STIFFER competition from new entrants in the local aviation space adversely impacted Fastjet Zimbabwe’s top line, subsequently plunging it into a US$4 million loss in 2023, the company’s latest annual report shows.
According to the company’s delayed 2023 annual report, revenue rose marginally by 1,8 percent to US$50,9 million in 2023 from US$50 million in 2022 which was below projections as larger international carriers with better economies of scale entered the market, driving down fares on key routes.
“The (revenue) increase was not as expected because of the entrance of competition into the market,” Fastjet stated in its just released 2023 annual report and financial statements.
Fastjet Zimbabwe recorded an 18 percent increase in passenger numbers, rising from 273 821 in 2022 to 323 409 in 2023.
This growth was largely attributed to the increased popularity of key routes, such as Johannesburg to Victoria Falls and the addition of more frequencies on the Bulawayo to Johannesburg route.
Ethiopian Airlines, Africa’s leading carrier, launched a new flight to Bulawayo, via Victoria Falls in October 2022.
Other airlines operating in Zimbabwe’s key routes include British Airways, South African Airways, Kenya Airways, RwandAir, ComAir and Lufthansa, among others.
The resumption of normal travel patterns post Covid-19 played a pivotal role in driving this demand.
Despite the increase in passenger numbers, revenue per passenger fell sharply by 14 percent, from US$182,7 in 2022 to US$157,5 in 2023. This decline was driven by heightened competition stemming from the Zimbabwean Government’s Open Skies Policy, which allowed foreign carriers to operate on Fastjet’s core routes.
“This has significantly increased the number of carriers operating on key routes operated by Fastjet Zimbabwe increasing competitive pressures in an already low-yield market,” Fastjet said.
Operating in a hyperinflationary environment remains a significant hurdle for Fastjet Zimbabwe. The rapid devaluation of the Zimbabwean Dollar then, forced continuous adjustments to ticket pricing strategies, especially for tickets priced in local currency.
While maintaining the US Dollar as its functional currency provided some stability, the volatility of the local economic environment added complexity to revenue management.
The airline’s transition from a pure low-cost model to a ‘value airline’ offering has been slow, potentially leaving gaps in capturing market segments that could contribute higher yields.
Fastjet Zimbabwe recorded a US$4 million loss, reversing a US$2,9 million profit in 2022.
newsdesk@fingaz.co.zw