West Africa flight ban leaves Kenya Airways in a fix

Kenya Airways is staring at a ticket refund nightmare following flight cancellations to two key West African routes due to the Ebola outbreak and likely loss of revenue if the suspension of flights is not lifted soon.

KQ aircraft fly 44 times a week to 10 West African cities, comprising nearly a third of the airline’s 36 destinations on the continent.

The airline has at least seven flights to Liberia and Sierra Leone per week, comprising at least 16 per cent of its West African flights.

Having resisted cancelling flights even after the exit of other major airlines, including British Airways and Lufthansa, KQ may have been looking at increased bookings as travellers going in and out of the Ebola-struck region saw their options of air travel become limited.

“We shall be providing a full refund of all tickets earlier booked and paid for prior to this suspension,” said KQ chief executive officer Titus Naikuni in a statement issued on Saturday.

In the financial year ending March 2014, African operations excluding Kenya contributed 54 per cent or Sh57.2 billion towards KQ’s total revenue of Sh106 billion.

While KQ has not provided a breakdown of how much of its revenue is derived from West Africa, estimates based on the number of destinations and frequency of flights show that the West African routes may be contributing up to Sh16 billion in revenue for the airline on an annual basis.

READ: Kenya Airways suspends flights to Liberia, Sierra Leone

Based on a flat estimate, the airline could be booking annual revenue of Sh2.4 billion from the two suspended destinations on an annualised basis, based on their share of weekly flights.

Revenue from each destination differs from the other, however, due to differences on ticket prices, frequency of flights, different landing fees and fuels costs.

The airline had earlier resisted pressure from the public and a section of MPs to suspend flights to the affected West African routes, saying that provision of air transport services was a crucial component in managing the outbreak through transportation of medical personnel and supplies.

KQ said that it had relied on a Ministry of Health directive issued on Saturday in its decision to temporarily suspend commercial flight operations to Liberia and Sierra Leone effective midnight Tuesday.

KQ has identified African destinations as key in its long-term plan to grow its number of destinations to 115, and has plans to extend the airline’s footprint to every African capital by 2016.

Beyond the losses for KQ however, a suspension of additional West African routes is also likely to be felt in the wider economy as it will affect trade between Kenya and West African economies.

KQ has indicated it may review other West African routes going forward, although remaining silent on whether operations of its Accra-Monrovia and Accra-Freetown flights will continue.

“In the interest of public safety for both our esteemed guests and staff, we reserve the right to cancel our flights to any other destination should the situation warrant,” Mr Naikuni added in the statement.

Kenyans will be keen to see whether the suspension will be extended to Nigerian cities for instance, given that Kenya and Nigeria have recently signed agreements to expand trading between the two economies.

The decision by the government to bar entry into Kenya for all air passengers from Sierra Leone, Liberia and Guinea does ease some pressure on KQ, however, given that regional rivals such as Ethiopian Airlines and Rwanda Air which also serve the West African routes were poised to gain competitive advantage by continuing flights between the affected routes and Nairobi.

It remains to be seen whether the other African airlines will follow KQ’s action and whether their respective countries will impose any restrictions on Kenyan flights as a retaliatory move.