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Why customer confidence will be key to keeping airlines in sky

A Kenya Airways plane
A Kenya Airways plane. FILE PHOTO | NMG 

After four months Kenya is reopening its airspace for domestic and international travel, giving a reprieve to airlines whose financial have been on a nose dive since their aircraft were grounded in March.

The announcement on Monday came as good news to local carriers that had been pushing for reopening, if only to cut their losses which have hit tens of billions of shillings in the last few months.

However, the industry recovery is expected to be slow with the International Air Transport Association (IATA) projecting that air traffic will not return to pre-Covid-19 crisis until 2023, meaning that airlines have to grapple with losses for at least two or three more years.

Locally, national carrier, Kenya Airways #ticker:KQ (KQ) projects that it will recover from the shocks of the coronavirus pandemic in about the same period.

Basing on the anticipated low numbers, KQ, which had planned to acquire new aircraft and retire some of its old fleet, said it will revisit the matter in 2023 when it expects demand to pick up.

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“With the shrinkage in demand at the moment, we have excess assets and there will be no need to acquire new aircraft,” said Allan Kilavuka in a response to the Business Daily.

Safarilink chief executive Alex Avedi said in an earlier interview that to manage their operating costs, they will start flying with a reduced fleet and adjust upwards as demand for passengers rises.

“Covid-19 effects on air travel are certainly going to last a number of years with no quick rebound to ‘the 2019 levels,” IATA Chief Economist Brian Pearce told Reuters recently.

Airlines normally rely on the cabin load factor to make profits and low numbers mean that it would be difficult for carriers to operate sustainably.

When he reopened the airspace on Monday, President Uhuru Kenyatta said carriers will be required to conform to all applicable guidelines and protocols from both the Ministry of Health, local regulators and International Civil Aviation Organisation (ICAO), and any additional requirements applicable at the ports of departure, arrival or transit. The directive signals the introduction of stringent measures at airports, which may discourage travellers.

IATA has warned counties against being overzealous by requiring mandatory quarantine once the airspace is opened, saying it will hurt the confidence of passengers. It instead urges countries to follow the guidelines issued by health and aviation agencies.

“Deviations from the guidance and mandatory approaches, especially on quarantine and social distancing, will damage public confidence, make it harder to operate effectively, slow down the industry restart and increase the economic pressures already created by Covid-19,” said IATA.

“We therefore urge African states to urgently adopt these guidelines so that we can ensure the implementation of consistent, harmonised and effective measures across the region, a prerequisite for passengers to return to air travel in all confidence, and for the swift restoration of air connectivity,” it added.

Kenya become the second country in East Africa to open up its airspace after Tanzania. Rwanda announced that it will open for scheduled commercial flight operations on August 1, according to the country’s Ministry of Infrastructure with travellers, including those on transit required to show proof of Covid-19 tests.

Similarly visitors to Dubai will be required to show certificates proving they are not carriers of the disease before they can be allowed entry starting next week.

The stringent requirements are expected to be adopted by most countries as they open up their airspace for passenger aircraft in the next couple of weeks.

Meanwhile as passenger business prepares to resume, last month Kenya Airports Authority (KAA) released data showing that cargo airlines, not affected by Covid-19 helped to improve aircraft movement at the JKIA with data from indicating that cargo has only been down by 18 percent between March and May this year.

“Cargo business was not hit much because of the ongoing operations at the airport as the government did not restrict the freighters from operating,” said KAA acting managing director Alex Gitari.

The industry figure shows that on yearly comparison, cargo handled in 2019 was 90,000 tonnes compared with 74,000 tonnes that was evacuated through JKIA between January and May.

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