Sir Stelios Haji-Ioannou set for take-off with a pan-African airline in Lonrho deal

 

Nairobi

EasyJet's founder Sir Stelios Haji-Ioannou moved closer to launching a pan-African, low-cost airline yesterday after a British investment firm he is part of bought Lonhro's African aviation business.

The deal will see Lonhro's popular East African, low-cost carrier Fly540 expand its existing operations before being relaunched as Fastjet later this year.

The deal values Lonrho's aviation division, which operates in Angola, Tanzania, Ghana and Kenya, at $85.7m (£55.1m) and injects that business into the Aim-listed cash shell Rubicon in which the easyJet founder took a 5 per cent share stake.

Through a reverse take-over, Lonrho will end up with a 74 per cent stake in Rubicon, which plans to relaunch the business as Fastjet.

Ed Winter, the chief executive of Rubicon, said customers should expect average fares as low as $70-$80 on link-ups between fast-growing cities such as Kenya's Nairobi and Angola's Luanda.

"It is the optimum time to launch because Africa is hugely under-served from an aviation perspective. It is the last frontier for aviation," said Mr Winter, who was formerly a director of the British Airways offshoot Go and then chief operating officer of easyJet.

"Africa has a rapidly growing middle class with GDP growth fuelled by oil discoveries. It has few good roads or railways and cheap air travel is a real alternative."

African aviation is noted for its poor safety record and awkward connections. Investment has been hobbled by complex cross-border regulation designed to protect national carriers from competition or foreign takeovers.

African aviation is valued at $56bn a year, and passenger numbers on the continent are expected to grow from nearly 68 million in 2010 to more than 150 million in 2030.

The sector is projected to grow by 4 per cent this year and keep growing at 1 per cent above the global average for the next 10 years, analysts said.

The Kenya-based investment adviser Aly-Khan Satchu said that anyone flying regularly in Africa can see both the potential and the drawbacks of the current service, which is often poor in quality and excessively expensive.

"It's a no-brainer. If you fly around Africa you see fuller planes but some of the highest fares in the world," he said.

Flag carriers such as British Airways have been expanding their coverage of the continent and upgrading planes in recognition of increased business traffic.

However, the South Africa-based analyst Linden Birns warned that many low-cost operators in East Africa, Nigeria and South Africa were struggling to find the finance to upgrade their fleets of 1980s "gas guzzlers" and offer competition to the pricier alternatives. "Africa has got so much pent-up potential that if a low-cost airline can get in and compete it's going to create new air corridors," he said.

Sir Stelios said his recipe of "halving fares" would encourage people who have never travelled by air to fly: "For Africa, with its densely populated cities separated by great distances, this means a new market of millions."

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower