Friday, 2 December 2016

Fastjet Negelects Nairobi And Entebbe, But To Relocate To South Africa 2017

Fastjet's new Chief Executive, Nico Bezuidenhout, would sooner or later be looking at the South African domestic market, now that key decisions are out of the way.

A relocation in early 2017 from London Gatwick to Johannesburg will take the head office of the airline into the African continent where operations actually take place, for now in Tanzania on domestic and regional routes and in Zimbabwe on one domestic route to Vic Falls and twice daily to Johannesburg.

Other decisions taken was to phase out the Airbus A319 fleet thought to be too large to operate profitably on other than high density routes and while presently only one Embraer E190 is flying for Fastjet are more expected in due course.

Information from usually reliable sources have now indicated that CEO Nico is eying the South African domestic market, where of course for the past decade before joining Fastjet he managed Mango, South African Airways' LCC.

This, if proven to be correct, would be an indicator that both Zambia and Kenya may go on the back burner though considerable work and resources have flown into getting operating licences and relevant permits to commence operations in these two countries.

Given the level of competition in South Africa in the LCC segment however, with other established players being Kulula among others, owned by Comair, a British Airways affiliate, and given that a former Fastjet Manager, one Kyle Haywood, failed to get the airline off the ground and subsequently left Fastjet, will Nico however have his work cut out for him, to consolidate on one side and push for expansion on the other into a notoriously hard fought over market as South Africa is.

If Fastjet goes ahead it will also have to review their business model which up to now saw Fastjet PLC hold 49 percent of the shares of the two companies in Tanzania and Zimbabwe, leaving the remaining 51 percent controlling interest in the hands of local investors. South Africa however has a lower threshold of just 25 percent of shares being permitted to be held by a foreign investor, something Fastjet's board no doubt will have to take a hard look at.

For now though are the few remaining flights from Dar es Salaam to Entebbe and Nairobi underway before, on 05th December, both services, alongside flights from Vic Falls to Johannesburg, will be halted until further notice.