Kenya Airways #ticker:KQ has not been operating cargo flights from Nairobi for the last two weeks as demand for freight and growth in capacity stiffens competition, a move that will hit the airline, which was banking on the service to supplement its income.
Chief executive Allan Kilavuka said there is increased capacity and low demand compared to before that is why the carrier has not been operating cargo flights.
At the moment, there are close to 12 cargo airlines operating from Jomo Kenyatta International Airport to different destinations in the world, a significant rise from less than five that were operational after the travel restriction brought about by Covid-19 was put in place.
“This (a lack of cargo flights) means less income and we will struggle even more than we were before,” Mr Kilavuka told the Business Daily.
“There is a lot more capacity now and demand is lower so there is less opportunity than before,” he added.
Mr Kilavuka said increased capacity had seen a drop in freight charges, meaning that it could not be profitable at the moment for KQ to operate long haul cargo flights using the passenger aircraft.
Kenya Airways does not have long-range cargo aircraft and the two B737F that the carrier owns can only do regional services and there is no too much cargo to transport intra-Africa.
The weekly capacity at the airport is now 1,800 tonnes against the volumes of 1,500 tonnes, meaning the supply has outstripped the demand.
The national carrier had started doing several cargo trips from Nairobi to Europe and Asia using passenger aircraft to generate some revenue to help the carrier meet some of its financial obligations such as paying off utility bills.
Increased capacity at the JKIA has pushed the cost of freight to Sh236 for a kilo from a high of Sh525 for the same quantity previously.
However, the cost is still high when compared to a normal period when a kilo of cargo goes for a dollar.
The move comes as a boost to players in the horticulture industry who have been grappling with high charges owing to limited capacity to ferry their produce to European country.
Some of the airlines flying to Nairobi at the moment include Qatar Airways, Ethiopian Airlines, Emirate Cargo, Lufthansa, Martinair, Etihad, British Airways and KLM among others.
KQ reported a Sh12.9 billion loss for the financial year ended December 2019 up from Sh7.7 billion in 2018 with losses attributed to increased cost of operations.