The Africa-based budget airline Fastjet, which operates flights in Tanzania, gained permission to fly into several international hubs on Friday. For a continent whose economic growth has been stifled by a lack of cross-border flight connections, the news is encouraging for those seeking Africa's economic development -- but it remains to be seen if Fastjet can make good on its ambitious plans to expand service in the near future.
Fastjet (LON:FJET) bills itself as a no-frills, low-cost carrier, but it aspires to be a pan-continental service. Currently, the airline offers domestic flights between the Tanzanian cities Kilimanjaro, Mwanza, Zanzibar and Dar es Salaam. Now, if all goes as planned, the carrier will soon offer international flights to South Africa, Zambia and Rwanda.
Fastjet began flying in 2012 after acquiring the Kenya-based air carrier Fly540, but the expected transfer of services hasn't gone smoothly. Fly540 still operates under its own name in Kenya. Debt settlement conflicts and licensing disagreements created obstacles for the transfer, but they were finally settled with a memorandum of understanding in April.
Fastjet wants to run domestic flights within South Africa, and it was in talks to acquire the assets of failed airline 1time. However, those efforts were put on hold to allow Fastjet to focus on its international aspirations.
Given its short and rocky history, Fastjet's attempts to go international will be watched closely. But CEO Ed Winter is optimistic.
"This is a monumental day in Fastjet's history, and it brings us closer to our goal of becoming Africa's first pan-continental low-cost airline," Winter said to the BBC. "We have expended huge effort over the past six months in obtaining these rights, and we can only thank the government and population of Tanzania, who have lobbied hard to allow us to gain access to the bilateral rights to operate to these countries."
Gaining the bilateral air transfer agreements necessary to operate international flights to South Africa, Zambia and Rwanda are indeed a significant achievement. Africa suffers from a lack of international flights within the continent, due in large part to restrictive governmental policies that have stifled the aviation industry there.
Taxes on fuel and airport usage fees have dampened demand by making air travel prohibitively costly, which is why a cheap carrier like Fastjet might be a perfect fit -- if it's able to stay aloft. The company posted revenues of $21.1 million and a pretax loss of $55.3 million for the 18 months ended in December 2012.
Such early losses aren't unheard of in this capital-intensive industry, and Fastjet could very well turn to profitability if it's able to seize the opportunities presented by its new international rights.