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."

Independent Comment
blog comments powered by Disqus
News in pictures
World news in pictures
       
iJobs Job Widget
iJobs Money & Business

Programme Change Manager

£850 - £1000 per day: Orgtel: Programme Change Manager - Banking - London - £8...

Operations Analyst

£180 - £230 per day: Orgtel: Operations Analyst - Leading Bank in the City of ...

Finance Business Analyst - Banking - £500pd

£500 per day: Orgtel: A top tier banking client urgently requires Finance Busi...

Senior Finance Project Manager

£425 - £550 per day: Orgtel: Senior Finance Project Manager - £550 - Bristol -...

Day In a Page

Watch out Watford: Here comes the secretive Bilderberg Group

Watch out Watford: Here comes the secretive Bilderberg Group

A meeting of global power brokers in a Hertfordshire hotel is exciting conspiracy theorists, but what are they really about?
'The ultimate all-in-one home entertainment system': Microsoft finally unveils its Xbox ONE console

'The ultimate all-in-one home entertainment system'

Microsoft finally unveils its Xbox ONE console
Plenty of Fish dating site founder pulls 'Intimate Encounters' option to ward off sleazy men

Plenty of sleaze

Dating website pulls intimate 'hook-up' section to curb harassment
Inferno author Dan Brown 'honoured' to be invited to join the Freemasons

The Freemasons’ Code

Dan Brown reveals the message that told him door to the lodge is open
Not secure any more: G4S boss heads for exit at last

Not secure any more: G4S boss heads for exit at last

Nick Buckles survived the Olympics débâcle and a £5bn bid fiasco but a profit warning finally triggered his downfall
How to say ‘I’m a sellout’: Tumblr’s David Karp’s message of reassurance to his staff sounded very familiar

How to say ‘I’m a sellout’

Tumblr’s David Karp’s message of reassurance to his staff sounded very familiar
Why clubs are keen to take a stand

Why clubs are keen to take a stand

There's a real desire around the grounds for safe standing. But will the authorities listen?
In the end the fans decided Tony Pulis had made a pig's ear of the job at Stoke City

In the end the fans decided Tony Pulis had made a pig's ear of the job at Stoke City

Disillusion with a siege mentality and negative playing style made change inevitable
James Lawton: The James Hunt I knew is the subject of a new F1 movie

James Lawton: The James Hunt I knew is the subject of a new F1 movie

British driver was fascinating man whose epic duel with Niki Lauda in 1976 was typical of an era of glamour and glory – but also the ever-present threat of death
Stuart Hogg: Ready to climb his own Everest

Stuart Hogg: Ready to climb his own Everest

Lions' cub, 20, joins long line of players from Scottish borders club Hawick given opportunity to make his mark at highest level
Carl Froch handed rare chance of revenge with dream rematch

Steve Bunce on Boxing

Carl Froch handed rare chance of revenge with dream rematch against Mikel Kessler
'There is a battle going on inside us that is never discussed'

Masculinity in crisis?

'There is a battle going on inside us that is never discussed'
Have US shock jocks gone too far?

Have US shock jocks gone too far?

An incendiary remark from Rush Limbaugh may be the beginning of the end for outspoken right-wing US broadcasters
The ‘Beverly Hills’ of Surrey pays more income tax than big cities of the North

The ‘Beverly Hills’ of Surrey

Elmbridge pays more income tax than big cities of the North
Heavenly Bodies

Heavenly Bodies

Michael Landy's artistic marriage made in heaven... and hell