Budget airline Jambojet, started operating freight business on passenger flights locally and regionally in February 2022 after getting the nod from Kenya Civil Aviation Authority (KCAA). The carrier targeted routes such as Mombasa, Kisumu, Eldoret and Malindi, as well as Goma in Eastern Democratic Republic of Congo.
The airline uses its Dash 8-Q400 plane which has a capacity for 78 passengers and 1.2 tonnes of goods per flight. Managing Director Karanja Ndegwa spoke to Business Daily about the experience.
What has your experience been like since you ventured into cargo business early 2022?
Cargo business is more regional than domestic. At the domestic front, it has not been good because people prefer roads compared with air transport. But we have seen lots of demand especially into the region. You find there’s a lot of connecting cargo, but there’s also point-to-point back to the region. So demand is quite there especially for transit cargo.
What share of revenue does freight contribute?
As we move more into the region, we will find cargo becomes a big revenue earner. Cargo contributes about four percent as a share of total business.
This business appears to rely more on DRC than other routes in the region?
Goma alone contributes about 70 percent of our total cargo revenue. So we see that especially with general cargo and fresh cargo. About 62 percent of the cargo we uplift is general cargo, mainly normal cargo and courier. Fresh produce, which account for 23 percent, include horticultural products and flowers into Goma.
What benefits have you witnessed with DRC joining the EAC bloc?
The tariffs are the same even after the DRC joined the bloc. The only change was on passenger especially on the Kenyan side where they don’t pay the fee that they were paying. We have also not seen lots of movement when it comes to cargo business because of the DRC joining [the bloc]. Most of the cargo in the region is transit cargo. So Eastern DRC is either fed through Dar es Salaam or Mombasa.
Talk to us about pricing, especially on the Goma route?
The most interesting thing is that if you look at the Eastern DRC, the number of players are very few. If you look at Goma, there are only two carriers: JamboJet and Ethiopian Airlines. And so you find capacity is not enough. So the prices still remain the same.
The charges across the board are about $2 [Sh258] per kilogramme. That is the same prices that we used to charge and that has not changed since we started. We limit the bookings just to make sure that we are not leaving any cargo whatsoever.
That means there’s scope for growth for cargo on that route…
One of the things is that looking at Goma, if we got a freighter, you will fill it into Eastern DRC comfortably. But as a business case, you cannot get an aircraft to serve one route unless you're doing multiple flights. But it [Goma] is not that big to do multiple flights a day.
If you were to do two flights a day, then that business case would turn positive. But the challenge you will get is that you’ll do about 40 percent coming back or even 30 percent. So you’ll find that empty space also hurts business case.
So basically cargo plan is off the radar…
Until we get a second route that is as good as Goma, it will not be appropriate for us to invest in a freighter aircraft. But it is something that we are considering and working on. But at this time, it is not the most appropriate time to invest in that. In the next two, three years, I believe that as JamboJet we will have moved into a freighter business within the business.
As we open new markets into the region in the short-term, we should be able to add freighters between Nairobi and other markets in the region because you find cargo is required more into the region compared to our domestic market. So, as we open other routes, that also give us an opportunity to have a strong business case for a freighter aircraft.
What are the timelines for new regional routes?
I don't have timelines, but there are quite a number of open markets like Juba, Kisangani in eastern DRC and Mwanza. I'm looking at the places where there are no hubs, but there is demand for cargo.
As for timelines that definitely is not easier because the business case is still not positive. But it's something that we are working on, and those are the areas one that are very interesting.
Are there plans to acquire a new plane?
Our plan and strategy is to continue growing with the [Dash-8] Q400 and if we were to get into even the freighter business we will go for that. The reason is because we have really invested in a simulator for training pilots here.
We have invested a lot in their maintenance, spare parts and we will continue with the Q400. For our growth, we will be adding additional Q400 in the short term. The plan is to get our ninth aircraft this year and next year we get the 10th.
