LOW-COST carrier fastjet’s brand licensing agreement with Federal Airlines has given it a foothold in South Africa, giving it access to a local network and the ability to launch domestic flights in South Africa, with the possibility of further enhancing its regional network too. It is a development expected to disrupt the aviation landscape in South Africa.

The agreement includes an option to purchase, which fastjet has not exercised.

Nico Bezuidenhout, CEO, says the agreement brings opportunities to both parties: Federal Airlines has an existing network and an established presence in SA, while fastjet has a presence in multiple geographical locations, distribution and an interline agreement with Emirates.

Bezuidenhout did not go into details about any future flights, but comments: “Federal Airlines will be looking to expand into additional routes in South Africa and regionally, using the fastjet brand.” He adds that new routes will be accessed on a case-by-case basis, taking into account the, financial viability, competition landscape as well as passenger volumes on the route.

The deal will disrupt the aviation landscape in South Africa. Barsa CEO, June Crawford, says the development gives fastjet, through Federal Airlines, the ability to operate domestic flights. She points out that foreign companies need to prove a 75% South African shareholding to operate domestic flights in SA, which fastjet does not have. June says this agreement is a creative way for fastjet to enter the domestic aviation market in SA.

Referring to the brand licensing agreement with Federal Airlines in SA and Solenta Aviation in Mozambique, Bezuidenhout says initially fastjet will launch domestic flights, but that as Mozambique shares borders with all the countries in which fastjet operates (SA, Zimbabwe, Zambia and Tanzania), it does make sense in time to link these countries to each other.

Bezuidenhout says Federal Airlines flights, which service safari lodges in South Africa, will continue to operate under the existing brand. Rebranding these flights as fastjet flights is an option but will depend on engagement with the trade. He adds that fastjet will seek to leverage its distribution channels to make Federal Airlines’ seats more accessible and that making these seats available on the GDS is a possibility.

Rudi Van Schalkwyk, CEO of Federal Airlines said: “Federal Airlines and fastjet entered into a brand licence agreement and not an acquisition per se: What this means in reality is that the Federal Airlines brand will ultimately be replaced by the fastjet brand.

“Federal Airlines is to rebrand its own lodge flights (in due time), but it will allow FAL to operate and use the fastjet brand for airline operations in South Africa into 2018.”

Van Schalkwyk said it was important to note that for all existing clients of Federal Airlines, there would be no changes to the existing charter or shuttle flights, and all booking platforms would stay the same.

“The Federal Airlines brand will be replaced by the fastjet brand, or iteration thereof, and operate as a band within the fastjet group of brands,” added Van Schalkwyk.

Speaking on the opportunities the acquisition presented for Federal Airlines and fastjet, Van Schalkwyk said: “I believe it is more a case of what opportunities this will present to the tourism and business industry. This news has been accepted very well with our existing clients and they view this as exciting changes in the industry.”

He said the management teams and staff of both Federal Airlines and fastjet collectively held substantial aviation experience in both Africa and global markets. “We strongly believe that the agreement will be beneficial to the South African and African tourism and business industry, by offering our clients more options and seamless connectivity on existing and future route networks.