The Kenya Airways Dreamliner B787 on touchdown at the Jomo Kenyatta
International Airport during the official reception in Nairobi on April
5, 2014. PHOTO | FILE
Last week, Dubai-based carrier, flydubai said it would increase its flights in Africa to 78 per week.
The
airline, which doubled its Africa routes last year, will have 12 touch
points in East and North Africa. The latest destinations are Alexandria,
Bujumbura, Juba and Zanzibar. This has seen its passenger numbers in
Africa shoot up by 14 per cent.
Flydubai
chairman His Highness Sheikh Ahmed Bin Saeed Al Maktoum said the
airline’s strategy this year is to increase flights, especially in the
underserved routes in Africa.
Dubai’s
Emirates has also brought the battle to the doorstep of the troubled
Kenya Airways when it announced plans to connect more people with
Kenya’s capital, Nairobi, by switching from the current Airbus A330-200
aircraft used in one of the two daily flights to a larger Boeing 777-300
ER starting May 1.
Abu Dhabi’s Etihad Airways and Qatar Airways have also been increasing their touch points in Africa.
The latest plan by the giant Gulf carriers means a fresh headache for Kenya Airways.
“The
coming of the Middle East carriers to fly destinations in Africa is a
real threat for KQ’s long-haul destinations,” said Standard Investment
Bank senior research analyst, Mr Eric Musau.
Kenya
Airways, Mr Musau added, should now consider scaling down its expansion
involving purchases of large aircraft for long-haul travels until the
current assets are fully used.
BASELESS ALLEGATIONS
Considering
that in 2014 Africa accounted for 54 per cent of the airline’s income,
the new threat in this airspace is likely to worsen the situation for
the loss-making carrier. Kenya Airways suffered Sh10.451 billion loss
for the half year ending September, 2014. It doesn’t help KQ that the
new competitors are said to be receiving huge subsidies from their
governments.
Three top US airlines
accused Dubai’s Emirates, Abu Dhabi’s Etihad Airways and Qatar Airways
two weeks ago of receiving subsidies from their governments amounting to
$42 billion (Sh3.9 trillion).
In a
55-page report, the US airlines and labour groups said the three Gulf
carriers had benefited unfairly from huge interest-free loans,
subsidised airport charges, government protection on fuel losses and
below-market labour costs considered unfair subsidies by the World Trade
Organisation.
In the report,
American Airlines, Delta Airlines and United Airlines, along with US
pilot and labour groups, urged Washington to raise the issue with the
UAE and Qatar.
The accusations have,
however, been denied. “These accusations are false and unacceptable.
They are baseless,” UAE economy Minister Sultan al-Mansouri was quoted
as saying by the Emarat Al-Youm newspaper.
Mr
Mansouri said the UAE was “ready to discuss such claims, on condition
of receiving reports that would prove that UAE carriers received
government support.”
Western airlines
have long complained about competition from the three Gulf carriers,
which are fast turning their home airports into major hubs for
transcontinental routes.
The waning fortunes of Kenya Airways could have prompted the government to move in to keep it afloat.
Early
last month, an inaugural aviation workshop held at the KQ Pride Centre
to supposedly deliberate on the way forward for the local industry
turned out to be a strategy to whip up all government officers to fly
KQ.
The meeting presided over by
Deputy President William Ruto discussed ways of increasing the airline’s
passenger numbers. The forum brought together several top government
officials including a host of Cabinet secretaries, permanent
secretaries, governors and senior aviation stakeholders.
Ruto
called on Kenyans to support KQ and appealed to all the local carriers
to price their tickets competitively to attract and win the loyalty of
Kenyan travellers.
CLEARANCE DELAYS
“As
we promote and pledge to support Kenyan carriers such as Kenya Airways,
we must as a government make it clear that we will not tolerate unfair
competition. Kenyan carriers must deliver high quality services and
attractive pricing propositions,” said Mr Ruto.
Similar
sentiments were expressed by Transport Cabinet secretary Michael Kamau,
who warned that the carrier could plunge into a crisis should Kenyans
fail to support it.
“If you don’t
support our national carrier, we will end up carrying it instead. Our
aviation industry is at crossroads and we have to determine the
direction we will take going forward,” Mr Kamau said.
Government
efforts to lift KQ out of trouble are not new. Qatar Airways’
application for licence to be the third foreign airline to fly to
Mombasa from August 2013 failed over what was said to be traffic right
issues.
In 2012, the Doha-based airline’s application to fly to Kilimanjaro via Nairobi was not permitted by Kenyan authorities.
Last
year, Fastjet’s plans for a low-cost flight business in the country
faced clearance delays from Kenya’s aviation authorities following
objections from local airlines including Kenya Airways.
The
resistance could have been motivated by the fact that Fastjet was
likely to give KQ’s budget carrier, JamboJet, a run for its money.
Jambojet flies Mombasa, Eldoret, Nairobi and Mombasa routes that Fastjet
is also eyeing
However, not all is
lost for the carrier that prides itself in being one of the top five
airlines in the continent. With 6,967 seats and a fleet of 50 aircraft,
17 of which are wide body planes, the airline flies to almost 50
passenger and 15 cargo destinations in Africa.
The
cargo division has consistently bagged awards for being the best in
Africa including the recent African Cargo Airline of the Year award. KQ
has also boosted its fleet by the wide body Dreamliner aircraft.
The
B767-300 fleet that was targeted for replacement by the Dreamliner
aircraft were also expected to cease business by November, last year.
The
latest increase in flight frequency in Africa by the powerful Middle
East carriers will definitely add to the headache of dwindling tourist
numbers to the country that has poured cold water to the new engines of
the country’s flag airline.
KQ IN FIGURES
Airline faces tough times
9.30: Share price on Friday
4.62: Percentage drop in share price last week
21.19: Percentage drop in share price this year to date
65: Destinations worldwide the airline was flying by September 2014
10.5bn: Loss in shillings recorded over six months to September 2014
50: Fleet number as at September 30, 2014
Partnerships could lift up airline
Kenya
Airways may well use partnerships with other airlines to boost its
dwindling passenger numbers, which is one of the airline’s greatest
challenges now.
A plan similar to the
partnership struck last year with Delta Airlines to have seamless
connecting flights to various destinations from Africa can be a big
boost for KQ.
In the partnership
with Delta, Kenya Airways offers connecting flights between Monrovia,
Liberia, and Accra, Ghana, operating three times a week on a Boeing KQ’s
737 aircraft. The move is meant to bridge Delta’s nonstop flights
between Accra’s Kotoka International Airport and New York’s John F
Kennedy International Airport.
“Delta
has had a presence in Liberia for four years and we are pleased to
continue this association with the country through our new partnership
with Kenya Airways,” said Perry Cantarutti, Delta’s senior
vice-president for Europe, the Middle East and Africa. This service has
replaced Delta’s three-time weekly operations from Monrovia’s Roberts
International Airport to Accra, Ghana. KQ therefore benefits from the
Delta’s 165 million passengers carried yearly.
Kenya
Airways’ regional general manager for West Africa, America, Europe
& Asia Pacific, Mr Julius Thairu said the partnership enhances the
airline’s connectivity across the globe.
“This
strategic partnership with Delta Airlines enhances our presence in West
Africa and cements our position as Africa’s premier airline, ‘’ Mr
Thairu said.
“By providing a seamless
connection from Liberia to Delta’s Accra to New York service, it
significantly boosts Kenya Airways’ efforts to link Africa to the rest
of the world.”
Similar partnerships
could help KQ to turn around its dire situation and reduce its focus in
the continent’s airspace it has struggled to command over time. Other
continental players such as South African Airways, Egyptair, Ethiopian
Airlines and Air Mauritius claim huge shares of the destinations and
passenger numbers.
— Edwin Okoth
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