Kenya Airways, Fly540 cash in on grounding of Jetlink

Kenya Airways and Fly 540 are cashing in on the grounding of Jetlink Express last year, chalking up market share and higher yields.

The carriers are taking advantage of the reduced competition and increased demand for flights on some of the routes during this political season, besides business travel, on the Mombasa, Kisumu, Eldoret and Juba routes.

Though the airlines did not rush to the market with more flights they have managed to grow their passenger numbers, which had been affected by the competition, and recorded higher yields from apparent price adjustment.

“We had a shortfall on load factor on some of the flights; we are now ripping as the passenger numbers have increased. Yields have gone up a bit,” said Fly 540’s director of operations and regulations, Nixon Ooko.

Load factor is the number of passengers uplifted by the airline. He said the airline had adjusted fares a ‘little bit’.

Jetlink suspended services in November due to cash flow challenges after it was unable to access about $2 billion (Sh170 million) worth of ticket sales held in bank accounts in South Sudan, leaving a huge vacuum.

(Read: Jetlink suspends operations)

The airline was the first to venture into Juba, its most profitable route. With most sales being in South Sudan pounds (SSP), the financial woes in the new African nation saw the airline hit hard leading to the suspension of its operations.

On the Juba route, Fly 540 has increased its weekly frequencies from 12 to 13, with an additional flight on Tuesdays. Currently, Kenya Airways (KQ) has two flights daily and is looking to increase the number of flights.

Passengers on the Nairobi-Juba flight are increasingly connecting to other destinations. KQ has positioned itself to move them through Nairobi and unveiled a special fare this week of $262 (Sh22,794) compared to Fly540’s $600 (Sh52,200), according to the companies’ websites.

KQ opted to deploy bigger planes on some of the routes by flying the higher capacity Embraer E190 with 110-seats compared to the Embraer E170 with 80-seats.

The move was “to capture increased traffic during the quarter,” said the airline in a statement announcing its third quarter performance to December 2012.

During this period, KQ saw domestic passenger numbers increase by 10.9 per cent to 228,119, compared to the previous year. The airline saw its cabin factor, the percentage of passenger seats sold, increase by 6.9 per cent to 81.5 per cent.

Part of the growth was driven by the introduction of flights to Eldoret in October.

Jetlink’s management is optimistic it will be back in operations by March. The airline is in talks with South African investors to inject sizeable capital in the airline.

(Read: Jetlink woos SA investors in plan to resume flights)

Its managing director, Elly Alluvale, told the Business Daily it was holding talks with potential investors to start operations this quarter.

However, he did not disclose the investors or the amount needed, saying talks were ongoing and would likely be tied up in the next couple of weeks. The airline is also pursuing a new joint venture with budget carrier Fastjet.