Nigeria has announced plans to revive its collapsed national
carrier on the same day Uganda ordered two Airbus planes, stepping up
pressure on Kenya Airways (KQ) whose mainstay is African routes.
Nigeria
on Wednesday launched its national carrier dubbed Nigeria Air, which is
set to take to the skies in December targeting the West African market.
Uganda
Airlines also announced the signing of a memorandum of understanding
for two A330-800neo Airbus planes for its long –haul network.
KQ is already facing strong headwinds on its African and Asian routes as the average fare has declined due to competition.
In
its annual report for the year ended December 2017, the national
carrier stated that more than half the revenue decline was as a result
of the drop in average fares on the routes.
“This
downward trend in fare is the result of increased competition and
overcapacity on “Intra-Africa” and “AfricaAsia” traffic flows. The key
competitors that Kenya Airways must contend with on these traffic flows
include Ethiopian Airlines, RwandAir, Qatar Airways and Emirates,” said
KQ in its financials.
Increased capacity by its
competitors has already taken a chunk of the carrier’s revenue. The
recent acquisition of planes by Uganda and Tanzania as well as the
signing of a partnership between Ethiopian airlines and the Zambian
government to revive the national airline for Zambia is only making the
skies bumpier for the airline.
According
to Ephraim Bagenda, CEO of Uganda Airlines, the agreement with Airbus
demonstrates economic growth supported by a robust aviation industry.
Tanzania
Airlines received its first Boeing Dreamliner about two weeks ago. The
plane will poise the airline to connect Tanzania directly with other
East African nations including Uganda and Burundi without having to fly
through Nairobi, Addis or Kigali.
According to IATA,
2017 saw traffic for African airline grow by 7.5 per cent, yet the
capacity rose at only 3.6 per cent. This, an indicator of the demand for
more capacity on the various routes in the market.
KQ’s competitors have grown their capacities on these flows over the last two years while its capacity has declined marginally.
According
to KQ’s annual report, Ethiopian’s capacity is up by about 20 per cent
while RwandAir’s capacity is up 22 per cent. Emirates and Qatar also
have grown their capacity by six per cent and 12 per cent respectively.
This resulted in significant downward pressure on fares as airlines
fight for traffic to fill the flood of seats in the market.
In
2016, KQ suspended flights to Abuja and Gaborone as part of changes to
its route network. During the time, Gaberone was served via Johannesburg
with partners.
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