What’s holding back Africa’s low-cost airlines?

Africa is flourishing. Most countries are at peace, and average GDP growth is around 6%. Record numbers of children go to school. Life-expectancy has risen by a tenth over the past decade and foreign direct investment has tripled. Consumer spending will double over the next ten years. As part of this growth, low-cost airlines – to fly business people or holiday-makers within and between countries – are springing up. But they are running into problems. 1time and Velvet Sky, two South African low-cost carriers, went bust last year. FastJet, which markets itself as the first pan-African low-cost carrier, has been stalled by lawsuits and losses.

What is holding back Africa’s low-cost airlines? There is no lack of demand, on some routes at least. Fly540, based in Kenya, had an annual turnover of $32m last year (up from $12m in 2007). Its flights from Nairobi to Mombasa, and to Zanzibar in neighbouring Tanzania, are popular with Kenya’s emerging middle class. Traders from Lodwar, a desert outpost in the north, take advantage of the Nairobi flight’s stop-off at Eldoret to stock up at the supermarket. A flight with Fly540 costs around half as much as a comparable flight on the state carrier, Kenya Airways. Comair, a South African airline, has just ordered four more 737s for kulula.com, its quirky low-cost subsidiary. Mango, another South African low-cost carrier, is also expanding its fleet.

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