29 January 2013

Kenya: Debt-Ridden Jetlink Gets Lifeline From Fastjet Deal

Financially limping local carrier Jetlink could be back on its feet after low budget carrier Fastjet roped it into a joint venture for a regional low cost airline. The deal follows the purchase of Fly 540 last year by Fastjet.

Though it is yet to begin flights from Kenya, Fastjet launched operations in Tanzania in November to become the first regional low cost carrier modelled along the lines of Europe's Easy Jet.

Yesterday, the airline announced that it has signed a memorandum of understanding with Jetlink for creation of a joint venture as a stepping stone to the launch of budget airline's business in Kenya.

"Talks are not yet finalised but we certainly envisage a combination of Jetlink's strengths and Fastjet's interest in Fly540 creating the optimum platform to launch the Fastjet brand in Kenya," said Fastjet CEO Ed Winter in a statement.

Jetlink announced in November suspension of all its flights citing a foreign currency exchange hitch in South Sudan that made it unable to access up to $2 million(Sh176 million) from ticket sales.

Explaining the situation, Jetlink said it had sold its tickets in Sudanese pounds but that problems with conversion of the money had made it impossible for it to cover its short term financial obligations therefore grounding operations. The MoU among the two airlines is however yet to be approved by regulators and company boards.

"A joint venture between Fastjet and Jetlink will facilitate the launch of the Fastjet brand in Kenya within the next few months with immediate access to domestic and regional destinations," said Winter.

Commenting on the deal, Jetlink's managing director Elly Aluvale said: "We believe the partnership will be mutually beneficial and will go a long way in meeting the current demand for capacity on Kenya's domestic and regional routes. It will also generate new traffic as passengers are attracted by low fares, made possible by fastjet's low cost operating model."

Fastjet had indicated its intention to launch flights from Kenya in the last quarter of 2012 but this has been delayed because it has not gotten all the necessary approvals from the government.

The airline said once it launches, it will sell tickets for as low as $20 (1760) to regional destinations. The airline operates on a no frills policy and passengers who want refreshments, food or additional luggage capacity have to pay extra for these services.

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