Muthoka firm wins China Southern’s cargo business

China Southern Airlines has hired a firm associated with billionaire businessman Peter Muthoka to handle its cargo business, making his company one of the biggest beneficiaries of the entry of the giant Asian carrier into Kenya.

The airline, which landed at the Jomo Kenyatta International Airport (JKIA) on Wednesday on its inaugural flight from Guangzhou to Nairobi, is mainly targeting the increasing number of Kenyan businessmen who import goods from China.

Africa Flight Services (AFL), which is associated with Mr Muthoka, will handle cargo for the Chinese carriers’ customers.

Kenya Airways, which has had a code-share agreement with China Southern Airlines, Wednesday announced that it had retained the partnership but lost out on the freight business even though it has its own cargo handling unit.

“We won this business purely by merit based on China Southern Airline’s assessment of our facilities at the JKIA,” said Mr Muthoka.

AFL has the largest fresh produce and cargo handling establishment at JKIA, where it competes with national carrier Kenya Airways and Swissport.

Both the Chinese airline and Kenya Airways are members of the Sky Team Alliance, which would have made KQ the favourite to win the freight business.

AFL runs its cargo handling business in partnership with World Flight Services (WFS), a global ground handling company with a presence in more than 50 countries whose entry into the Kenya market is expected to increase competition at JKIA where Kenya Airways and Swissport have dominated for many years.

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Retention of the code-share partnership is however a big boost to Kenya Airways, which would have lost on passenger referrals further straining its financial base given it has been earning revenue through flying the passengers booked by the China-based airline’s representatives in Kenya.

Kenya Airway’s recorded a Sh25.7 billion after-tax loss for the year ended March 2015, attributed to poor management and competition from other airlines.

China Southern Airlines previously relied on its local marketers for booking and would later transfer the passengers to Kenya Airways and share the revenue generated.

The referrals will however drop with the direct flights by the Chinese carrier, though it will only fly three times in a week.

“We have had code-share agreement since 2009 and we extended this to include Lusaka, Sydney, Melbourne and Path in an extended partnership agreement signed in May 2013,”said Kenya Airways managing director Mbuvi Ngunze when he received the airline at JKIA.

Under the new arrangement signed on Wednesday between Kenya Airways and China Southern Airlines, customers who wish to fix their travel dates when the host airline is not flying can now use Kenya Airways to fly from Nairobi to Guangzhou.

“China and Africa have a time honoured history of friendly relations and close ties and both sides have achieved remarkable results in cooperation of all fields,” said China Southern Airlines chairman Si Xianmin.

“We are happy to open our second direct air route to Africa, having launched our first between Shenzhen and Mauritius last year. We hope our additional flights will provide our guests with convenience, besides increasing the number of business and leisure travellers into Africa and Asia,” added Mr Xianmin.