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TC957
Topic Author
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ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 10:54 am

Hi all

Interestering article in todays' travel news about ET casting doubt on Stelios's success in launching FastJet in Africa, claiming Africa " isn't ready " for a LCC.
Nice looking livery for FastJet by the way !

Discuss....
http://www.travelweekly.co.uk/Articl...misses+stelioss+african+dream.html
 
migair54
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 11:03 am

I also think the same, but you never know, I thnik it's going to be very difficult for them, specially because the rights to operate trunk routes, nobody is going to make it easy for them.

Fastjet is advertising Lusaka starting 1st of February 2014 but I dont think they have started, also I heard a lot of rumors about JNB closing due to big loses, let's see.
 
MEA-707
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 11:30 am

Of course ET's boss will say that ! Did KLM, BA and Lufthansa's spokesmen say in 1997 that Ryanair and easyJet will be a sensational success ?
Africa (or Latin America) are very difficult markets for LCC's so it's couragious for anyone who tries. Maybe the first 5 LCC's fail and the 6th will manage.
nobody has ever died from hard work, but why take the risk?
 
behramjee
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 1:20 pm

In Africa, the problem that LCCs have is a lower cost base structure (high cost of fuel in particular in Africa versus many EU states) and lack of adequate infrastructure. The only countries that could do well with LCCs are South Africa, Kenya, Egypt and Morocco. In addition, majority of African airports are closed between 7pm-6am due to safety issues after sunset hence aircraft utilization which plays a vital factor in bringing CASK down and increasing cash flow cannot be fully taken advantage of.

In Europe and USA, LCCs have blossomed because lots of airports are open till midnight, turn around times for aircraft are 30 minutes versus 45-75 minutes in Africa, world class facilities exist and its easy to attract cockpit crew for $ 4000-6000 per month on a B737/A320 versus paying US$ 10,000 per month for a captain in West/Central Africa these days !

So overall in hindsight, what the ET CEO is saying is 100% true !
 
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Polot
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 1:28 pm

Quoting behramjee (Reply 3):
In Africa, the problem that LCCs have is a lower cost base structure (high cost of fuel in particular in Africa versus many EU states) and lack of adequate infrastructure.

The biggest problem is Africa is a rather closed market (few open skies). The ability to operate, or discontinue, any route they want, at the price they want, and at the frequency they want is vital for a successful LCC as they have to stay lean to keep costs low. Being forced into flying specific routes or frequencies due to bilateral agreements hampers their potential profitability.

It is the same reason why there isn't yet a successful pan-South American LCC.
 
KL577
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 2:00 pm

Quoting behramjee (Reply 3):
n addition, majority of African airports are closed between 7pm-6am due to safety issues after sunset

I am not sure about this. All major international airports in Africa are open 24h. In fact, most airports see the majority of their passengers passing through terminals at evening and night hours. If you mean that a lot of secondary airports are closed you're right.
 
ETinCaribe
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 5:46 pm

Sure, some sound arguments, but Fastjet is here and I hope he and his team are taking them seriously or they will pay the price down the line. The main question in my mind is whether ET has any plans to set up its own LCC when the time is right? I wish ET took some pages out of the Fastjet book, like having one brand across hubs, why have ASKY in west Africa, Malawian Airlines, etc. Just use one brand and add a country name to it if need be.

Interesting insight into the Fastjet financials:
Fastjet - African LCC (by Kiwinlondon Dec 28 2013 in Civil Aviation)#6
Fastjet - African LCC (by Kiwinlondon Dec 28 2013 in Civil Aviation)#11

Quoting MEA-707 (Reply 2):
Of course ET's boss will say that ! Did KLM, BA and Lufthansa's spokesmen say in 1997 that Ryanair and easyJet will be a sensational success ?

I agree. No surprise he says that especially due to:

Quoting behramjee (Reply 3):
high cost of fuel
Quoting behramjee (Reply 3):
majority of African airports are closed between 7pm-6am
Quoting Polot (Reply 4):
closed market

in sum, too many ingredients are still lacking...

Quoting TC957 (Thread starter):
Nice looking livery for FastJet by the way !

True beauty!!!
 
MaverickM11
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 6:01 pm

I think everyone is doubting the success of Fastjet. While I LOVE the idea, I just don't think the regulatory framework is there, and the stimulative effects of low fares aren't quite what they are in a more developed region. Fastjet's lack of success seems to agree with ET's boss and just about anyone else as well.

Quoting Polot (Reply 4):

The biggest problem is Africa is a rather closed market (few open skies).

   WN's success came from *deregulation*, as it only flew with in Texas until then. There is really neither a "Texas" or deregulation on the horizon in Africa. Plus I think lowering fares by 50%, let's say, isn't going to stimulate much, when the percentage of Africans that can afford to fly, even at that lower fare level, is still very small. That's why you see more success with hub-and-spoke carriers, and a lack of point to point carriers that are making any money.
I don't take responsibility at all
 
speedbird128
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 8:06 pm

Gotta love this statement:

Quote:
“A third runway has been discussed for years. Dubai just got on and built six runways.”

He obviously hasn't seen (a) the congestion into DXB during the arrival banks, and (b) hasn't noticed that DWC has only 1 runway which nobody is keen to use unless "motivated" to do so...
A306, A313, A319, A320, A321, A332, A343, A345, A346 A388, AC90, B06, B722, B732, B733, B735, B738, B744, B762, B772, B7
 
AsoRock
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 8:12 pm

Quoting MaverickM11 (Reply 7):

New airlines need years to prove their business plan, establish strong brands and turn in a profit. Look at Virgin America... Were people calling it a failure a year into its operations ? It's barely breaking even right now. Airlines need sufficient capital and Long term vision. Fastjet can truly succeed but it will take money, few years and a little luck in African countries opening up their skies to competition. Granted, Africa isn't ideal for LCCs, but nowadays we are seeing legacy carriers adopt LCC strategies while LCC carriers adopt some legacy carrier principles. Look at FlyDubai and Air Arabia in the Gulf region, they fly the same routes legacy carriers ply, into major airports (not secondary). All FastJet needs is economies of scale, high aircraft utilization, lean workforce, and carve a nice niche and solid brand and you have a good chance. Stelios isn't stupid to bet this money in a hopeless environment. Africa will be home to the next generation of emerging economies and now is the time to grab a piece of the pie. I truly hope they make it and expand into larger markets like Nigeria, South Africa, etc.
 
TC957
Topic Author
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RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 8:41 pm

Quoting Speedbird128 (Reply 8):

Don't let facts get in the way of a good story !
  
 
MaverickM11
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Joined: Thu Apr 06, 2000 1:59 pm

RE: ET Boss Doubts FastJet Success In Africa

Fri Feb 07, 2014 8:46 pm

Quoting AsoRock (Reply 9):
New airlines need years to prove their business plan

I don't think that's necessarily true; plenty of airlines have been successful either right out of the box or soon after. Those new/low employee/aircraft costs are a very strong asset--the problem is what do you do when those advantages fade away (see Gol or Southwest, for example). I think the bigger problem here is that Fastjet thought they'd get much farther in terms of regulatory approval than they've managed. They're basically little more than a domestic Tanzanian carrier now, when it seems like they envisioned crisscrossing most of East/Southern Africa by this point. It seems like they severely underestimated the political opposition to freeing up the skies, both domestically and internationally.

Quoting AsoRock (Reply 9):
Look at Virgin America... Were people calling it a failure a year into its operations ?

VX has been a financial conflagration/train wreck since day one. But a very stylish train wreck.
I don't take responsibility at all
 
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JetBuddy
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RE: ET Boss Doubts FastJet Success In Africa

Sat Feb 08, 2014 5:18 am

It seems to me that the African nations need to form some kind of open skies agreement. I think that will happen sometime the next 10 years because of the extremely fast developing economies, and the demand for air travel is certainly going to explode.

Some kind of pan-African "FAA" needs to be founded, I think it would be beneficial for everyone, especially safety wise.
 
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Sepultallica
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RE: ET Boss Doubts FastJet Success In Africa

Sat Feb 08, 2014 11:47 am

Quoting JetBuddy (Reply 12):
It seems to me that the African nations need to form some kind of open skies agreement. I think that will happen sometime the next 10 years because of the extremely fast developing economies, and the demand for air travel is certainly going to explode.

Already done - the Yamoussoukro Decision of 1999: http://www.afcac.org/en/documents/conferences/July2012/yde.pdf

Specifically, the Yamoussoukro Decision calls for, among others:

- Full liberalization of intra-African air transport services in terms of access, capacity, frequency, and tariffs
- Free exercise of first, second, third, fourth and fifth freedom rights for passenger and freight air services by eligible airlines (These rights, granted by most international air service agreements, enable, among others, non-national carriers to land in a state and take on traffic coming from or destined for a third state.)
- Liberalized tariffs and fair competition
- Compliance with established ICAO safety standards and recommended practices

The problem is that despite all the pomp and fervour, only a handful of the 44 signatories have moved to implement it.
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