FastJet, the new pan-African low-cost carrier backed by Stelios Haji-Ioannou, will launch operations in Dar es Salaam, Tanzania in early November and plans to expand its fleet size to up to 15 Airbus A319s within the first year of operations.
The airline's chief executive Ed Winter says that east African governments have been sympathetic to the carrier's arguments against taxation. "We've shown them that a reduction in the tax - and the stimulation of demand and the overall size of the market - will cause a rapid increase in the net revenues for government," he explains. "But it needs a bit of a leap of faith for governments to actually reduce taxes."
FastJet's second base in Nairobi, Kenya will follow shortly after Tanzania, while its two west African bases - in Accra, Ghana and Luanda, Angola - will be launched in 2013.
The airline already has air operators' certificates (AOCs) in the four countries due to its takeover of Fly540, which operates a predominantly turboprop fleet and will be gradually wound down as FastJet's A319s arrive. It has also benefited from linking up with locally based Lonrho Aviation.
Describing Tanzanian officials as "very receptive" to the rationale behind liberalising air transport, Winter nonetheless insists that taxes remain too high in the country. "But it's nowhere near as high as in west Africa," he notes.
"What's basically happened over the years is that air travel [in Africa] has been restricted - and still is - to high-net worth individuals, both business traffic and tourists. Governments have treated it somewhat as a wealth tax. And clearly that, along with the fuel tax they charge, needs to change."
FastJet's efforts to kick-start a low-cost carrier revolution will get underway with two A319s based in Tanzania, but the fleet will grow to four or five jets "fairly quickly".
"You need to get to that size to reach critical mass," emphasises Winter, former chief operating officer of EasyJet and founding director of low-cost carrier Go. "We're certainly looking at growing to 15 aircraft in the first 12 months. The fact that we've got the flexibility of the two bases in east Africa - as well as west Africa to grow in - I think 15 is a very reasonable target."
Though the airline has yet to announce its inaugural routes, the combination of under-developed land transportat and an emerging middle class creates opportunities across the continent.
"Clearly if one looks at Tanzania internally there are some obvious destinations, like Kilimanjaro, Mwanza, Mbeya And of course all of the regional cities that you'd expect - there's Nairobi, Kigali, Bujumbura, Entebbe, Lusaka, Johannesburg - the sort of places where you would anticipate demand," he says.
Nearby countries, which have for years battled with their own internal conflicts, could also benefit from what Winter describes as the "democratisation of air travel in Africa".
"I think Juba is very interesting," he says of the capital city of South Sudan, which was established as an independent state in July 2011 following two prolonged civil wars. "There's a clear demand for connections between Juba and Dar es Salaam."
He continues: "The conflicts in the Democratic Republic of Congo are really confined to the north-eastern regions of the country, particularly the border region with Rwanda. But Lubumbashi is much further south and it's actually a thriving city."
Though FastJet has spoken to "a few" international carriers, any partnerships will be kept at arms-length. Air France-KLM, British Airways and Brussels Airlines all have a strong presence on the continent, but Winter says efforts to link up low-cost and legacy models have historically proved "difficult".
"I think the maxim of 'simplicity drives low-cost, complexity drives high-cost' still holds very true. But I think we will certainly pick up a lot of inbound traffic that wants to move around Africa," he says.
So far low-cost carriers remain relatively limited in the region. In the south Comair and South African Airways have both got a presence through their Kulula and Mango brands, while in the east, Kenya Airways is planning to launch a budget operation through its new Jambo Jet brand.
There will also be marked differences between the African low-cost carrier model and the one pioneered so successfully in Europe, where leisure travel provides the lion's share of demand. Arguing that the low-cost model "works in all sorts of ways", Winter says population redistribution - endemic in Africa for a variety of reasons, ranging from labour mobility to war - has created huge potential for the VFR (visiting friends and relative) market. Business traffic will also be a critical driver of growth, at least initially.
With one-way fares starting as low as $20, FastJet's management team is confident of bringing air travel to the masses in Africa. The local expertise of Lonrho and the "Stelios halo" accompanying EasyGroup will only strengthen its hand.
"My vision for FastJet going forward is a very large number of bases spread around Africa, and where appropriate connectivity between those bases," Winter concludes. "I would see us going rapidly beyond the four AOCs we've currently got. Those four just give us a head start."
Source: Air Transport Intelligence news
