Wednesday, April 24, 2013

► SOUTH AFRICA: fastjet to enter South African market under JV with local investment firm; to use FedAir's AOC.

fastjetAs previously speculated in this post, Tanzanian LCC, fastjet (FN), has indeed struck a deal with South African investment firm, Blockbuster, in which flights between Johannesburg and Cape Town will be operated under Federal Air's (7V) AOC. If all regulatory approval is obtained, flights should début from May 31
In its announcement, the LCC said it had signed a memorandum of understanding (MoU) with Blockbuster to set up a joint venture (JV) in which fastjet will hold a minority 25% stake while the rest will remain in the hands of Blockbuster. A commercial arrangement has been struck between Blockbuster and local operator Federal Air, which will allow fastjet to leverage Federal Air's existing licensing infrastructure and "deliver its low-cost airline model to the South African public."

Flights are planned to operate between Johannesburg and Cape Town twice a day, seven days a week, in the prime business travel morning and afternoon slots with a possible launch set for May 31, 2013. Once that route has been established, further destinations will be added.
fastjet A320 in Johannesburg yesterday
fastjet A320 in Johannesburg (Craig Ginanis)
We believe that the operating agreements in place between Blockbuster and Federal Air represent a great opportunity for fastjet, our local investors, our partners at Federal Air and most importantly, the South African public," said fastjet’s chief executive officer, Ed Winter.

"We are now firmly focused on quickly getting up and running in order to create a fresh, unique and commercially sustainable offering which will stimulate the market," Winter continued. "fastjet sees a strategic gap in the South African marketplace for a pan-continental, low-cost airline operating the yield management model required to keep fares affordable for passengers, not just at launch, but also in the long term," he concluded.
The new tie up now poses questions about fastjet's plans to acquire 1Time, currently mired in both legal and political deadlock.