Is Fastjet the biggest Low cost carrier in Africa?

AFRICAN LCC group Fastjet is in the middle of the largest expansion of its international route network since it commenced operations three years ago, with four new routes being launched in early 2016.

Fastjet is now the largest LCC in Africa’s international market and plans further expansion throughout 2016, including from a new base in Zambia.

Two newly launched routes to Kenya from its original base in Tanzania represent a breakthrough after three years of regulatory delays. Two new upcoming routes to South Africa from its second base in Zimbabwe are also a major milestone as they represent the first international routes outside Tanzania, a stepping stone in Fastjet’s connect the dots pan-Africa strategy.

According to an analysis carried by the Centre for Aviation (CAPA), Fastjet has huge opportunities for further growth – particularly after the suspension of services by flyafrica.com, the only other pan-African LCC group – but there are also huge challenges to overcome still, including regulatory hurdles and unfavourable economic conditions in some of its markets.

The latest regulatory setback occurred in Malawi, prompting Fastjet to suspend services to Lilongwe. Fastjet launched operations in late 2012 with a Tanzanian operating certificate and three A319’s based at Dar es Salaam.

Multiple regulatory setbacks prevented the group from launching several planned international routes from Tanzania and establishing affiliates in other African countries.

As a result Fastjet’s initial fleet was underutilised, impacting profitability, as the group was confined primarily to Tanzania’s relatively small domestic market. Fastjet Tanzania was finally able to launch its first international route in Oct-2013, from Dar es Salaam to Johannesburg, after eventually overcoming regulatory delays with South African authorities.

It was able to launch three more international routes in 2014–to Lusaka in Zambia, Harare in Zimbabwe and Entebbe in Uganda– enabling full utilisation of its initial fleet of three A319’s.

In 2015 there were more breakthroughs, as Fastjet finally was able to secure an operating certificate from a second African country, enabling the Oct-2015 launch of Fastjet Zimbabwe.

The group also expanded its fleet for the first time since its late 2012 launch, adding two A319’s in Tanzania and one A319 in Zimbabwe, for a total of six aircraft.

However, 2015 was a challenging year for Fastjet as it continued to face regulatory challenges in several markets while demand dropped significantly in its home market of Tanzania in 2H2015, due to weaker economic conditions and political uncertainty.

Domestic demand was impacted for several weeks prior to the late Oct-2015 elections. Demand remained weak in the last two months of 2015 as the new government took over and gradually put in place new ministers and policies.

Fastjet’s load factor dropped to only 60 per cent in Nov-2015 compared with 77 per cent in Nov-2014.

Its load factor was only 63 per cent in Oct-2015, and 64 per cent in Sep-2015. The start of the year 2016 saw a major transformation in the local air travel after Fastjet Tanzania launched Dar-Nairobi flights in what aviation experts predict could be a game-changer in the local aviation business.

The much-awaited breakthrough came after Fastjet, the pan-African low-cost, no-frills airline, was granted clearance by the Kenyan government to operate flights between Kenya and Tanzania under the Bilateral Air services Agreement between the two countries, as previously approved by the Tanzanian government.

The clearance came as a sigh of relief for, Fastjet had been lobbying for the clearance for a long time and at one time, in an apparent desperation, a former airline’s general manager had even pleaded with the Tanzanian government to intervene on Fastjet’s behalf.

Today, with Fastjet finally ‘savoring’, as it were, the Kenyan skies, the fast-growing airline is evidently setting its eyes on a share of the East African aviation market cake that has hitherto been monopolized by the traditional airlines.

The growth of aviation industry in Africa, and indeed sub-Saharan Africa, has been hampered by regulatory restrictions on competition, giving the conventional airlines an upper hand to run roughshod over their customers price-wise. This has led to increased concentration of only a few major airlines both in the total market and on individual routes.

The new General Manager for Fastjet Tanzania, John Corse, noted the great discrepancy between the prices offered by the traditional airlines and low-cost travel and assured Fastjet customers, both regular and new fliers, that Fastjet’s fare model would be different.

“The travelling public pay extortionate fares for regional travel, as the lack of competition on many routes keeps prices artificially high, making air travel beyond the reach of most”, Corse said during the launch of Dar-Nairobi flights in January this year.

Buoyed by the success of Fastjet’s operations in Tanzania in which it had already flown over 1,800,000 passengers by the end of 2015, and over one third of whom were first time fliers, Corse assured the public that the airline would offer a unique fare model that will be affordable to all.

“Passenger traffic between the major cities of Dar es Salaam and Nairobi, which have a combined population of over 8 million people, has been limited by these high fares which we believe, have excluded large percentages of citizens from air travel”, Mr Corse added and noted that Fastjet’s coming into the market will bring choice to passengers hence easier mobility for entrepreneurs, tourists and other visitors travelling between the two countries.

Besides, Fastjet’s flights to Kenya will undoubtedly boost the regional integration through improved bilateral relations and business and social interaction-a prerequisite for fostering East African Community Integration.

According to the Tanzanian Ambassador to Kenya, John Haule, Fastjet’s flights to Nairobi will enable Tanzanians to have a choice when travelling to Kenya, hence encourage them to travel to the country for business, tourism and leisure.

“We are happy that with the coming of Fastjet to Kenya, more Tanzanians will be able to afford air travel and this will enable them to travel to Kenya for various activities.

We encourage more Tanzanians to travel because it will not only boost their businesses but it will also improve social interaction hence spurring the growth of East African Community”, Ambassador Haule said during the launch of Fastjet flights in Nairobi, Kenya. Echoing Ambassador Haule’s sentiments, Corse underscored the importance of air travel in Africa.

He cited: “Affordable air travel is key to the growth of economies across Africa, and Fastjet has been able to announce these new routes by working closely with the governments and civil aviation authorities of Tanzania and Kenya, who understand and value the positive impact the low-cost air travel can have on the lives of their citizens and the general economy”.

Fastjet’s expansion program has been noted by the authoritative Australian-based Centre for Aviation (CAPA), an outfit that provides independent aviation market intelligence, analysis and data.

After fastjet launched Dar-Nairobi flights, CAPA noted that Tanzania’s premier low-cost airline was set to become ‘the largest low-cost carrier in Africa’.

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By 9jatravel / Administrator, bbp_keymaster

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on Feb 23, 2016

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