Last updated: 01:10 PM ET, Wed October 07 2015

Why Africa's Fledgling Low-Cost Airlines are Fighting To Take Off

Airlines & Airports | Josh Lew | October 05, 2015

Why Africa's Fledgling Low-Cost Airlines are Fighting To Take Off

Low-cost airlines have become a major part of the commercial aviation landscape. In the Americas, Europe and Asia, there are a number of established budget airlines, and some have a significant share of the marketplace. Flag carriers and legacy airlines are still important players in the industry, but on many occasions, they have had to change their fares or alter their service in order to keep their passenger numbers from falling.

The Last Untapped Market

Africa is, in many ways, the final frontier for budget airlines. Many of the countries on the continent have rapidly growing middle classes. These people often still have to rely on bus service to move around. National carriers are the only options for flying, and their international fares can often be prohibitively expensive because of the lack of competition.

The budget market is still up for grabs in Africa, but, so far, only a few no-frills airlines are testing the waters.

These new players are about the challenge the continent’s established airlines by offering the kind of international service that is currently only provided by flag carriers. FastJet, an airline with its headquarters in the UK and its hub in Dar es Salaam, Tanzania, is one member of this “first wave.” Their goal is, basically, to follow the strategy that made Southwest, Ryanair and AirAsia so successful: provide no-frills service at a price that undercuts the competition.       

Roadblocks Abound

This might sound like a foolproof investment opportunity for airline entrepreneurs. There is a rather large catch, though. These airlines will have to deal with governments that are still stubbornly supporting national carriers. Africa does have a decades-old agreement on the books that is similar to Europe’s “open skies” policy. However, it was never really implemented. Many countries continue to try to protect their flag carriers with strict regulations and high taxes. This is the main reason that new airlines have taken so long to take off in Africa.

Many of these government-supported national airlines are struggling mightily. Even well established names like South African Airways have had to rely on bailouts in recent years. 

There are established low-cost airlines on the continent, but these, including South Africa’s Mango Airlines, only focus on domestic markets. FastJet is trying to blaze a new trail. It has begun service between LCC-friendly countries in the hope that it will be able to expand as holdouts start to see that change is inevitable. FastJet now flies between Tanzania, South Africa, Zambia, Zimbabwe and Uganda.

The Future is Impossible to Ignore

In many ways, Africa today resembles Southeast Asia a decade ago, with its growing middle class and fledgling no-frills airlines. There is little question that budget carriers will eventually begin to thrive in Africa. The demand will simply be too great to ignore.

And there will also be an element of competition to help drive the development. South Africa, Ethiopia and Kenya have airports that are considered hubs for their particular region. The African country that every economist is watching is Nigeria. Its Lagos hub, Murtala Muhammed International, is widely considered one of the world's worst major airports. In fact, the Nigerian aviation industry as a whole has been slowed by corruption and mismanagement. The other regional powers could take a giant step forward by letting low-cost airlines fly between their hubs. The easier it is to travel to Addis Ababa, Nairobi, Jo'burg and other capitals, the further ahead they will get in terms of image and accessibility. 

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