Astral cuts air freight costs 20pc as oil price plunges

An Astral Aviation cargo plane. The firm is passing on benefits of the low cost of fuel to customers with reduction in air freight charges. PHOTO | FILE 

By GERALD ANDAE

In Summary

• The cargo firm is now charging $1.75 (Sh178.5) per kilogramme to Juba, down from Sh229.5, and Sh137.7 to Mogadishu instead of Sh255 levied previously.

Astral Aviation has cut its air freight charges by 20 per cent, citing a significant drop in...
jet fuel prices as crude oil value continues to tumble in the global market.

The cargo firm is now charging $1.75 (Sh178.5) per kilogramme to Juba, down from Sh229.5, and Sh137.7 to Mogadishu instead of Sh255 levied previously.

The firm’s chief executive officer Sunjeev Gadhia says they are passing the benefits of the low cost of fuel to their customers.

“Oil price have significantly dropped in the last one year and we felt that it’s proper to pass the same benefits to our clients,” said Mr Gadhia.

Fuel accounts for about 40 per cent of the cost of airline operations and is a key determinant on the charges that the aviation industry levy their customers.

The cost of freight on the London route remains low with the airline charging $1.50 compared to regional countries that are closer to Kenya because they (airline) come back with cargo from Europe.

Transport Cabinet Secretary James Macharia says flights have their charges in tandem with low oil prices.

Mr Macharia said all costs, both for freight and passengers should be down to reflect the low oil prices.

“The oil prices have significantly dropped and so should the the charges that airlines are levying their clients,” said Mr Macharia.

Siginon Aviation says they have not adjusted their costs because they use other cargo airlines to transport their goods.

“The drop in fuel has no direct impact on us because we have a contract with cargo airlines in transporting our customers’ goods,” said the firm.

Mr Gadhia said the cost of exporting cargo to countries such as Somalia and Sudan are slightly higher because of the political instability that has seen insurers charge a premium for cover on the airlines operating on these routes.

Mr Gadhia also noted that transporting cargo to the Horn of Africa remains expensive because their cargo planes normally return empty as there is hardly a consignment to bring back.

The logistics firm last year increased its flight frequency across the region following rising demand for air freight and a reduction in some of the local routes.

The firm increased trips to Juba and Mogadishu from October 12 and is servicing Hargeisa and Djibouti from Mogadishu.