FastJet to fly into Dar amid queries over Kenya stake

Budget carrier FastJet has announced it will establish a second base in Kenya, after Tanzania, amid questions on its local ownership.

The low cost carrier Monday said it would start operations in Dar es Salaam in November and is looking to remodel Fly540 in Nairobi into a low-cost African airline to be branded Fastjet once its application to use a bigger Airbus A319 is approved.

“Our initial focus will be on East Africa with the airline’s first base at Dar es Salaam, Tanzania, where the A319 aircraft has already been approved by the Tanzania Civil Aviation Authority,” Fast Jet’s chief executive, Ed Winters, said in a statement.

“This will be followed by a second base in Nairobi, Kenya, once the A319 is approved there.”  

The company has applied to the Kenya Civil Aviation Authority (KCAA) to introduce the Airbus fleet A319 to Nairobi, hoping a bigger jet will give it room to offer rock bottom fares and take on rivals like Kenya Airways.

It expects to keep fares across the East African routes at between Sh6, 000 and Sh6, 700, with passengers paying for extras like food and baggage.

The lack of clarity in Fly540’s ownership structure, which is key to the airline’s continued operations as a local carrier in Kenya, has come under scrutiny.

(Read: Fly540 under scrutiny after sale of shares to British firm)

Aviation business

Rubicon bought Lonrho’s African aviation business, including a 49 per cent stake in Fly 540 for $86 million (Sh7.2 billion) and plans to acquire interest in a large portion of the remaining 51 per cent stake from the majority shareholder, 530 investments at a price of $2.25 million (Sh185).

To be a domestic airline majority shareholding is expected to be local -- which means Fly540 could lose its licence as a Kenyan operator.

The FLY540 chief executive Don Smith has however maintained the airline is still Kenyan owned with Rubicon only having a majority economic interest in the airline.

“The airline needs to be clear about its shareholding,” said Mr Peter Simani, a partner at Simani & Associates Advocates.

To operate the new planes locally the airline will have to apply to KCAA, who are charged with regulating and managing the country’s airspace.

Its application was among 19 licenses that KCAA begun looking at last week in a hearing where questions were raised about its ownership.  The fate of the licence will be known by the end of September.