Africa the last frontier for aviation industry, says easyJet founder

Africa’s aviation industry has been through a turbulent time recently. Two weeks ago a plane belonging to Nigerian airline Dana Air went down over Lagos killing all passengers. Just days before a cargo plane crash landed at Ghana’s Kotoka International Airport. Last week Kenya’s Jomo Kenyatta International Airport also had to be temporarily closed after an Egypt Air aircraft veered off the runway and blocked other planes from taking off and landing.

An artist's impression of a FastJet aircraft.

One man that is likely looking forward to the future of the industry is easyJet founder Sir Stelios Haji-Ioannou. His new African airline, FastJet, could soon take to the skies.

Lonrho, the pan-African investment group, has partnered with easyGroup to launch the new carrier. Lonrho currently owns budget airline Fly540 that operates in east Africa, Angola and Ghana. As part of the deal, Fly540 will be rebranded to FastJet.

To facilitate the launch of the new airline, Lonrho will sell its aviation unit to British investment firm Rubicon for around $86 million in Rubicon shares. If approved by shareholders, the transaction will see Lonrho with an over 70% stake in Rubicon, while easyGroup will own 5%.

“This is another small but significant step in bringing the dream of low-cost air travel to millions of people in Africa – the aviation industry’s last frontier,” commented the easyJet founder. “Past experience shows by halving fares, a successful low-cost carrier can encourage those people, who have never previously travelled by air, to fly. For Africa, with its densely populated cities separated by great distances – this means a potential new market of millions.”

It is expected that Ed Winter, former COO of easyJet, will become the CEO of Rubicon.

“Rubicon will pursue a strategy of developing a low-cost African airline utilising the Lonrho Aviation route network and existing platforms. Under a licensing agreement with easyGroup, the airline will be branded FastJet and will use modern jet aircraft and operate to European standards,” reads a statement released by Lonrho.

“EasyGroup knows how to build a big, large, low-cost empire, they have done it before. To take [Fly540] to the next phase we thought we would partner with Sir Stelios and his expertise and his team of people,” said David Lenigas, executive chairman of Lonrho, in an earlier interview with How we made it in Africa.

According to Lonrho, Africa’s one billion people and the strengthening emerging economies across the continent are building a significant demand for air travel.

Budget hotels

Lonrho has also partnered with easyGroup to launch the brand in Africa. The first hotel is set to open in Johannesburg, South Africa before the end of the year. Lonrho plans to launch fifty hotels across the continent by 2016.

“In our travels and business around Africa … we just see a chronic demand for a really good international standard, high quality budget hotel chain that focuses on business travellers within Africa,” said Lenigas.

“There are plenty of budget chains in Africa, particularly in South Africa, but you know they are all on highways. We don’t want to build hotels on highways. We want to build hotels in CBDs or big commercial centres where people can book, stay and go to work. We see a big lack in the African market space for a product like that,” he added.

EasyHotel currently operates hotels across Europe and the Middle East. Its no-frills rooms are generally quite small and toiletries (except soap and shampoo) are not supplied. The use of the television and housekeeping is at an extra charge. Rates vary based on how early the booking is made and how much demand there is for a particular date.

“The cheapest rooms in the hotel will be $29. That will typically be for about 10% to 15% of the rooms available at any one time,” said Lenigas.