Kenya's flag carrier focuses on further growing its intra-Africa network as traffic falls in its troubled home market
The evolution of Kenya Airways into an African carrier not dependent on the Kenyan market has helped it survive the collapse of the country's tourism industry following the unrest of late last year after government elections.
While frequencies were cut on a number of routes amid a 15% fall in passenger numbers early this year, capacity on the airline's network has now more or less been restored. A power-sharing agreement reached at the end of February between President Kibaki and the leader of the opposition Raila Odinga eased tensions in the country after more than two months of violence. "The only route we have suspended for a longer time is Paris and we intend to open up Paris by 10 June," says Kenya Airways chief executive Titus Naikuni.
Around 100,000 jobs have been lost in Kenya's tourism business after the sector was badly affected by the outbreak of violence in December and subsequent dissuasive travel advisories. This has eased since the power-sharing deal, but a recent faltering of talks between the two sides on forming a cabinet shows that political fragility still remains.
Kenya Airways and its Dutch partner KLM say they are working with tourism authorities on a major initiative to revive the sector and counter the negative publicity stemming from the unrest. The two SkyTeam carriers say tourist areas and airport operations have been unaffected.
"The problems tended to be very localised, in the western parts of the country," says Jake Grieves-Cook, managing director of Gamewatch Safaris and former chair of the Kenya Tourism Board. "Where the vast majority of tourism is - the game parks and beach resorts - we didn't have any problems. The tourism infrastructure was completely intact. Tourists continued with their holidays [when the unrest began]. Then when they left, they were not replaced."
Adds KLM's regional manager for Eastern Africa, TJ Heukelom: "Kenya Airways and KLM have tried to set up a recovering plan from the post-election violence. We are trying to get Nairobi, Kenya and East Africa back on the map."
Naikuni says it was largely on the carrier's long-haul European routes where the airline was affected. "It has had an impact on us, we lost about 15% of our business compared to the same time last year, but most of that is from Europe and mostly is around tourism," he says. "15% sounds small, but it's not so small and it came at a time of our [tourism] peak. We lost in terms of revenue between Ks2.5 billion and Ks3 billion ($38 million)."
But he adds that the carrier's strong development of its intra-Africa network over recent years, notably linking East and West Africa, has helped insulate it from the difficulties. Around 70% of its transit traffic is to other points in Africa and Naikuni says the airline will remain profitable for the current financial year.
"When you look at what happened in December, that really shows we are no longer a Kenyan airline, we are an African airline. The traffic out of Kenya almost disappeared, but we were able to survive because of the traffic out of the rest of Africa. That's why it didn't hurt us as badly as perhaps it would have seven years ago," says Naikuni.
He adds that Kenya Airways is working on further positioning itself as an African, rather than Kenyan, carrier by negotiating partnerships with undisclosed carriers in West and mid-southern Africa. Naikuni says the talks are at an advanced stage and the new projects should be finalised later this year, giving Kenya Airways a hub in West Africa and furthering its goal of building an intra-Africa network. Kenya Airways already holds a 49% stake in ATR operator Precision Air in neighbouring Tanzania.
Of the carrier's 41 destinations, 29 are already regional routes within Africa and four are domestic sectors. "Now we have opened up quite a bit into Africa. The ambition I have is that one day you can fly into any African country with Kenya Airways. That's why we are looking at having a hub in West Africa," Naikuni says.
Liberalisation
Liberalisation of African skies, however, remains sluggish. "It's an emotive subject," says Naikuni. "There are countries with successful airlines, like Kenya, which want to go into open skies. But there are countries without successful airlines who ask: why should we open up to the likes of Kenya? I appreciate their concerns and so it's about how we address these concerns, without stifling the opening-up of Africa. Slowly we will get there."
The airline will slow its own growth rate this year and will add only two new routes - to Delhi and Brazzaville in Congo. Naikuni says the carrier will instead focus this year on improving the airline's on-time performance, customer service levels and adopting new IT solutions to replace manual ones. "We have a plan of action of what to do and we don't want to grow as fast as we have in the last few years. We want to prepare ourselves until 2010 when our [Boeing] 787s come, with our people trained and our systems in place."
Read our 2006 cover interview with Titus Naikuni at flightglobal.com/kenya
Source: Airline Business
