Feb. 6 (Bloomberg) -- Five Forty Aviation Ltd. said it withdrew Fastjet Plc’s rights to use the Fly540 brand in a dispute over licensing fees and has notified airline regulators in Tanzania, Angola, and Ghana of the change.
Five Forty Aviation is owed $7.7 million in payments from Fastjet, which also hasn’t provided required safety information, the Nairobi-based company said in a statement today. Fastjet said in an e-mail that the claims are “unsubstantiated” and that it has responded “through the appropriate channels.”
Fastjet, which has its registered headquarters in London, is developing an African low-fare airline network after an agreement was reached in June that included rights to the Fly540 brand through a license from Five Forty Aviation. Fastjet started commercial service in November, and has been looking to expand into markets such as South Africa.
Five Forty Aviation said today that it’s demanding that Fastjet remove Fly540 logos and brand literature and that units in Angola and Ghana repaint planes in a “neutral color.”
“We had no choice but to take this action because the most worrying aspect of non-compliance with the licensing agreement is that we have no way of assuring that the planes are safe to fly,” Five Forty Aviation Chief Executive Officer Don Smith said in the statement. Amid a lack of safety reports for three months, “we believe that one plane, which flew with defects from Tanzania and landed in Nairobi on Dec. 14, should not have flown.”
A Fly540 regional jet, without passengers, undertook a flight to undergo maintenance, and none of Fastjet’s Airbus SAS A319 airliners was involved on the date in question, the U.K. company said today in an e-mail. “Fastjet takes safety very seriously and will investigate any claims relating to defects,” it said.
In addition to the licensing fees, Fastjet has failed to issue shares to Five Forty Aviation promised under last year’s agreement, said Harry Chathli, a London-based spokesman for the Kenyan company.
Fastjet said it paid Smith and partners more than $6 million for their Fly540 interests and “will now aggressively seek to have our purchase contracts enforced.” Five Forty Aviation “is powerless to terminate purported brand license agreements for any Fly540 operations,” the U.K. company said.
The dispute affects principally Fastjet operations in Ghana and Angola, where the Fly540 brand is used, while Tanzanian flights are operated under Fastjet’s own name.
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