Tuesday, 18 March 2014

East African Low Cost pirouettes

Just what is happening in the once relatively orderly East African skies ? Every day reveals another twist..........

First there was a single Low Cost Carrier (LCC) when the new British based startup FastJet's owners bought 49% of Kenya's Fly540 at the definitely non low cost price of $83m. Significantly 49% doesn't get its holder control of any business or its policies. Nothing less than 51% reliably does that. This was to be the first step in FastJet's dream of a Pan-African series of similar local airlines spanning the continent. Meanwhile Kenya Airways was already planning to launch its own LCC-Jambojet. Denied rights in Kenya FastJet set up shop in neighbouring Tanzania and started flying from Dar es Salaam. Next, another newcomer ,FlySAX of Kenya, with the same majority shareholder as Fly540, Don Smith, announced the creation of LCC, FlySAX Tanzania, thus entering direct competition with FastJet Tanzania. Next up was Kenya Airways launching JamboJet Kenya which will ultimately compete with both FastJet and  FlySAX Tanzania. Fly540 has now filed a complaint of unfair competition against JamboJet , saying it will disadvantage them. That's a tricky one. Competition is legal and highly desirable but regardless of any arguments about expanding the market etc any newcomer is going immediately to take some business off incumbents. Meanwhile FastJet is establishing FastJet Zambia which before the year is out may well establish a bridgehead in Kenya as Zambia's national carrier or at least using Zambian rights.

All clear then? And for the next pirouette?

-John Williams.

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