Ethiopia deal with Malawian Air puts new pressure on KQ
Kenya Airways is set to face stiff competition in southern Africa following the return of Malawi’s national carrier with Ethiopian Airlines as a majority shareholder.
Ethiopian Airlines, which is KQ’s top rival in the region, will own 49 per cent of Malawian Air, marking a return of a government-controlled airline in Lilongwe, the capital, following the collapse of Air Malawi.
The airline collapsed due cash flow problems early this year and the government opted to start a new carrier rather than rescue it.
Its collapse opened the window for Kenya Airways to get new rights to connect passengers between Lusaka and Lilongwe, which had been withdrawn in October by the Malawi’s Department of Civil Aviation due to a disagreement with Air Malawi.
KQ also got rights to fly to Blantyre, Malawi’s second largest city and commercial hub, and started operations last month with three weekly flights over its 10 weekly flights to Lilongwe.
The Ethiopian partnership allows the airline to set up a base in Southern Africa, its third, a move that will see it compete with Kenya Airways for passengers and revenues.
“Through this strategic partnership with Malawian Air, Lilongwe will become Ethiopian Airlines third hub on the continent after its main hub in Addis Ababa and Lome, Togo,” said the airline’s CEO, Tewolde Gebremariam, in a statement.
The government of Malawi and other private investors will control the remaining 51 per cent stake in Malawian Air. It’s not clear how this will affect KQ’s rights to Lusaka from Malawi and Blantyre route.
But the presence of Ethiopian Airlines — which is bigger and so far one of the most successful carriers on the continent — will certainly put pressure on KQ and trigger a price war.
Mr Gebremariam said the partnership will see the new airline harmonise their flight schedules so as to provide seamless connectivity, especially in southern Africa.
Last year, the Malawian government called for strategic partners to bail out ailing national carrier Air Malawi.
Malawi is one of KQ’s lucrative routes in Southern Africa as it deepens its growth strategy of connecting more African cities to Asia and Europe through Nairobi. KQ has been heavily investing in Southern Africa with new routes and increased frequencies.
Ethiopian is also eyeing new markets. The second largest airline on the continent recently introduced flights to Sao Paulo, Brazil, a move that will see it position itself to move passengers to the South American country in time for the World Cup in 2014 and the Olympics in 2016.
The airline will serve the route through its Togo hub offering the only direct service between West Africa and the South American nation.
Ethiopian has also recently launched flights to Seoul, South Korea.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
