Low-cost airline sees bright future in Tanzania

Dar es Salaam, Tanzania (PANA) - Despite a US$24.9 million loss posted in its Tanzanian operation in the first half of 2013, Fastjet is confident in the potential of its long-term strategy to become the pan-African low cost airline of choice, according to Ed Winter, the company’s interim chairman and chief executive officer (CEO).

“We have seen the low cost model stimulate the Tanzanian market in the same way other such markets in other areas of the world were stimulated by its introduction in the past,” Winter said in the just released unaudited interim results for the six months ended 30 June 2013.

Depicting the airline’s experience in the country as a success, the CEO said that lessons learned while setting up the Tanzanian operation would be deployed to the company’s advantage during expansion into other markets.

“The success of the Tanzanian operation has caught the attention of other African governments who have approached us to enquire about introducing fast-jet operations,” he said, explaining that in some countries, developing the Fastjet brand will involve direct investment (as is the case in Tanzania), while in other countries it will be via a licensing agreement.

Highlighting the operation as profitable on an underlying route level basis, Winter said the business is expected to remain profitable at the earnings before interest and taxes level.

Building on the strong consumer faith, the CEO reported that the airline was going ahead with its growth plan and would soon launch its first international route from Dar es Salaam to Johannesburg.

“We expect to add further international routes over the next few months, including to destinations in Zambia and Malawi,” he said.

In addition to this, the airline intends to add a fifth city, Mbeya, to its Tanzanian domestic network from 1 Nov. 2013, following the completion of the redevelopment of Songwe airport [in southern Tanzania] to accommodate modern jet aircraft.

“Once Tanzania is fully established and profitable, we will turn our attention again to the South African market,” said Winter, noting that regional routes from South Africa to sub-Saharan destinations lacked effective competition and were both under-served and overpriced.

Fastjet was launched in Tanzania on 29 Nov. 2012 and since then its average revenue per passenger has risen from US$46 in January to US$81 in June 2013.

Meanwhile, average load factors have risen from 66 percent to 78 percent during the same

According to the airline’s report, 38 percent of Fastjet’s passengers in the first half of 2013 were first time fliers and 34,000 seats were sold to those booking early at the base-price of only US$20, so establishing the low cost model in Tanzania.
-0- PANA AR/SEG 3Oct2013

03 october 2013 10:48:24

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