Fastjet has a hard landing in Africa

Aparticularly shambolic West African airline once sought to woo passengers by telling them rates of luggage theft had fallen. It was an indicator, if one were needed, that standards in the African passenger aviation market are not set dauntingly high.

Yet Fastjet, a low-cost African airline set up with backing from EasyJet founder Stelios Haji-Ioannou, admits it may struggle to survive. It has cash of $3.9m, of which $3m cannot easily be removed from Zimbabwe. In the first half, Fastjet was making operating losses of about $500,000 a week. London-listed Fastjet is desperately seeking fresh investment, despite having raised $10m in July. The group’s chances of matching the fabled longevity of its emblem, an African grey parrot, look slim.

Fastjet’s woes are themselves emblematic of the mismatch between Africa’s rich economic potential and its modest achievements. On paper, a low-cost airline should fly. Africa accounts for about 15% of the world’s population but less than 3% of the world’s aviation traffic. Road and rail transport is poor.

But protectionist governments and state carriers combine to make life hard for new entrants. Take Tanzania. Half of Fastjet’s $30m in revenue in the six months to the end of June came from the country. So did half of its $14.6m losses. Fastjet blames slowing growth and aggressive competition from a state carrier for this woe.

The airline made mistakes too. It took a successful European business model and tried to wedge it into an illfitting African space. Fastjet’s planes were too big. It assumed customers would pay with credit cards when many preferred to pay with a phone-based wallet.

Fastjet should forget Tanzania and focus on Zimbabwe and Mozambique. Even then, its chances of breaking even are low. The single aviation market agreed by 23 African countries remains a pipe dream. It is not a reality. /London, November 9