Boost for KQ as Jambojet gets regional licence

Kenya Airways’ budget airline Jambojet has got a licence for international flights, handing a New Year’s gift to the loss-making national carrier.

The Kenya Civil Aviation Authority (KCAA) has given Jambojet a one-year licence to ply international flights to nine major East African destinations as per a notice published on Friday.

Jambojet has been flying to Eldoret, Kisumu and Mombasa from its base in Nairobi since its launch in April last year. The new licence will see Jambojet add Juba, Entebbe, Dar es Salaam, Mwanza, Bujumbura, Kigali, Zanzibar, Kilimanjaro and Addis Ababa to its domestic routes. The carrier will serve the routes using its fleet of Boeing 737 aircraft based at Nairobi’s Jomo Kenyatta International Airport.

Jambojet’s debut on the international stage raises competition for rival regional carriers including Fly540, Rwandair, PrecisionAir, and Ethiopian Airlines. London-based Fastjet Plc has also announced plans to start operations in Kenya as part of its bid to become a major budget carrier on the continent.

READ: Low-cost airlines flydubai, fastjet join scramble for East Africa traffic

KQ is betting on Jambojet to boost its earnings on short-haul routes which are becoming increasingly competitive due to the entry of new players and expansion by established carriers. Jambojet is riding on relatively cheaper fares to boost passenger volumes by encouraging more people to fly as opposed to travelling by bus.

The cost of its air tickets can be as low as half those charged by the parent company and other commercial (non-budget) airlines.

Jambojet is currently charging as low as Sh4,000 ($45) for a one-way flight from Nairobi to Mombasa. The low-cost carriers’ tickets cost as low as two-thirds of fares charged by formal bus operators on some of the popular domestic routes. 

Jambojet, which has a fleet of three planes, is able to charge the relatively lower fares by offering fewer frills. Passengers pay for all extras like food, baggage and seat choices. KQ hopes this business model will help tap rising passenger numbers within the region and also ward off competition from budget carriers like Fly540.

The model will now be expanded to the East African market where increased economic integration and rising growth rates have boosted demand for air travel.

KQ spent Sh118 million on Jambojet’s initial startup cost. The national carrier posted this amount as a net loss in its latest annual report where it also revealed that Jambojet is shouldering liabilities of Sh881 million originating from its predecessor Flamingo Airlines which folded in April 2004.

Jambojet’s launch marked an about-turn by KQ, which merged its former low-priced passenger and cargo unit Flamingo Airlines with its group operations. Flamingo Airlines had been making losses over the four years of its existence. Liabilities of Sh881 million and deferred tax of Sh221 million from the defunct airline were transferred to its successor Jambojet.

In the half-year to September 2014, Kenya Airways reported a record net loss of Sh10 billion

Jambojet, which is currently spending big on marketing and special offers, stands to be of even greater importance to KQ in the short term following the cancellation of flights to West Africa over the Ebola outbreak.