9 July 2012

Kenya: Fastjet to Phase Out Fly540 By October

Photo: Fastjet
An artist's impression of a Fastjet Airbus.

RUBICON Investments, the company that bought out regional airline Fly 540 plans to launch its operations locally by October under new name FastJet, it has announced. British investment firm Rubicon last month completed a buyout deal to take over Fly 540 for $85.7 million (Sh7.3 billion) from Lonrho group. The firm said then that it had chose to acquire Fly540 as its platform for the launch of a budget airline in Africa modelled along Europe's largest low cost carrier Easy Jet founded by one of Rubicon's director's, Stelios Haji-Ioannou.

In its latest statement, Rubicon said it had chosen Airbus A319 for Fastjet operations in the continent. "The decision to launch FastJet with the Airbus A319 enables us to expand rapidly with each aircraft potentially carrying around 250,000 passengers a year. Rubicon expects passenger capacity to double from current levels within six months of the introduction of the A319 fleet," said Rubicon CEO Ed Winter in the statement posted on the firm's website. "We plan to add at least five leased Airbus A319 aircraft to the fleet within six months of launch and up to 15 within a year."

This announcement was made hours after a local newspaper reported that the buyout deal had been challenged by a creditor who gone to the registrar of companies in a bid to block the transfer of Lonrho's shares in Fly540 to Rubicon. The creditor, the report said, is demanding Sh55 million from Fly540 for supply of jet fuel and seeks to block the transfer until the debt is settled.

However if the deal eventually pulls through and Fastjet manages to launch operations by October as planned, it would create fierce competition with Kenya Airways' new subsidiary Jambo Jet also planning to launch at the same time. In April, KQ's Finance Director Alex Mbugua told an investors meeting held at Outspan hotel in Nyeri that the budget airline Jambo Jet would launch in six months time since staff recruitment was already on course.

Jambo Jet is also expected to be a low cost airline. The fight for the regional air travel market by the airlines will signal the beginning of cheaper fares. Currently air travel is very costly with travel to some regional destinations costing as much as or more than long haul destinations like Europe or North America. David Lenigas, Executive Chairman of Rubicon and of Lonrho Plc added that FastJet intends to sign a deal with a major European maintenance, repair and overhaul company in a bid to also raise the aviation safety standards in the continent to be at par with Europe.

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