KQ bid to block Ethiopian rival from local cargo flops

The Transport ministry has dismissed Kenya Airways #ticker:KQ petition seeking to overturn a government deal allowing Ethiopian Airlines to operate passenger planes grounded by coronavirus for shipment of cargo from the Jomo Kenyatta International Airport (JKIA) in Nairobi to Europe and Asia.

Mr James Macharia, the Transport Secretary, Wednesday termed as “fundamentally misplaced” a complaint by Kenya Airways (KQ) against the decision to grant its rival the lucrative cargo deal.

On April 6, the Ministry of Transport allowed Ethiopian Airlines to vary its licence for passenger planes and use six aircraft to ferry cargo from Nairobi and Mombasa to overseas at a time when carriers are charging a premium for the service.

The loss-making KQ said the deal will give the rival carrier undue advantage in a period when Kenya has frozen international passenger travel in the wake of the coronavirus outbreak, leaving cargo as the only revenue driver.

“Kenya Airways has only two cargo freighters, one of which is currently undergoing heavy maintenance. These freighters, however, fly short distances and cannot, therefore, fly to Europe,” Mr Macharia told the Senate Transport committee in a virtual meeting yesterday.

“The complaint, therefore, by KQ, and I have told them, was fundamentally misplaced.”

KQ is worried that Ethiopian Airlines will take a huge chunk of the business of shipping flowers, fresh fruits, vegetables as well as meat that have become increasingly scarce in Europe as the pandemic hampers the global movement of produce.

Mr Macharia reckons that KQ cannot not lift between 2,000 to 3,000 metric tonnes at its full capacity.

“The current capacity requirement for lifting cargo is between 3,500 and 4,500 metric tonnes, while the available capacity is 1,500 metric tonnes,” said Mr Macharia in the brief to the Kiambu senator Kimani Wamatangi-led committee.

“Based on the capacity deficit, there is need to allow for additional capacity to service sectors of the economy such as fresh/produce and flowers.”

KQ chief executive Allan Kilavuka said earlier the carrier was not consulted on the impact that the Ethiopian Airlines deal would have on its business.

KQ is banking on the cargo business, which generates about Sh11 billion annually, to pay salaries and utilities like security, water and electricity.

It is seeking a multibillion-shilling government bailout after the grounding of its planes.