BATAM, Indonesia, Aug 30 (Reuters) - Indonesia's Lion Group, whose budget carrier Lion Air operates in one of the world's most competitive regions, will spend $250 million to build its second maintenance hub as it takes delivery of more than 500 jets from Airbus and Boeing.
The hub at the Indonesian island of Batam, just 20 kilometres (12.5 miles) from neighbouring Singapore, will be completed by the end of 2016, officials told reporters on a tour of the site on Thursday.
Passenger traffic in Southeast Asia has expanded rapidly, driven by expanding economies, growing middle-class affluence and the rise of the budget airline. Low-cost carriers such as Lion Air, AirAsia, Tiger Airways and Qantas Airways' Jetstar account for about 50 percent of seat capacity in the region.
In Indonesia, as airlines expand aggressively, they face a challenge to service their growing fleets. The country also struggles to improve its civil air safety after a string of deadly accidents.
Lion Group's airlines are currently serviced from one hangar in Surabaya in east Java.
The facility at Batam will have four wide body hangars, of which two will be completed by this year and the rest by the end of June 2014, said Romdani Adali Adang, the president of Lion Technic, a unit of Lion Group.
The facility will have both airframe and engine maintenance, repair and overhaul capabilities.
The proximity to Singapore means Lion's maintenance hub can tap Singapore's logistics network, facilitating access to spare parts and components.
Lion Technic, which has a staff strength of 2,500, will employ 2,000 additional staff at the facility by end-2016.