion Air faces fierce competition with Garuda Indonesia and Air Asia.    © Reuters

JAKARTA -- All 189 people aboard Lion Air Flight JT610, which crashed into the sea minutes after take-off on Monday, are feared dead, officials said.

"Seeing the condition of the body parts we've found, we think ... nobody survived," said Bambang Suryo Aji, director at Indonesia's National Search and Rescue Agency, or Basarnas, at a press conference on Monday afternoon. He added that the team had sent six bags containing human body parts for identification to the National Police Hospital in Jakarta.

The crash deals a huge blow to the aviation company, which along with Garuda Indonesia and Batik Air "had their safety upgraded to the highest level after Indonesia passed a key international audit" in June this year. The airline receives a safety rating of six, just one point shy of the maximum rating, according to AirlineRatings. Both low-cost Lion and full-service Batik are part of the privately-owned Lion Air Group.

"The plane ... had undergone checks in Seattle before being flown to Indonesia, so it had been certified by the U.S., and then certified by the Transportation Ministry in Indonesia," stressed Lion Air Group President Edward Sirait to reporters. "It had undergone checks that rendered it eligible for a certificate of airworthiness."

Sirait admitted that there was a technical problem on the ill-fated plane's previous flight, but that it had been fixed.

Rescue team members carry a body bag with the remains of a passenger of Lion Air, flight JT610, that crashed into the sea, at the Tanjung Priok port in Jakarta, Indonesia on Oct. 29.   © Reuters

Before Monday's crash, Lion Air had not reported a fatal accident since the 2004 incident in which 25 people died when one of its aircraft crashed in heavy rain at Solo City in Central Java Province. But the airline, which is the largest in Indonesia by passenger numbers, has had a spotty safety record, with a number of minor incidents as well as runway overruns reported. The most high- profile trouble came in 2013, when its flight to the tourist destination of Bali ended up in the water near the island's international airport. All 108 people on board survived.

The company was founded by brothers Rusdi and Kusnan Kirana in 1999 shortly after the collapse of the New Order regime that ended the state's monopoly over Indonesia's aviation industry. The brothers had previously owned and run a travel agency.

As Lion quickly expanded its fleet and business in recent years, Rusdi decided to enter politics and was appointed a deputy chairman of the National Awakening Party, a member of the ruling coalition, in 2014. He was then appointed presidential adviser to President Joko Widodo, and earlier this year left the job to take the position of Indonesia's ambassador to Malaysia.

The Kirana brothers were ranked 33rd on the Forbes list of the 50 richest Indonesians last year, with a combined net worth of $970 million.

Indonesia's Lion Air founder Rusdi Kirana    © Reuters

Lion Air Group announced itself to the world in 2011, when it placed the largest order Boeing had ever received, a $21.7 billion deal for 230 planes. Then-U.S. President Barack Obama was on hand in Bali for the signing ceremony. The Indonesian airline group said in 2017 that it had ordered 218 737 Max 8 jets in 2017 and in April this year announced it had purchased 50 Boeing 737 Max 10 planes, a deal valued at around $6.24 billion at list prices.

"Faced with increased competition from Garuda Indonesia and AirAsia, it was expanding its fleet rapidly," said Kotaro Toriumi, an aviation analyst. "And there might be a possibility that costs like maintenance and pilot education were becoming burdensome for the airline."

A highly secretive company with little information on its numbers, just how the company secures funding for such large orders remains largely unknown.

The crash on Monday also puts a dent in Indonesia's aviation industry. Its aviation companies had just been cleared by the European Union earlier this year from its blacklist due to the country making sufficient improvements to raise its safety levels. The ban has been in place since 2007 in the wake of two major accidents involving Garuda and now-defunct Adam Air. The U.S. removed Indonesia from a similar list in 2016.

The fatal incident may also rekindle the ongoing concern that low-cost carriers are unsafe. While budget carriers -- which have expanded rapidly in Southeast Asia as more people travel -- do cut various costs to keep fares low, strict rules on safety regulations set out by relevant authorities mean they cannot compromise on safety.

Nevertheless, accidents at LCCs raise concerns among passengers that cheaper means unsafe. In 2014, when a plane operated by AirAsia Indonesia crashed in the Java Sea claiming 162 lives, it prompted a reaction by the Indonesian government to crack down on the sale of cheap tickets in the belief that wider profit margins could encourage airlines to spend more on safety. The move was criticized as knee-jerk by experts, and the government ended the policy eight months later.

"The nature of the LCC business model pushes harder on the boundaries of performance," said Michel Brekelmans, managing director with consulting firm SCP/Asia. "[But] as long as you have experienced people, the right processes and compliance to standards, you can have fast growth without compromising safety."

He added that he believes there are no major concerns about safety among Asian LCCs, as most are linked to established airline groups, flying with modern technology and experienced pilots.

"The majority of domestic passengers will see Lion Air as one of the few available options for cheap domestic travel in Indonesia," Brekelmans said. "This most recent accident will no doubt put some short term caution into the market but I think down the line the majority of passengers in Indonesia will discount the risk of incidents and accidents associated with air travel to a low probability and continue to fly."

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