Fastjet has abandoned its plans to resuscitate liquidated low-cost airline, 1time, and has announced the signing of a Memorandum of Understanding with local South African investment company, Blockbuster, which is associated with a number of high-profile South Africans, including President Jacob Zuma’s son Edward. The airline aims to launch its initial Johannesburg to Cape Town route on May 31.
The airline intends to initially operate flights on the Johannesburg to Cape Town route twice a day, seven days a week in the prime business travel morning and afternoon slots. Flights to other key destinations will be launched once the Cape Town route is established.
A commercial arrangement has been struck between Blockbuster and local operator, Federal Airlines, that will allow fastjet to leverage Federal Airlines’ existing licensing infrastructure and deliver its low-cost airline model to the South African public.
It is anticipated that the new entity will be 75% owned by Blockbuster, in compliance with South African law, and 25% owned by fastjet.
In recent months, fastjet has been in discussions with a number of South Africa-based entities to support its market entry strategy, including negotiations regarding a potential purchase of liquidated airline, 1time.
“In the opinion of the directors, the value of the 1time has diminished over time. As there is still no indication that 1time creditors will accept the fastjet offer, the company has therefore chosen to invest in the Blockbuster/Federal Airlines venture to pursue its entry into an important African market and a country well-suited to fastjet’s low-cost operating model,” said a statement by fastjet.
fastjet Chief Executive, Ed Winter, said: “Though we have been in talks with a number of companies regarding licensing arrangements, we have ultimately decided that in order to best serve South African customers, we should invest not in the past, but in the future.
“We are now firmly focused on quickly getting up and running in order to create a fresh, unique and commercially sustainable offering which will stimulate the market,” continued Winter.
Winter said fastjet saw a strategic gap in the South African marketplace for a pan-continental, low-cost airline operating the yield management model required to keep fares affordable for passengers, not just at launch but also in the long term.
David Lenigas, fastjet’s Chairman, added that airfares in South Africa had skyrocketed since 1time ceased flying at the end of last year, and many planes are operating at full capacity - specifically on the key Johannesburg to Cape Town and Durban routes.
“We do not seek to be a hostile competitor in the market place as we fully understand and appreciate the significance of the national carrier and existing airlines in country, but we want to provide extra seat capacity to South Africans so that they can travel when and where they want at better prices.”
