Why does Thai Lion Air use loads of 737 ERs for 1-2hr routes? Thai Lion Air primarily flies short-haul domestic routes and most of the time I find myself on an ER version of a relatively new 737. Isn't ER for extended range? And thus costs a lot more per plane?

Incidentally their sister company Malindo also has what seems to be an unnecessary amount of ERs (I just flew on one this morning from KUL to BKK - a 110min flight - and one the week before from KUL to HKT, again under 2hrs).
Operationally speaking, this may come as a surprise, but it's not the range of the ER, rather the additional exits and flat bulkhead, which allow more seats (note: Lion Air was the launch customer of the -900ER).

Exits: even if there is room for more passengers, a limiting feature is typically the exits. More exits, more passengers can evacuate in the same duration in an emergency.
Bulkhead: the typical bulkhead is spherical; a flat one would allow more floor area.


The 737-900ER is the same size as the 737-900, but can carry an 26 additional passengers in a one-class configuration. It incorporates an additional pair of exit doors and a flat rear-pressure bulkhead that boosts maximum capacity to 215 passengers in a single-class layout.
— Boeing 737-900ER roll-out in Renton; flightglobal.com; 10 August, 2006


(planespotters.net) One additional exit per side.

(airliners.net) An example of a flat bulkhead on the Boeing 727.