6 February 2013

Kenya: Fastjest, Fly540 Deal Hit By Turbulence

Nairobi — The dispute between Fastjet plc and Five Forty Aviation Limited is far from over after the latter announced that it had withdrawn the licenses it had granted for Fastjet's operations in Angola, Ghana and Tanzania to use the Fly540 brand.

Five Forty Aviation CEO Don Smith said this is due to failure on the part of Fastjet's Africa operations to comply with the respective licence agreements signed with the company.

Five Forty Aviation, trading as Fly540, says Fastjet is in breach of both the safety and commercial conditions of the licence and owe them over $7.7 million (Sh674.9million) in outstanding licensing fees.

Notice has now been given to Fly540 Angola, Fly540 Ghana and Tanzania to re-paint their aircraft in a neutral colour.

Additionally, Fastjet's Africa operations have to re-brand all of the sales offices, removing the Fly540 brand, return all materials containing the Fly540 logo and rename the companies.

However in an immediate response, Fastjet Chairman David Lenigas has termed the reports as alarming, inaccurate and misleading and even threatened to take legal action over any such further claims.

"Fastjet has paid Don Smith and his partners well in excess of $6 million (Sh526.1million) for their interest in Fly540 and associated brands and we will now aggressively seek to have our purchase contracts enforced," Lenigas said.

Fastjet says that Fly540 does not have the power to withdraw any air operations licence adding that the agreements are not only between the individual entities but the relevant governments too.

"Five Forty Aviation is powerless to terminate purported brand license agreements for any Fly540 operations. With regards operations, it will have no impact on operations," Fastjet CEO Ed Winter said.

The continued dispute now indicates that the two may not partner to enter the Kenyan market as earlier planned.

On Monday last week, Fastjet entered into a Memorandum of Understanding (MoU) with Jetlink Express, in an effort to see it launch its brand in Kenya this year.

Jetlink suspended its operations in November last year due to a cash flow crisis occasioned by the airline's flights to Juba in South Sudan.

"In the meantime, we continue to work with the relevant authorities in other countries in Africa to expand the Fastjet network."

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