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Low Cost Airlines Fly Into Political Turbulence In Africa

Low Cost Airlines Fly Into Political Turbulence In Africa

Running a low cost airline in Africa is no easy feat, but governments around the continent are making it even harder for investors in this sector to operate by adopting protectionist measures to safeguard state-owned carriers, FastJet’s chief executive said.

Ed Winters told Bloomberg  his airline’s ambition  to become the largest low-cost carrier in Africa was facing a challenge in countries where governments are trying to support their mostly loss-making national carriers by  making it hard for private airlines to compete.

“The continued policy in some countries about protectionism of state airlines surely can’t make sense,” Winters said.

“Why would countries put so much money into an airline, when that money will be far better spent on roads, health, all those things which the people need?”

Launched in  2012, FastJet has transported 1.5 million people so far, has operation in six African countries including Tanzania, Kenya and Zimbabwe.

national airlines
African countries with national airlines (Image: quartz.com)

Of the Sixteen state-owned airlines in Africa, only a few like Ethiopian Airlines made a profit in 2014.

Other major airlines on the continent like Kenya Airways and South African Airways (SAA) have made huge losses for the last three years and are on government bailout lifelines.

Kenya Airways received a $42 million capital injection from the government this year after it made a $289 million loss in 2014.  It has also drawn down a $200 million bridging loan it received for Cairo-based Afreximbank to help it stay afloat, Reuters reported.

SAA has also received $105 million in government-backed loans to help it turbulent times, Quartz Africa reported.

Winters said such financial support by African governments makes it difficult for private operators like FastJet to make commercial decisions.

“Liberalization has to come within Africa,” Winter said.

“We could have increased our network a lot more rapidly and brought safe and reliable travel a lot sooner if it wasn’t for the level of protectionism in Africa,” he added.