Aim-listed low-cost airline Fastjet aimed to have its own airliners in South Africa’s airspace by May through a 25:75 partnership with South African investment company Blockbuster.
After months of negotiations with several potential partners to enter the South African market, the new low-cost airline was expected to start operating an initial route between Cape Town and Johannesburg on May 31.
Tickets for the first flights of the new airline, the name of which has not yet been released, would go on sale in the next few weeks, Fastjet CEO Ed Winter said in a statement on Wednesday.
Through a commercial agreement secured by Blockbuster, which had associations with President Jacob Zuma’s son, Edward Zuma, and businessman Yusuf Kajee, Fastjet would leverage charter operator Federal Airlines’ existing licensing infrastructure.
“ … [there is a] strategic gap in the South African marketplace for a pan-continental, low-cost airline operating the yield management model required to keep fares affordable for passengers, not just at launch, but also in the long term,” Winter commented.
Fastjet chairperson David Lenigas added, “Air fares in South Africa have skyrocketed since 1time ceased flying at the end of last year and many planes are operating at full capacity – specifically on the key Johannesburg to Cape Town and Durban routes.”
He stressed that the new carrier did not aim to become a hostile competitor in the marketplace, but rather to fill a demand gap.
“Though we have been in talks with a number of companies regarding licensing arrangements, we have ultimately decided that in order to best serve South African customers, we should invest not in the past, but in the future,” Winter explained.
This had put an end to the possibility of the firm taking over 1time’s licence.
Fastjet had been in negotiations to acquire 1time, but media reports on Tuesday quoted provisional liquidators as saying that 1time’s debts exceeded the offers from prospective buyers.
“As there is still no indication that 1time creditors will accept the Fastjet offer, the company has chosen to invest in the Blockbuster/Federal Airlines venture to pursue its entry into an important African market and a country well-suited to Fastjet’s low-cost operating model,” Winter explained, adding that the value of 1time had also diminished.
Fastjet was now focused on establishing a “fresh, unique and commercially sustainable” service after raising £2-million in working capital for its upcoming launch by issuing 160-million shares at 1.25p a share.
Flights to other key destinations would be launched following the establishment of the Cape Town to Johannesburg route.