Fly540 staff board a plane. The carrier says JamboJet’s low-cost tickets will put its business at risk, arguing that KQ ownership poses unfair competition. Photo/FILE
What you need to know:
Fly540 claims that JamboJet’s low-cost tickets will put its business at risk, arguing that budget carrier’s ownership by Kenya Airways (KQ) poses unfair competition for smaller airlines.
JamboJet chief executive Willem Hondius said Fly540 should have raised the concerns during licensing hearings by the Kenya Civil Aviation (KCAA).
KQ and Fly540 have been the main players dominating the Nairobi to Mombasa, Kisumu and Eldoret route since the collapse of Jetlink two years ago. This has seen both airlines increase frequencies on the profitable routes.
Regional airline Fly540 is set to petition the Competition Authority of Kenya to investigate national carrier Kenya Airways’ new low-cost subsidiary JamboJet for what it calls “anti-competitive behaviour.”
Fly540 claims that JamboJet’s low-cost tickets will put its business at risk, arguing that budget carrier’s ownership by Kenya Airways (KQ) poses unfair competition for smaller airlines.
JamboJet is a fully-owned subsidiary of Kenya Airways that is set to launch its inaugural flights on April 1.
“We are looking at our options to go to the Competition Authority as we believe it (introduction of JamboJet) could bring anti-competitive behaviour due to the shareholding of Jambo,” said Don Smith, Fly540’s chief executive in an interview.
JamboJet is offering tickets that are priced as low as Sh2,850 for one-way flights from Nairobi to Kisumu, Mombasa and Eldoret, which is less than half of the cost of commercial flights offered by Fly540 and Kenya Airways on the same routes.
Kenya Airways has already withdrawn its flights to Eldoret in what is seen as a strategic move to ease its subsidiary’s entry on the route.
JamboJet has said it is targeting bus passengers and first-time flyers who are price sensitive and not particular about extra frills such as free meals and drinks that are offered on normal commercial airlines.
But its flights to Kenya’s three biggest towns puts it in direct competition with Fly540 as well as its parent company, Kenya Airways.
Mr Smith said the introduction of the new airline would undermine the industry and lead to monopolisation by KQ.
Fly540 also flies to Lamu, Lodwar, Juba and Zanzibar from the Wilson and Jomo Kenyatta International airports.
JamboJet chief executive Willem Hondius said Fly540 should have raised the concerns during licensing hearings by the Kenya Civil Aviation (KCAA).
“When we had the public hearings for the Air Service License where a lot of airlines were represented, no complaints or objections were brought forward,” said Mr Hondius.
He said JamboJet’s model would not kill the domestic aviation industry but “grow the pie” with “30 to 40 per cent of its passengers” being those who have never flown before.
New passengers
“We are in the market to attract new passengers. People who have never flown before or people who will fly more frequent than they do now,” said Mr Hondius.
Mr Smith cast doubts on JamboJet’s financial model arguing it was likely to fail like KQ’s other budget carrier Flamingo Airlines, which was absorbed into the group in 2004.
JamboJet’s low cost tickets have attracted major attention, with bookings surpassing 8,500 by the sixth day of being opened to the market.
The airline will come with fewer comforts compared to those found in KQ and rival Fly540, including paying for extras like food, baggage and seat selection.
KQ and Fly540 have been the main players dominating the Nairobi to Mombasa, Kisumu and Eldoret route since the collapse of Jetlink two years ago. This has seen both airlines increase frequencies on the profitable routes.
