Jens Flottau Dar es Salaam, Tanzania

Fastjet has just launched its first scheduled services. But whether the low-cost model will become a resounding success will depend on much more than just airline economics. The willingness of African governments to liberalize is a key factor in Fastjet's development.

The carrier's first scheduled flight took place Nov. 29. Initially, two daily round-trips from Tanzania's economic center, Dar es Salaam, to two domestic destinations, Mwanza and Kilimanjaro in the north of the country, are available. Fastjet plans to expand operations to Kenya with services from Nairobi to Dar es Salaam and Zanzibar, as well as domestic flights to Mombasa. The two countries combined will create sufficient demand for Fastjet to grow its fleet to about 15 aircraft by the end of 2013, CEO Ed Winter believes.

Bookings have exceeded expectations, Winter says, and the airline anticipates near-capacity flights in its first few days of scheduled operations.

But Fastjet's ambitions go far beyond Tanzania and Kenya. The carrier wants to establish a new business model and become the first true pan-African airline. While Kenya and Tanzania are important markets in the eastern part of the continent, there appear to be abundant opportunities in population-rich Ghana and Nigeria in West Africa.

In a way, Fastjet will have to grapple with situations that are similar to those that Southwest Airlines faced in the 1970s, Ryanair and EasyJet in the 1990s, and Air Asia and the likes in the 2000s. For Southwest, the problem was a highly regulated market and legacy opponents such as Texas Air or American Airlines that tried to block the then-nascent airline's every initiative. Fastjet's environment is regulated in every aspect imaginable.

Open skies initiatives in this region rarely exist; although there is one paper, it has never been ratified. And legacy competitors such as powerful Kenya Airways or Ethiopian Airlines will consider Fastjet a serious threat to their business. In most cases, travelers require visas that can cost up to $250, on top of departure taxes as high as $70 (Ghana and Nigeria) or even $130 (Senegal). “That makes the model less effective, it inhibits price elasticity,” admits Winter.

The challenge for Fastjet will therefore not only include infrastructure constraints and influencing people's travel patterns, it will involve establishing the model in spite of the added ancillary costs. Air passenger tariffs in the U.K. and Germany are a fraction of what some African governments charge, yet they still have a severe impact on air travel demand.