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Low Cost Air Travel Comes to Africa

African travellers, plagued by the high fares charged by airlines targeting the business market, are a step closer to being able to fly across the continent on a no-frills budget airline.

In a plan involving three companies, Lonrho's east and central African carrier, Fly540, is set to be transformed into a low-cost airline to be named Fastjet.

The three companies are Lonrho, London-listed Rubicon Diversified Investments Plc and the easyGroup, which operates the popular British low-cost airline, easyJet.

Rubicon announced in London on Wednesday that it intended buying Lonrho's aviation division for U.S. $85 million, in a "reverse takeover" deal in which Lonrho will retain a 73.7 percent interest in Rubicon.

This follows the an announcement last week that Rubicon is entering a brand licence agreement with easyGroup in which it will acquire exclusive rights to the Fastjet brand, conditional on the reverse takeover by Lonrho.

Citing Fly540's "unique platform of hubs, fly rights and growing passenger revenue base", the chairperson of Rubicon, Robert Burnham, said the three companies would grow into "a low cost, point-to-point, no-frills all jet airline for Africa".

The former chief operating officer of easyJet, Ed Winter, said that "with rising GDP and consumer spending, and changing demographics, Africa is ripe for a democratisation of air travel... The African aviation market is significantly under-served".

Rubicon's shareholders will meet on June 29 to decide on the deal. In a notice to the markets, Rubicon said plans for the launch of Fastjet were under way "but not yet finalised". It added that launching "an appropriate fleet of modern jet aircraft" may require the raising of more funding.

easyJet founder Sir Stelios Haji-Ioannou called the Rubicon announcement "another small but significant step" in bringing low-cost air travel to Africa, "a potential new market of millions".

AllAfrica News
14 June 2012

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