Kenya Airways’ woes mount as competitors eye its market share

National carrier Kenya Airways has an uphill task navigating its way from the debt pit to regain its glory as the Pride of Africa.

The airline, which is struggling to recover from a huge financial loss, faces competition from regional carriers such as Ethiopian Airlines and South African Airways.

In the financial year ended June 2015 Ethiopian Airlines posted a net profit of $175 million (Sh17.8 billion) and ferried 6.4 million passengers last year compared to KQ’s 4.6 million, according to data from the International Civil Aviation Organisation.

International airlines which have entered the East African market are also threatening to eat into its share of the market if radical measures are not taken to change its fortunes.

On December 1 Etihad Airways, the largest airline in the United Arab Emirates, launched direct flights from Abu Dhabi to Dar es Salaam making it the airline’s fourth destination in the region.

Qatar Airways has direct flights to Addis Ababa, Djibouti, Kigali, Entebbe, Kilimanjaro, Zanzibar, Dar es Salaam as well as Nairobi.

The re-entry of budget airline Fastjet in the Kenyan market heightens competition for Kenya Airways, a situation which will be made worse if the Kenya Civil Aviation Authority (KCAA) grants the UK based budget airline a licence to operate international routes through the country.

Kenya Airline Pilots Association (Kalpa) has recommended the implementation of the Senate report calling for an overhaul of KQ’s management structure.
Kalpa secretary-general Ronald Karauri urged the government to do more than bail out KQ.

Major shareholder

“The government is a major shareholder and it needs to protect its investments by putting in place people who understand the aviation industry to get us out of these turbulent times. KQ is facing competition from big players like Qatar and Etihad who get government assistance back home in the form of subsidies and tax reliefs,” said Captain Karauri.

In the year to March 2015, Kenya Airways posted a record Sh25.7 billion loss though the downward trend can be traced back to the 2012/2013 financial year when the airline made a Sh9.012 billion loss.

The turnaround plan, developed with the help of Mckinsey consultants, looks to return the airline to profitability in two years by reducing costs and selling its assets including four Boeing 777-200 planes worth $146 million and converting Sh25 billion into a long term debt.

After the release of their half-year results, Standard Investment Bank commented that the importance of the airline to the economy was far-reaching
“The next few months are going to be challenging and critical given the financing environment and government ability to inject additional capital,” the investment bank reported.

Recapitalisation can only do so much for the carrier which plays a great role in promoting tourism beyond the country’s borders.

While awaiting the restructuring of the airline and prosecution of the former management as proposed by a Senate committee inquiring into KQ’s affairs, there is need to look into the staff’s grievances in order to improve service delivery.

“A lot of the issues pilots, cabin crew and other staff have with the management of the national carrier are mainly due to the fact that it does not fully understand the heavily regulated industry and the required rest times between duties in order not to compromise on safety.

‘‘With proper management the issues can swiftly be resolved,” Mr Karauri said.