#AVIADEV2018 – ENABLING AIRLINES TO MEET THE MEDIA
(Posted 17th July 2018)
Opportunity arose recently to speak with Nico Bezuidenhout, CEO of pan African low fare airline Fastjet, and ask him a few questions.
Q1) Starting off with the latest news about Fastjet finally getting route rights between Harare and Bulawayo – what does that mean to the airline? Some time ago word had it that once Fastjet commences flights to Zimbabwe’s second largest city, other domestic destination would follow soon thereafter – is this still on the cards and will this be possible with the present fleet composition?
A) We have successfully launched sales our first daily flights between Harare and Bulawayo with the first flight scheduled for 20 July 2018.
Q2) Fastjet some time ago acquired three ATR72 aircraft which are yet to be deployed. Can you shed some light on where these turboprops are due to go, Zimbabwe, Tanzania, Mozambique – and does Fastjet have plans to add more of these planes to the fleet?
A) The ATR’s are a key addition to our fleet as it allows for the operation of routes that are not suitable for jet aircraft. The aircraft will be deployed in Tanzania, we have just received approval on registration of the fleet, and presently engaging with the relevant regulatory bodies to acquire relevant route rights.
Q3) Fastjet presently operates two different Embraer jet types, the ERJ145 and the E190. Will your jet fleet grow with these two Embraer models across your operational bases or are you eyeing other jet aircraft types too?
A) Our E-Jet fleet has proven highly successful in fastjet’s markets and we will evaluate each market we enter, moving forward, with respect to aircraft type based on actual requirements.
Q4) Turning to Tanzania, Fastjet’s first African country. In the past you had Zanzibar on your route map as well as Johannesburg. Understandably was the A319 too large for flights to Zanzibar. With a right sized fleet do you have plans to return to the Spice Island?
A) Zanzibar is a key component in the East African tourism milieu and fastjet continues to assess Zanzibar as a destination, in particular given the smaller aircraft type we will be introducing into the market soon.
Q5) Fastjet also served Johannesburg in the past before, after an interlude with a leased aircraft, halting services. Does the airline have plans to resume flights between DAR and JNB?
A) South Africa and Tanzania are key trade and tourism partners to each-other and, as fastjet establish a greater presence in each of these countries, it follows that connecting South Africa and Tanzania is logical – it is purely a matter of timing.
Q6) Twice this year did your drop down booking menu show flights to Tanzania’s town of Kigoma and twice were those flights pulled. That has raised many questions about the reasons for that and I wonder if you can shed some light on what happened and if you wish to pursue this domestic destinations, and perhaps others, in Tanzania.
A) Unfortunately, a regulatory hurdle has delayed fastjet’s entry into Kigoma; however, this is a route we want to operate as there are currently no jet-services providing connectivity. Fastjet continues to engage with all relevant stakeholders in pursuit of a designation to serve the Dar es Salaam Kigoma route.
Q7) Following the launch of operations in Tanzania was Zimbabwe the next country to see Fastjet launch flights. For some time there was talk about Zambia too joining the Fastjet ranks before more recently Mozambique became your third base. Fastjet has time and again stated that it aims to become Africa’s leading low fare airline – where next will Fastjet establish an operation, South Africa perhaps given your HQ is based in Johannesburg and you and your team have extensive experience with the South African market? Given your major shareholder Solenta Aviation holding readily available AOC’s in several African countries, where next will the Fastjet colours fly from?
A) South Africa remains a lucrative market due to the market size; however, given positive GDP growth forecasts for many African markets fastjet is spoilt for choice. The airline continually interrogates opportunities while its ambition to become a successful pan-African airline for everyone remains.
Being a private enterprise, and not backed by unlimited government resources, fastjet’s growth curve will remain prudent and based on commercial success.
Q8) Can you share your plans about the growth prospects of your Mozambique venture in the face of Ethiopian Airlines announcing they will launch an airline in that country or maybe partner with an existing airline before the end of the year?
A) Since our Mozambican launch in November 2017 we have already significantly increased frequencies between Maputo and Beira, for example, as well as an additional flight between Maputo and Tete. Fastjet plans to introduce an additional aircraft in-market this year along with network expansion.
Q9) Since its launch has Fastjet posted constant losses and tested shareholders patience. How has the move of the HQ from London to Johannesburg and the rightsizing of the fleet impacted on your drive towards profitability and when, in your opinion, will operational profits be accomplished.
A) The successful completion of the Stabilisation Plan has seen fastjet overhaul almost every aspect of the business last year. The airline is now managed at a lower cost base from African soil, fleet changes and network realignment have proven successful along with a new reservation system, the purchase of the brand from EasyGroup and many other interventions. Losses have been curbed substantially.
In addition I would like to draw your attention to an excerpt from our most recently posted results statement:
· Strategic and operational partnership agreed with Solenta Aviation Holdings Ltd;
· Purchase of fastjet brand from easyGroup, enabling future brand licence agreements and greater operational flexibility;
· Market entry into Mozambique via a brand license agreement with Solenta Aviation Mozambique; and subsequent MoU signed with LAM – Mozambique Airlines, S.A;
· Brand license agreement with Federal Airlines, giving fastjet access to an AOC for South Africa, to commence in-country services by early 2019;
· Board re-shaped and strengthened during the first-half of 2017;
· Fundraising of US$28.8m in January 2017 and US$44m in September 2017, reflecting ongoing shareholder confidence in fastjet’s strategy; and
· fastjet named Leading Low-Cost Airline in Africa at the 2017 World Travel Awards and Best Low-Cost Airline, Africa, at the 2017 Skytrax awards.
Financial and Operational highlights
· Successful implementation of Stabilisation Plan comprising:
o Network rationalisation and right-sizing of capacity to better suit fastjet’s markets;
o Fleet transition to smaller E190 and E145 aircraft together with the planned introduction of three 70-seater ATR72 turbo-prop aircraft during September2018;
o Cost savings realised from supplier renegotiations and organisational changes following the relocation of fastjet’s Head Office to Johannesburg; and
o Additional revenue generating initiatives including introduction of a new Central Reservation System and improved travel agent distribution capability.
· The positive impact of the Stabilisation Plan helped fastjet to deliver:
o Operating loss down 61% to US$25.3m (2016: US$65.6m), after one-off costs of US$6.9m associated with an unexpected engine event and a US$2.5m bad debt write off;
o Revenue per seat up 30% to US$60.9 (2016: US$46.9)
o Load factor up 17 percentage points to 71% (2016: 54%); and
o Costs reduced by 48% to US$70.7m (2016: US$136.2m).
Q10) Where do you want to see Fastjet positioned in Africa in a couple of years and how do you plan to get there?
Our intent remains the same. To become a successful pan-African airline that is affordable and accessible to everyone.
