What exactly is fastjet and who the hell is Redone? Nigerians ask! Stories have been flying up and down about fastjet since it announced an entry into the juicy Nigeria market. Nigeria with 10.1m annual pax is latest in this almost fairytale story of fastjet. We have put together all the story on fastjet so our readers can get an idea. fastjet plans first international route, delays South African domestic launch. From CAPD fastjet’s contorted strategies to develop a planned pan-South African LCC network continue to twist and turn, with the Tanzania-based carrier changing tack once again, this time shelving plans to launch domestic operations in South Africa in favour of commencing international services from Dar es Salaam. The London-listed carrier has beengranted bilateral rights by Tanzania to operate international routes to South Africa,Zambia and Rwanda. fastjet had intended to launch twice daily domestic services on South Africa’s busiest domestic route between Johannesburg and Cape Town in early Jul-2013 as part of a joint venture with South African investment company FastJet Holdings (previously Blockbuster) and charter carrier Federal Air, which was to have operated the route with a wet-leased 737-300. In addition the carrier has entered into an MoU with Nigeria’s Red 1 Airways to expand the brand to West Africa, apparently under a new model in which local partners take a majority stake in the venture using the fastjetbrand. Red 1 reportedly consists of a group ofNigerian investors interested in launching a new carrier in Western Africa. Bilateral rights represent a major step in fastjet’s pan-African aspirations Bilateral rights from Tanzania to South Africa,Zambia and Rwanda are a major step in fastjet’s aspiration to establish a pan-African network which to date has struggled to expand beyond its original Tanzanian domestic operations. While its operations in Tanzania have been relatively successful, the market is too small to sustain the carrier without supporting international connections. Launch dates for services to Johannesburg, Kigali and Lusaka from Dar es Salaam are expected to be announced soon. fastjet’s growth has been inhibited by the lackof international routes and has limited the carrier to offering double daily domestic services between Dar es Salaam, Kilimanjaro and Mwanza. The airline suspended services from Kilimanjaro to Mwanza and Zanzibar in Apr-2013 due to low seasonal demand. The Kilimanjaro-Zanzibar route will recommence on 02-Jul-2013. The carrier claimed it had been promised thatinternational rights from Tanzania would be granted soon after launching domestic services in the country in Nov-2012. However,the process had been slower than expected and it had taken intensive lobbying to finally gain approval. fastjet delays impending South African launchin favour of international expansion But fastjet’s decision to focus on launching international services from Tanzania will now come at the expense of the much vaunted planned domestic services in South Africa; these have been put on hold indefinitely. fastjet had planned to commence double dailyJohannesburg-Cape Town services in early Jul-2013 as part of a joint venture with South African investment company Fastjet Holdings (formerly Blockbuster). fastjet announced an MoU with Blockbuster in Apr-2013 under which Blockbuster will own 75% of the new entity, allowing fastjet to comply with the minimum South African ownership required to operate domestic services and access international traffic rights. fastjet will hold the remaining 25%. fastjet will, however, provide the funding for the operation including GBP2 million (USD3.1million) raised through the issue of 160 million new shares to an unidentified institutional investor. fastjet sees a strategic gap in the South African marketplace for a pan-continental, low-cost airline. As South Africa’s middle classgrows, the demand for affordable air travel will increase and fastjet plans to tap into the growth. fastjet CEO and interim chairman Ed Winter stated: "Bringing the fastjet brand to South Africa is a cornerstone in the creation of our pan-African network. We remain totally committed to launching the fastjet brand in South Africa as soon as possible, but given all the time and effort the team has invested overthe past months to secure our international route designations, we have taken the sensible decision to prioritize setting up theselucrative and high profile routes first, before turning our attention to launch the fastjet brand on domestic routes in South Africa". Incumbents, state-owned South African Airways and privately-owned Comair, believe the competitive South African market is already over-served. Both carriers also operate LCC subsidiaries Mango and Kulula respectively, which would compete with fastjet. South Africa has been a difficult market for LCCs in which to gain traction, with the demise of Velvet Sky and 1time in 2012 in the face of tough competition, high fuel costs and inefficient fleet. fastjet unsuccessfully attempted to buy the assets of 1time from its provisional liquidator as a means to quickly enter the market by the end of 2012 and gain access to 1time’s valuable international rights. fastjet promises to cut fares between Tanzania and South Africa by 60% fastjet is promising to reduce the cost of air travel between Johannesburg and Dar es Salaam by 60% with launch fares starting from USD100 (one way, excluding government taxes and charges). That compares to USD400 charged by SAA (including USD147 in taxes and charges) for the approximately 3h30m flight. South African Airways (SAA) has enjoyed a monopoly on the route since Oct-2012 when Tanzanian carrier Precision suspended services to South Africa. SAA offers about 1,375 one-way seats per week on the route operating 11 passenger frequencies with A319 aircraft. In addition SAA operates a weekly 737-300 freight service on the route. The Details of Resolved fastjet and fly 540 War The brand’s owner, Five Forty Aviation, claims FastJet subsidiaries must cease using the Fly540 name as they are in breach of boththe safety and commercial conditions of the licence and owe $7.7m (£4.9m) in outstandinglicensing fees. It has sent legal letters to FastJet’s operationsin Angola, Ghana and Tanzania ordering the businesses to “re-name the company other than Fly540”, “re-paint the aircraft in a neutral colour”, “re-brand all the sales offices” and return uniforms and marketing materials containing the Fly540 logo. The development is the latest in a row between FastJet and Five Forty Aviation, which is majority owned by its chief executive Don Smith. Five Forty Aviation has a separate£4.4m legal claim against the Aim-listed FastJet for allegedly failing to honour a deal to repay debts that the company guaranteed with Chase Bank in Kenya – a claim FastJet refutes. FastJet’s Africa operations have been licensing the Fly540 brand from Five Forty Aviation since 2008. Withdrawing the licencesdirectly affects three planes in Angola and two in Ghana. FastJet flew two planes using the brand in Tanzania until November 2012. Mr Smith alleges FastJet’s Tanzanian operation owes $6.9m, Angola $500,000 and Ghana $300,000, while all three have failed todisclose 2012 financial data or information that demonstrates compliance with safety standards. “We had no choice but to take this action because the most worrying aspect of non-compliance with the licensing arrangement is we have no way of assuring the planes are safe to fly,” Mr Smith said. “Wehave not received any safety reports for the past three months from FastJet’s Africa operations, and one plane, which flew with defects from Tanzania to Nairobi on 14 December, we believe should not have flown.” A FastJet spokesman hit back saying: “No FastJet A319 flew from Tanzania to Nairobi on December 14. A maintenance flight was undertaken by a Fly540 CRJ [Canadair Regional Jet] from Tanzania to Nairobi to return the plane to a maintenance facility in Kenya. FastJet takes safety very seriously and will investigate any claims relating to defects.” The spokesman added: “Five Forty Aviation is powerless to terminate purported brand license agreements for any Fly540 operations.FastJet has responded to the unsubstantiated claims made by Five Forty Aviation regarding the Fly 540 brand through the appropriate channels.” The dispute is the latest to hit FastJet, which also faces having aircraft repossessed by Canadian leasing firm Avmax in a row over unpaid bills and has received a £1.5m tax claim from the Tanzanian authorities. FastJet shares fell 0.38 to 3.28p – a drop of 18pc over the first two days this week.
Posted on: Mon, 01 Jul 2013 06:20:05 +0000
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