Two new low-cost airlines are planning to enter the South African market despite the brutal operating environment that grounded two companies - Velvet Sky and 1time - this year alone.
Fastjet, a subsidiary of London-based Lonrho, has been in talks to acquire 1time since last month, when the company went into provisional liquidation.
At the same time, the founders of 1time, who left the company more than a year before it failed, have applied for an operating licence to start a new company to be called Skywise.
While Skywise will offer local routes, Fastjet CEO Ed Winter said the company was aiming to increase the route networks from South Africa into the rest of Africa.
He said management was hoping that the deal would be concluded in time to get some routes flying by Christmas.
He said, however, that negotiations were ongoing and that the deal was still subject to board, parent company and regulatory approval.
Fastjet last month established a base for its west and east African operations in Tanzania.
Mr Winter declined to answer questions.
However, the acquisition appears unlikely. Even if Fastjet management makes a deal with 1time’s creditors, buying the company is likely to saddle it with significant debt.
Further, before the company brings in its own fuel-efficient A319 aircraft, it will spend several months operating 1time’s thirsty MD80s.
Buying 1time would not give Fastjet immediate access to an operational licence.
1time’s existing licence would need to be amended, a process that entails publishing the company’s intentions in the Government Gazette and obtaining official approval from the Department of Transport’s Air Service Licensing Council.
One industry insider, who asked not to be named, said it would seem more logical for Fastjet to team up with Skywise, as it would then be entering the market with an unencumbered new licence.
However, Glenn Orsmond, one of 1time’s founders seeking to launch Skywise, laughed off the suggestion.
He said their quest for a new operating licence was progressing well despite disgruntled former 1time employees who had approached the Department of Transport to register their objection to the application.
In a petition, the former staff members claimed "1time’s colossal debt was amassed while the airline was in the hands of the founders, all of whom conveniently saw fit to sell off their vested interest and part ways with the company".
They also said that not only were the founders "responsible for the lack of job security, they (were) also the catalyst for the events that led to the provisional liquidation of 1time".
Mr Orsmond said he had seen the former employees at the Department of Transport, but none of their objections had been considered by the council.
He said he left 1time after the company’s BEE deal was concluded and the founding members had lost shareholding and board control.
Mr Orsmond said he had made a presentation to the board about the strategy he believed the company should follow, but the board did not agree with him and wanted to follow a different path.
His resignation was done in agreement with the board, he said.
Mr Orsmond said he and his colleagues were "here to create jobs" and were "going to hire a lot of these guys".
1time’s demise has minimised the competition, and prices are said to have risen as a result.
Who backs airline
LONRHO, the London-listed company behind Fastjet, has been operating in Africa for over 100 years. Platinum miner Lonmin, which operated Marikana, was formerly its mining division.
The company operates in five industry sectors: infrastructure, agribusiness, hotels, IT support services and more recently in transport with its aim to be a pan-African low-cost carrier.
Fastjet is backed by Lonrho and Sir Stelios Haji-Ioannou, a British entrepreneur of Greek Cypriot origin, who founded Europe-based low-cost carrier EasyJet.
Lonrho owned unprofitable airline Fly540, which operated several routes across west and east Africa. Fastjet has established a base in Tanzania, and the first flights under the new banner began last month.