FastJet focusing on East Africa, with operating base in Dar es Salaam, writes
ALTHOUGH low-cost air travel accounts for just 6% of air travel in Africa, the continent's middle class is expected to triple by 2031, and low-cost airlines present a key growth opportunity in the market.
Yesterday, FastJet, the AIM-listed low-cost African airline in which Lonrho owns a majority stake, announced it would establish its first operating base in Dar es Salaam, Tanzania.
FastJet will commence flying in November with seats going on sale online a few weeks earlier. One-way fares will be available for $20, excluding taxes and charges.
The lease for FastJet's first Airbus A319 aircraft has been signed with lessor BBAM and it will arrive in Dar es Salaam next month, the company says.
FastJet CE Ed Winter says its initial focus will be on East Africa, where the A319 aircraft has already been approved by the Tanzania Civil Aviation Authority. & This will be followed by a second base in Nairobi, Kenya, once the A319 is approved there.& According to Lonrho executive chairman David Lenigas, the demand for low-cost airlines in Africa is huge, as government-owned airlines are usually too expensive, which has kept people from flying. In June, Lonrho paid a consideration of £55.1m in FastJet shares, giving it an initial 73.7% stake in the aviation company. Since then, FastJet has raised £5.5m of new equity, diluting Lonrho's holding to 67.4%.
Stelios Haji-Ioannou, founder and major shareholder of UK-based low-cost airline easyJet, is also a shareholder in FastJet.
According to Mr Haji-Ioannou, Africa is & the aviation industry's last frontier& and with its densely populated cities that are separated by great distances, it is & a potential new market of millions& Lonrho aims to implement a similar low-cost model in Africa to the one that easyJet began in Europe, where the airline has become very successful.
Once established in East Africa, FastJet plans to launch in Accra, Ghana and Luanda, Angola.
Johannesburg- and London-listed Lonrho focuses on African markets, with core services in agriculture, logistics, transport and infrastructure.
In July, Boeing projected that over the next 20 years, Africa's aviation industry would require an additional 900 aircraft, 14,500 pilots, and 16,200 maintenance technicians.
Low-cost carriers do, however, face challenges, as the continent is heavily restricted on the destinations to which airlines can fly.
According to J Miguel Santos, director of sales for Africa at Boeing Commercial Airplanes, low-cost carriers thrive with no restrictions and an open skies environment, and the African market is & constrained& He says there needs to be political will to deal with the constraints facing the market.
& African governments need to make a commitment to support the air traffic growth forecasts. This requires open skies, airport infrastructure upgrades, more pilots, and more maintenance technicians,& Mr Santos says.
Mr Lenigas says because SA's low-cost airline market is already & very competitive and established& Lonrho has no plans to operate in the country in the near future.
High fuel prices and fierce competition has forced rival 1Time to file for business rescue last month. & Business rescue gives you protection from creditors that may want to file for liquidation while you are turning the business around,& 1time CEO Blacky Komani has said.
In April, 1Time reported a R157m loss for the year to end-December. The company has said it had been implementing a turnaround strategy that would return it to profitability within three years. This would include cutting unprofitable routes and renegotiating expensive, dollar-denominated aircraft leases.
Meanwhile, competitor Comair, which operates British Airways flights and budget airline kulula. com, expects to have a & very good& year ahead after it reported a modest profit for the year ended June in what the company describes as & the toughest year in its history& The improved financial performance has been achieved against a hostile backdrop of record fuel prices, higher taxes and fierce competition in the airline industry.
& The past year has been the toughest financial period in Comair's history and no different from that experienced by the global aviation industry.
& The sustained high fuel price and weak global economy created pressure from which few airlines could escape unscathed, as evidenced by the failure of such notable carriers as Malev (Hungary), Spanair and Air Australia, and the filing for Chapter 11 protection by American Airlines,& Comair said earlier this month.
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