FastJet says state protectionism does not make sense

November 3, 2015, 4:59am

Fastjet. Photo by the Sunday Times

By Business Day Live, Bloomberg

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.

"We could have increased our network a lot more rapidly and brought safe and reliable value travel, a lot ... 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 base in Africa. It now has six aircraft and serves eight destinations from the Tanzanian commercial capital, including Johannesburg.

Mr Winter was speaking ahead of the company’s first flight between Harare and Victoria Falls.

The company had originally planned to have bases in Ghana and Angola, before putting the plans on hold last year. FastJet retained an ambition to start linking more destinations in Zambia, SA, Kenya and Uganda, Mr Winter said, and was waiting for the governments of Zimbabwe and countries including SA 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," Mr 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% owned by the government, posted a record full-year loss earlier this year and may need a bail-out of as much as $600m.

"Governments can’t run airlines, it has been proven," Mr 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 in October signed a deal with Emirates that allows the Gulf carrier’s passengers to book tickets on its flights, said in September that its full-year loss would widen as an economic slowdown in African countries, including SA and Zambia, weighed on revenue. The shares were unchanged in London on Monday, having gained 9.3% this year to 76.50 pence, valuing the carrier at £51m.

"My task at the moment is growing this airline, returning this airline to profitability and expanding our network," Mr Winter said.