Fastjet: Strategy and Expansion
(5 pages of text)
In 2012, Fastjet acquired Fly540, a low-cost airline with operations in Tanzania, Kenya, Angola, and Ghana, and began operating as a low-cost carrier with the goal to become the most successful pan-African low-cost airline. Since starting operations, Fastjet had grown tremendously, achieving strong market acceptance and a reputation for reliability and punctuality. Although yield per passenger had increased over its first two years, Fastjet had continued to report operating losses due to its poorly performing operations in Kenya, Angola, and Ghana. In September 2014, Fastjet had the opportunity to expand into other African regions, and the company’s chief executive officer needed to consider his options to successfully grow the company’s operations.
The case is intended for an undergraduate-level strategy course. The case offers significant flexibility with regard to the instructor's preferred area of focus. Depending on the class, the instructor can focus on a range of resources and capabilities, including finances, operations, and human capital. After working through the case and assignment questions, students will be able to do the following:
- Understand the business context in Tanzania and East Africa, and how a low-cost business model can thrive in the airline industry.
- Perform a financial size-up of a company to determine a good time to expand.
- Assess various expansion plans, both qualitatively and quantitatively.
- Balance the trade-offs and opportunities among the timeliness of implementation, management preferences, and resources and capabilities, while positioning the company for sustainable growth.
Ghana; Kenya; Tanzania; Angola, Medium, 2012
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