Harare - FastJet said its ambition to become the first discount airline spanning sub-Saharan Africa is being held back by government protectionism and unprofitable state-owned carriers that resist new entrants to many countries.
“Liberalisation has to come within Africa,” CEO Ed Winter said in an interview on Thursday in Harare, Zimbabwe’s capital. “We could have increased our network a lot more rapidly and brought safe and reliable value travel, a lot more sooner, if it wasn’t for the level of protectionism in Africa.”
FastJet started flying an Airbus Group SE A319 plane in 2012 from Dar es Salaam, its main Africa base. It now has six aircraft and services eight destinations from the Tanzanian commercial capital, including Johannesburg. Winter was speaking ahead of the company’s first flight between Harare and Victoria Falls, a popular tourist destination that straddles the Zimbabwe-Zambia border.
The company had originally planned to have bases in Ghana and Angola, before putting the plans on hold last year. FastJet retains an ambition to start linking more destinations in Zambia, South Africa, Kenya and Uganda, Winter said, and is waiting for the governments of Zimbabwe and countries including South Africa to agree to further routes in the region.
Wasting money
“The continued policy in some countries about protectionism of state airlines surely, can’t make sense,” Winter said, without being specific. “Why would countries put so much money into an airline, when that money will be far better spent on roads, health all those things which the people need?”
State-owned South African Airways is surviving off government-guaranteed loans and has appointed six permanent or acting CEOs in three years. Kenya Airways, which is 30 percent owned by the government, posted a record full-year loss earlier this year and may need a bailout of as much as $600 million.
“Governments can’t run airlines, it has been proven,” Winter said. “Let private enterprise take its course. You will get a much better aviation landscape. Competition is good for everybody. It drives out the inefficient.”
FastJet, which earlier this month signed a deal with Emirates that allows the Gulf carrier’s passengers to book tickets on its flights, said Sept. 28 that its full-year loss would widen as an economic slowdown in African countries including South Africa and Zambia weighs on revenue. The shares have gained 9.3 percent this year in London to 76.50 pence, valuing the carrier at 51 million pounds ($78 million).
“My task at the moment is growing this airline, returning this airline to profitability and expanding our network,” Winter said.
- With assistance from Liezel Hill in Johannesburg.
BLOOMBERG