The Competition Authority of Kenya (CAK) has halted operations of a low-cost carrier, Fly540 following increased traveller complaints including advertising with false information and cancellation of flights on short notice.
The CAK has said it had undertaken market screening into consumer-related infringements arising from more than 50 consumer complaints lodged against the domestic airline like delays in making refunds.
The authority said the airline failed to adhere to a warning issued on July 29 and the CAK has continued to receive complaints from consumers indicating the non-compliance.
“Fly540 Limited is hereby directed by the authority to with immediate effect, cease and desist from advertising for flight bookings in electronic, print and social media or receiving any flight bookings from the public or their representatives and or in any other way holding yourselves as being in a position to offer flight and related services to customers to and from any of the airports within the Republic of Kenya until the ongoing investigations are completed,” CAK director-general Boniface Makongo said in an order to Fly540 airline chief executive Donald Smith Earle.
The airline had also been operating without a licence after it expired on September 30, but was still receiving money from travellers.
The CAK has authorised the company to refund money to consumers for tickets sold from September 30 to date and money received from consumers who had purchased their tickets before September 30 and flights were cancelled.
Refunds are to be made within 30 days from the date of the order — November 15 — and inform its agents that the airline would not be selling tickets.
Failure to comply with the orders, the regulator said, directors would be liable to a fine not exceeding Sh500,000 or imprisonment for a term of five years or both.
“The authority is aware that your Air Operator Certificate expired September 30, and accordingly you are not authorised to offer services. Equally, we are aware that you have suspended operations at the Jomo Kenyatta International Airline (JKIA) terminal 1D/ Terminal 2 and your offices at Watermark Business Park, Karen remains inaccessible to the affected public,” added Mr Makongo.
From its base at the JKIA, Fly540 serves domestic destinations such as Eldoret, Kakamega, Kisumu, Lamu, and Malindi.
The airline has been competing with domestic airlines on similar routes including Jambojet, which also operates from its hub at JKIA, Safarilink, Skyward Express, 748 Air Services and Renegade Air.
Fly540 also operates international routes including Zanzibar and Entebbe.
Last year, the International Air Transport Association (IATA) suspended the Kenyan carrier from its electronic Billing and Settlement Plan (BSP), tied to a major travel agent defaulting.
Under BSP rules, IATA is mandated to suspend an airline if it violates any of the plan’s participating requirements including among others the failure to pay outstanding amounts due, the loss of a carrier’s IATA code, or the cessation of its operations.