Fresh competition is expected in the domestic air travel business after the Kenya Civil Aviation Authority (KCAA) awarded little known Renegade Air Limited a three-year service licence on 10 prime routes.
The agency said the airline had been cleared to operate on routes connecting Nairobi to main business and tourism destinations including Mombasa, Kisumu, Eldoret, Malindi, Lokichogio, Kitale, Lodwar, Marsabit, Loyengalani,, Ileret, Kapese and Nariokotome.
“Licence granted for three years with effect from June 26,” said director-general Gilbert Kibe in a gazette notice.
Renegade Air has also been cleared to conduct aerial work services in Kenya and the rest of Africa using a range of aircraft based at Jomo Kenyatta International Airport (JKIA) and Wilson Airport in Nairobi. The company’s fleet will include an AS 350 helicopter, a Cessna 208, a Bombardier Dash 8 and a Boeing 737.
The allocation of prime routes to Renegade Air puts it in direct competition with Kenya Airways’ low-cost airline Jambojet that already operates flights between Nairobi and Eldoret, Kisumu, Lamu, Malindi, Mombasa and Diani.
Besides turning heat on KQ, the move by KCAA is likely to rekindle debate over a long pending application by London Stock Exchange-listed airline, Fastjet.
Fastjet is seeking clearance to operate on routes similar to those awarded to Renegade Air.
The low-cost airline intends to operate international flights to and from Europe, Middle East, Uganda, Zimbabwe, Zambia, South Africa and Tanzania, among other countries as well as domestic flights between the cities of Nairobi, Mombasa, Kisumu and Eldoret.
KQ, which operates low-cost carrier JamboJet, has raised objections to Fastjet’s planned re-entry into Kenyan market, signalling rising competition in the nascent budget airline business.
The national carrier’s objections caused the regulator to defer awarding Fastjet a permit last year, effectively applying brakes on its ambitious regional expansion drive.
The national carrier in February 2014 launched JamboJet, which plies some of the routes that Fastjet is also eyeing. Fastjet has identified five countries as key markets for the initial expansion of its business plan over the next three years, and has already started operations in some states.
“The company’s target is to build a fleet of up to 34 aircraft operating to 40 destinations within and from Tanzania, Zambia, Zimbabwe, South Africa, Kenya and Uganda by end of 2018,” said the airline in its 2014 annual statement.
“Expansion through this three-year plan should create significant shareholder value.”
The KCAA in June said Fastjet would know its fate later that month when the regulator’s reconstituted board holds its maiden meeting. Fastjet’s application was, however, not mentioned when KCAA on Friday released its latest list of decisions made on various applications.
The entry of Renegade Air on the domestic routes will, however, remain under focus given the challenges that have dogged other players in the segment.
JamboJet in June, for instance, announced it had stopped flying larger aircraft to Eldoret and Kisumu, citing low passenger volumes just months after it unveiled direct flights to the destinations.
Managing director Wllem Hondius said it had not been economical to operate Boeing 737-300 aircraft to the towns, because of the low volumes that resulted from direct flights to Eldoret and Kisumu.
The budget carrier started flying nonstop on the Nairobi-Eldoret route in March, despite admitting that it would face a challenge of attracting adequate passenger numbers on the route.
“It is true that we have currently changed to smaller aircraft because the number of passengers on these routes is too low to sustain a large aircraft,” he said earlier.
Mr Hondius said Jambojet introduced the Bombardier Dash 8 Q400 on the routes, leased from DAC Aviation.
“This aircraft has 78 seats and it has the speed of a jet aircraft and is very comfortable,” he said in reaction to complaints that the smaller aircraft is uncomfortable, especially during turbulence.
The domestic airline industry also witnessed a setback in May when low-cost carrier Southeast Airlines stopped its operations barely months after launch last November citing high operating costs and stiff competition from Kenya Airways’ budget subsidiary, Jambojet.
The airline said it was contemplating re-launching as a local and regional carrier with larger planes capable of competing in a market that of late has attracted new entrants.
“We had difficulties in generating profit from the business given the huge competition from established airlines such as Jambojet and Fly540 which have the capacity to ferry large numbers compared to what we were offering in the market,” former Southeast Airlines general manager Mtalaki Mwamburi told the Business Daily.
The carrier was flying a 50-passenger aircraft daily from Nairobi to Mombasa from the Jomo Kenyatta International Airport and had announced plans to start flights to Kisumu, Eldoret and Malindi.
