Over the recent few years the African middle class has been growing rapidly increasing the demand for low cost air travel across the continent giving rise to low cost carriers (LCC). In Angela Zhou’s blog she talks about a Canadian LCC called JetLines and on it’s direct sales business model meaning their strategy is simple. One type of aircraft, one type of class and multiple hubs which is the hallmark of the LCC model as it provides convenience without all the ‘bells and whistles’ other carriers provide saving costs enabling them to charge lower fares. Another UBC blogger, Ferdinand Billard talks about how Air France and KLM are launching their own LCC as currently they are unable to compete with EasyJet and Ryanair. How does this link to Africa?

Currently in Africa the middle class is growing and demand for flights is increasing. However, airline fares are some of the highest in Africa and current carriers are unable to tap into the
growing middle class market, therefore, LCCs are becoming popular within Africa. This links to Ferdinand’s blog as he talks about how EasyJet and Ryanair took the growing middle class market in Europe away from the mainstream airlines like Air France and KLM and this is what is happening in Africa.

The model Angela Zhou talks about has been widely adopted by new LCCs such as FastJet and Mango Airlines in Africa. FastJet is a LCC established in 2012 based out of Dares-salaam, Tanzania. Mango Airlines is based out of Johannesburg, South Africa and operates in Botswana and South Africa. Both airlines have caused market disruptions by  lowering fares by almost 100%. FastJet broke Kenya Airways monopoly route between Dares-salaam, Tanzania and Nairobi, Kenya where tickets were about $300 -$500 and FastJet is charging between $50 – $150. This has doubled the amount of people flying between the two cities showing that FastJet is tapping into the middle class in both countries.

However, LCCs in Africa do face large challenges politically and economically which hinder their growth. The LCC model works best when the airline has multiple hubs across their network however, in Africa many governments are not giving permission to airlines like FastJet and Mango airlines to set up hubs within their countries in a effort to protect their national carriers. These issues have hit FastJets income statement negatively with them posting a loss in 2015 due to politics hindering their growth and disrupting their strategy.

In my opinion, LCCs will take over the African continent and tap into the middle class over time as in Africa dealing with politics always takes time but at some point the governments will realize the economic gains.

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Sources: –

http://centreforaviation.com/analysis/low-cost-airlines-start-to-penetrate-african-international-market-led-by-fastjet-134416

Jetlines: Canada’s Ultra-Low Fare Airline

Air France-KLM Taking Off Again?

 

http://www.fastjet.com/img/stand_alone_files/file/original/2015-fastjet-annual-report-web-96.pdf

 

Pictures From: –

http://www.fastjet.com/us/en/destinations

http://www.fastjet.com/tz/en/blog/live-blog-mbeya-launch-day