ROUTES AFRICA: Fastjet Opens Flights for Africa

Richard Maslen June 21, 2014

Fastjet is aiming to become Africa’s first pan-continental low-cost airline – but that is easier said than done. Chief commercial officer, Richard Bodin, spoke with Jonny Williamson from our sister magazine, Routes News, about the reality of LCC growth in the continent.

It doesn’t get more ‘London’ than drinking tea with an airline chief commercial officer at one of the Square Mile’s boutique hotels, during a week when the city’s tube drivers were on strike. It’s a long way from the open plains and bustling, growing cities of East and Southern Africa where Richard Bodin and the rest of the fastjet team are focused on bringing low-cost flights to a whole new market of airline passengers.

Our sister publication Routes News meets with Bodin after what has been a momentous few months for the LCC, including the launch of its first international service from Dar es Salaam. Fastjet has established a strong market position in its home country of Tanzania since launching operations there in November 2012. It has since built a domestic network that includes Kilimanjaro, Mwanza, Mbeya and Zanzibar.

Things have, however, been trickier in other markets. Fastjet launched its first international route, Dar es Salaam–Johannesburg, in October 2013, after a protracted wrangle with South African regulators. In February, the airline added Lusaka in Zambia to its network, and has well-developed plans to establish a base there in the near future.

Having carried its 500,000th passenger, fastjet’s Bodin attributes the airline’s success in its home market to a combination of governmental support, the Tanzanian people’s enthusiasm for low-cost air travel, good brand recognition and effective communication campaigns. “By dramatically lowering fares, fastjet stimulated demand, persuaded Tanzanians away from roads and fundamentally made aviation accessible,” he says.

Fastjet now plans to expand further with routes planned to Malawi’s capital Lilongwe and Zimbabwe’s capital Harare, as well as launching flights from Dar es Salaam to the Kenyan capital, Nairobi.

As Africa’s economic, mining and industrial centre, Johannesburg is a market with tremendous potential for fastjet. Adding South Africa’s commercial powerhouse to its destination network was a priority right from the beginning. Popular with commercial and leisure passengers, Bodin notes the Johannesburg service is also a hit with blue-collar workers and service staff travelling between South Africa and Tanzania’s numerous mines.

The launch of Dar es Salaam–Johannesburg was accompanied by the well-documented wrangling with South Africa’s regulators, which fastjet believes was linked to protectionism of the country’s struggling national carrier, South African Airways (SAA). “Initially we were seen as a potential threat and on that basis our application for a foreign operator licence took far longer than originally anticipated,” says Bodin. Despite those delays, the route is now growing steadily, Bodin says. Now, fastjet is working on plans to broaden its network in South Africa with the addition of services to Cape Town and Durban.

Fastjet recently announced it was grounding flights in Angola and scaling back its Ghanaian operation to instead focus on opportunities in East and Southern Africa. It operated in both of the countries under the Fly540 brand, with turboprop aircraft. Bodin believes East and Southern Africa are more capable of supporting an LCC model and that fastjet will be able to stimulate new markets in both regions. Despite this, Bodin says Angola and Ghana will play a part in fastjet’s future strategy.

“With an economy supported by new wealth derived from the oil and gas industry, Angola in particular is a significant country with vast amounts of potential,” he says, and adds that Ghana’s aviation market still has a long way to go before it reaches full maturity. He says substantial airport investment is required in order for the country’s airports to accommodate more widebody aircraft.

Fastjet’s success in Tanzania has had a positive effect on the local market, encouraging its competitors, primarily Precision Air, to reduce airfares and up their service standards. In an environment where on-time performance, flight cancellations and reliability weren’t consistently quantified, 96% of fastjet’s flights were on time during its first 15 months and only a handful of flights were cancelled.

Bodin credits such benchmarks as being a catalyst for improvements across many of the region’s airlines, with several aviation authorities working to overhaul the infrastructure under their respective controls. “Governments see what we are achieving in Tanzania – the benefits to the people and the economy, and now recognise that a strong LCC operating in their country will actually improve the market, rather than threaten the established flag carrier,” the CCO says.

Many sub-Saharan economies are going through dramatic change, with new wealth and a burgeoning middle class emerging. Despite this, South Africa is the only country where there is true LCC competition, because of the restrictive regulatory regimes in most African countries. Protectionism is something fastjet executives have consistently voiced concerns about. Despite the challenges, Bodin believes regional agreements are achievable for Africa.

Looking ahead, Bodin believes organic growth will be key to building on existing fastjet routes and frequencies. He is also keen to see new routes being launched, in particular a new service from Dar es Salaam to Nairobi, and forecasts fastjet will expand its fleet of three A319s as new bases in Tanzania, South Africa, Zambia and other markets are established. And while Africa remains a highly regulated market, that is not to say fastjet does not face stiff competition from the likes of Kenya’s Jambojet and Kenya Airways; South African Airways (SAA) and its LCC subsidiary, Mango; Ethiopian Airlines; and West Africa’s ASKY Airlines.

Bodin welcomes this competition, saying it is a way of keeping fastjet “honest, focused and responsive, as well as helping to develop Africa’s aviation market overall”. “Our decision to enter virgin territory with a vastly different business model centred on low fares and universal accessibility was met with some scepticism. However, the benefits of aviation are far-reaching and our decision has quickly been proven to be the right one,” he concludes.