African low-cost carrier fastjet has taken a significant step towards launching operations in Zambia after its new local business received an Air Service Permit (ASP) from the authorities in Zambia, which affords the airline authority to operate air services to both domestic and international destinations within and from Zambia.
The fastjet Zambia team is now continuing the submission of the necessary documents and manuals to complete the application process for an Air Operating Certificate (AOC) which will then allow the commencement of operations.
"We have been working tirelessly to roll out the fastjet model across the region and obtaining the ASP in Zambia is a really positive step forward. We still have to obtain the full AOC, but this vote of confidence from the authorities is a major step along that road,” said Ed Winter, interim chairman and chief executive officer, fastjet.
The timescale for the official take-off of the business will be dependent on the length of time taken for the authorities to review the AOC application documents. “We look forward to going on sale and commencing operations in Zambia once that process has been completed,” added Winter.
fastjet commenced the process of obtaining the necessary licences earlier this year. Receiving an ASP means that the Zambian Civil Aviation Authority and the Ministry of Transport has approved the business plan, aircraft choice and proposed structure of the planned airline as appropriate to operate in Zambia.
Zambia will be fastjet's second base from which it plans to operate low cost flights to various destinations in East and Southern Africa. Prices on regional routes from Zambia are currently very high especially and where a monopoly operator controls the route, fastjet is confident that its low cost model will stimulate the market.
Further expanding its African presence, fastjet has received permission from the Uganda Civil Aviation Authority to operate flights from Uganda to Juba, Nairobi, Kigali and Johannesburg with fifth freedom rights to its flights from Tanzania. However, the airline still require approvals from the relevant authorities in each country before it will be able to offer flights linking Entebbe with these destinations.
fastjet commenced operations between Dar es Salaam and Entebbe in September 2014, and added additional flights the following month to meet demand. This new permission will further establish fastjet in the country and support the growth of its air connectivity following the closure of local carrier Ai Uganda.
Since Air Uganda ceased flying, the fares offered by other carriers for flights linking Uganda regionally have risen steadily, according to fastjet. "Fifth Freedom rights present a fantastic opportunity to increase the Tanzanian network, increasing aircraft utilisation and also establishing the fastjet brand in Uganda without the immediate establishment of a full Ugandan base," said Winter.
As part of its long-term development in Africa, fastjet in seeking to establish a pan-African operation with business ventures across the Continent. To support this structure the airline has now signed an agreement to enable Tanzanian participation in the ownership of its local venture, fastjet Airlines Limited.
The arrangement will bring total Tanzanian legal and beneficial ownership of the carrier to 51 per cent and is expected to benefit from entry into new markets and have greater access to more international African destinations through the various Bilateral Air Service Agreements to which Tanzania is a party.
According to fastjet, the arrangement will provide the near term benefit of local shareholding in Tanzania, but it will initiate the process of finding suitable long-term Tanzanian shareholders. This will support its ambition of having airline companies in strategic African jurisdictions which are part owned by nationals of the countries in which they are based to help in creating a truly pan-African airline.
Meanwhile, the fastjet board is in discussions with a number of potential funders, including industry partners and specialist African investors, with a view to investment both at the Group level and at the individual operating company level.
As set out in its interim results in September, until the contribution from operations exceeds central costs, there will be a requirement for additional funding for the Group. Furthermore, additional funding will be required for each significant phase of expansion including those mentioned in this story, as well as its near term working capital. The Company is aiming to complete this necessary funding by early in the New Year.