fastjet's CEO has become something of an expert in overcoming obstacles and shares his plans for low-cost travel in Africa.
Writer Ian Armitage
Airline industry veteran Ed Winter is a man with a rather ambitious plan – build the first pan-African low-cost airline.
Now that is quite the task, but the former pilot who held senior roles at UK-based British Airways, easyJet and Go has all the experience necessary to pull it off.
"Africa is without doubt aviation's final frontier," he says. "But it is an environment where protectionism, a lack of infrastructure and bureaucracy have held things back.
"Africa is in desperate need of good aviation connectivity. A billion people live in Africa but it has just three percent of the world's aviation. If you look at it, every city is a long distance to the next one, poorly serviced by road and rail. There's usually a jungle, mountain, river or lake in the way. Aviation should be a much bigger feature of the African economy than it is."
And with Africa's economies growing, there are an increasing number of people with the money to fly.
It makes good business sense.
"Our model relies on making air travel more affordable to the burgeoning middle class," says Winter.
London-listed fastjet was created following its acquisition of the African airline Fly540 and operates from four bases in Kenya, Tanzania, Ghana and Angola.
"We launched flights under the fastjet brand in Tanzania utilising our Airbus A319 fleet at the end of 2012 and currently fly four routes in Tanzania," he says. "Of course, in October this year, we launched, after some considerable delays, our first international flights between Tanzania's commercial hub Dar es Salaam and Johannesburg in South Africa, which represents a new era for us. It has been more difficult than we initially thought but we are delighted we finally got here. Until now that route has been prohibitively expensive for many people, with incumbents charging crazy prices, which restricts the market size. But the launch of this service offers a new, affordable and reliable option to both Tanzanians and South Africans – we're competing head-to-head with South African Airways to provide real value for money flights. We believe that with our low fares we can stimulate demand on this route significantly."
It is the first of several planned international routes for fastjet from Tanzania and other potential new bases throughout Africa.
Flights between the two cities will initially be operated by fastjet three times a week on Mondays, Wednesdays and Fridays, increasing in frequency as soon as consumer demand dictates.
The plan is to use its Tanzanian base as a springboard in much the same way that easyJet spread across Europe in the 1990s, when it exploited the opportunity offered by the newly liberalised single market.
"There is currently only one other international route within Africa operated by low-cost carriers apart from our Dar es Salaam/Johannesburg route," says Winter. "Building on our existing operation and the strong consumer faith in our brand, the opportunities for us to penetrate the intra-Africa market are huge but so are the challenges."
Indeed, Africa's low-cost carriers face strong headwinds. The main problem is costs. Governments impose large taxes on fuel and tickets, and airlines are charged higher insurance premiums than established ones in other countries.
"Europe's budget-airline boom in the 1990s was made possible by an open sky agreement," Winter says. "But in Africa it is not open sky. We're waiting to see the outcome of a court case where Comair (operating British Airways and kulula.com) is challenging newcomer low-cost airline FlySafair from operating domestically in South Africa because of ownership regulations. It will have serious ramifications because if you move towards liberalisation and allow airlines to operate in a competitive, free market you drive airlines into efficiency. If you look at Europe, the low-cost airlines like easyJet or Ryanair are now carrying hundreds of millions of people who wouldn't have travelled before. In the background, the old traditional airlines like British Airways, Air France and KLM are still surviving and thriving, becoming far more efficient. What you end up with is far better connectivity and an environment where the consumer wins."
On November 1, the day we talked to Winter, fastjet launched services to Mbeya in Tanzania. It is an important domestic destination for the airline, which he says "given its location in the south-west of the country, close to the border, gives us access to a catchment that spreads into Malawi and Zambia".
He expects to add further international routes over the next few months, including to destinations in Zambia and Malawi.
"fastjet has been on an incredible journey since we started flying domestically in Tanzania with a single A319 plane nearly 12 months ago between Dar es Salaam, Mwanza, and Kilimanjaro. With Mbeya, our services will be going into the new Songwe Airport, which has been upgraded to allow it to handle jet aircraft operating to international standards. We have worked hard with Tanzanian authorities and the Civil Aviation Authority (CAA) to get the right facilities in place. Dar es Salaam will remain the focal point for our international expansion - destinations like Lusaka, Harare, Maputo, Lilongwe, Entebbe, Juba, Nairobi and Mombasa are all in our sights. In the future I can envisage routes from Kilimanjaro and Zanzibar to Johannesburg. We're looking forward to announcing some more international routes pretty soon and we are confident in the potential of our long-term strategy to become the pan-African low cost airline of choice."
Winter hopes to have a South African operation up and running soon and said that local law requires airlines to be 75 percent owned by a domestic firm, another challenge and something that has so far stopped fastjet from getting into the market there.
"Our business model actively encourages giving up equity to local partners but unlike other franchise businesses such as restaurants or the hotel trade, the airline industry has standards on which it simply cannot compromise, given the safety factor."
fastjet's solution is a management contract that will require partners to give up control of matters such as safety, pilot training and maintenance.
"What we want to create is a series of fastjet airlines. To the consumer it is all one airline because it will offer the same levels of punctuality and reliability, the same customer service and be sold as part of the same network. Now clearly the passenger needs to be told at some point that they are being carried by fastjet SA or fastjet Tanzania etc. and that they are separate companies but if we can create that series of fastjet airlines around Africa to the consumer that becomes something very similar to the easyJet model around Europe. The challenge for us is how do we control that quality and reliability across all those airlines? One area we are making progress is maintenance which is very important from a lot of aspects – costs, flight safety and reliability. So the maintenance contract is vital and rather than rely on lots of different maintenance providers, we did requests for proposals with several European maintenance repair organisations and Sabena Technics came out as being the best and serves our structure. Therefore each of the fastjet airlines will have an arrangement as part of that global contract so the same standards, quality and reliability will be across the airlines. It is that sort of thing that will enable us to control the brand and reliability across the pan-African network."
Another urgent matter on the agenda is the need to find a chairman, a role Winter has temporarily assumed.
"We haven't progressed the search as quickly as we'd have liked," he says.
But the future is bright.
"We're excited. The low-cost model is all about market stimulation. It is not about market share. It is about going into a market place that is constrained because prices are too high, coming in with a reasonable, flexible fare and stimulating demand. The fact that the middle classes are growing rapidly just adds to the rate of market expansion.
"I think we're doing just that."
Analysts believe Africa is ready for an airline with the ambition of fastjet and that a commonly branded airline is a brilliant idea.
When flying in Tanzania from capital Dar es Salaam to Kilimanjaro or Mwanza, Winter says, 38 percent of passengers are first-time flyers, testament to Africa's potential for growth.
fastjet flights in Tanzania sell for as little as $20.
To learn more visit www.fastjet.com.
Image: © fastjet
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