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African routes drive Kenya Airways revenue growth

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A fleet of Kenya Airways planes at Jomo Kenyatta International Airport in this photo taken on July 15, 2020. PHOTO | JEFF ANGOTE | NMG

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Summary

  • Industry data indicates that the airline earned Sh38 billion in revenue from its operations in Africa last year, which was a significant rise from the Sh27 billion that was realised in 2020.
  • The earnings from Africa accounted for more than half of the total revenue that the national carrier earned from the six continents where it operates.
  • The carrier earned Sh70 billion from all the routes where it flies in the review period, which was higher than the Sh52 billion that was realised a year earlier.

Africa remains the biggest driver of Kenya Airways' #ticker:KQ revenue, highlighting the important role that the regional countries play in keeping the carrier afloat.

Industry data indicates that the airline earned Sh38 billion in revenue from its operations in Africa last year, which was a significant rise from the Sh27 billion that was realised in 2020.

The earnings from Africa accounted for more than half of the total revenue that the national carrier earned from the six continents where it operates.

The carrier earned Sh70 billion from all the routes where it flies in the review period, which was higher than the Sh52 billion that was realised a year earlier.

India was the worst-performing route for the carrier last year, bringing in Sh1.7 billion, down from Sh2.3 billion that was realised in 2020.

The declined earnings from India could be attributed to strict measures put in place by New Delhi to contain the spread of Covid-19, which saw the airline suspend passenger flights to Mumbai in April last year following high cases of infections in that country.

Kenya Airways (KQ) has been operating flights to India under a special arrangement, normally referred to as ‘air bubble’ in aviation, which limited the number of passengers to 400 a week.

The airline, however, said last month that it was resuming normal flights to India with additional frequencies on the route.

KQ will now fly daily to India after the Asian country lifted the restrictions that had limited the national carrier to three flights a week, coming as a major boost to the airline that is struggling financially.

The carrier, which resumed flights to India in September last year, is now making 10 weekly flights to the destination, coming as a major relief to passengers seeking to travel to the country.

Europe was the second-highest revenue earner for the airline last year raking in Sh11.3 billion, followed by the Middle East at Sh7.7 billion, and Sh4.5 billion on the American route.

Revenue on the American route doubled from the previous year’s earnings of Sh2.3 billion. KQ has been weighing options on the viability of the American route after the destination took long to turn into profitability.

Kenya Airways told Parliament that it would know whether the New York route was commercially viable at the end of last year after the carrier resumed flights on the route after it had been cut short by Covid-19.

Kenya Airways started direct flights to the US in October 2018, cutting the journey to 15 hours on the long haul route tapped as part of an effort to revive the airline’s fortunes.

The national carrier was to start flying to Rome and Milan in June but it says the plans have been put on hold due to lower demand than it had earlier projected.

According to the initial schedule, KQ was to operate two weekly flights on Wednesday and Sunday using a large capacity aircraft Boeing 787 Dreamliner.

KQ re-introduced flights to Rome in 2019 after a seven-year hiatus, banking on increased traffic between the two continents and a new link in Geneva to boost its earnings.

The carrier narrowed its net loss for the year ended December by 56.58 percent on higher revenue as travel picked up with the easing of Covid-19 restrictions.

The national carrier reported a net loss of Sh15.8 billion in the review period compared to a net loss of Sh36.2 billion the year before when travel restrictions hit operations hardest, including the grounding of its planes for months.

Total revenue in the review period sprang by 32.98 percent to Sh70.22 billion, partly lifted by alternative sources such as air charter services which jumped 300 percent and helped compensate for income lost because of travel restrictions on some routes.

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