Cargo plane takeoff sparks hope as losses top Sh912m

By James Ratemo and Reuters

Kenya’s horticulture industry has lost Sh912 million ($12 million under current exchange rates) to the volcano-induced European airspace closure and will take several weeks to recover.

The revelations came after a Boeing 747 cargo plane to Europe by Kenya Airways partner KLM, took off from the Jomo Kenyatta International Airport (JKIA) yesterday, headed to Schiphol Airport in the Netherlands, signaling a possible easing of the crisis in the coming days.

According to Kenya Airways Chief Operating Officer, Bram Stellar, the plane was cleared at 1.10 pm yesterday, after KLM and British Airways did test flights over Europe without any engine complications.

Stellar said if the plane lands safely, then other airlines could borrow cue and resume operations. However, passenger planes would be delayed for longer as airlines monitor the ash clouds.

Hard currency earner

Kenya Airways Managing Director Titus Naikuni told a press conference yesterday that the airline was losing over $1 million (Sh76 million) daily due to cancelled flights.

Horticultural exports are the leading hard currency earner in Kenya, east Africa’s largest economy, raking in Sh71.6 billion ($924 million) last year. The sector provides thousands of jobs.

"It is bad. We have lost Sh228 million ($3 million) a night, so that is a total of about Sh912 million ($12 million) as of last night," Stephen Mbithi, the head of the Fresh Producers Exporters Association of Kenya (FPEAK) told Reuters by phone.

FPEAK is an umbrella body that brings together 150 firms, including growers of vegetables, flowers and fruit. Some 82 percent of total output is exported to the European Union.

Mbithi said the country flies out 1,000 tones of fruit and vegetables every night at this time of the year, and only about 100 tonnes left on Monday morning, destined for Spain.

"We want to see if we can open a corridor into Spain, then we can send everything from Spain straight to Germany, Netherlands Belgium and everywhere we sell," he said.

He said more workers would be asked to stay away from farms after 5,000 employees, mainly harvesters, stopped working over the weekend when refrigerated stores reached capacity.

"The stores are full, there is no more space to keep anything, we are looking to suspend more work today ... we are only stopping harvesting workers," he said.

Foreign exchange traders said the Kenyan shilling was likely to remain under pressure against the dollar as the flight ban was bound to hit hard currency inflows.

In an interview with The Standard, Sanjeev Gadhia, CEO Astral Aviation, a freight company said his company has so far lost over Sh760 million due to withheld cargo in Europe, its main source of imports.

Gadhia said the importation business has also been hurt since no goods are coming in from Europe for distribution in Africa for the past six days.

"Over 50 per cent of our imports come from Europe...for the last six days we have had no dispatches from Europe. This means countries like Uganda, Burundi and Rwanda, which also depend on Kenya as transit route are also affected. The flower industry could have lost between $3 million to $5 million due to the crisis," said Gadhia.

Too much supply

While cut flowers, which are mainly exported to Europe, and vegetables such as baby corn, baby carrots and green beans are air freighted, fruit exports were not affected because they are usually sent by sea, Mbithi said.

Fruit accounts for five per cent of the value of total horticulture export earnings, while the rest is split between flowers and vegetables.

"This week there will be further losses whatever happens, even if cargo services resume, because there might be too much supply at once when the smoke stops," Mbithi said.

"If everything goes back to normal, then we expect that within two-three weeks, then we will go back to normal, that is prices and everything," he said. "So it is going to be a major short-term loss."

Tourists stranded

The chief executive of the Kenya Flower Council, Jane Ngige, told BBC radio yesterday that about 3,000 tonnes of flowers had perished since the flight disruptions started.

The impact on tourism, however, has been limited because April to end of May is low season. However, most of the tourists already in the country from Europe are stranded in hotels.

Kenya Airports Authority Corporate Communications Officer Dominic Ngigi, said grounding of Europe-bound flights interrupted operations at JKIA and Moi International Airport.

The cloud of volcanic ash that has engulfed Iceland has affected most of the flights that are bound to Europe.

Most of the European Airports have closed down their air space due to safety reasons.

He said London-bound British Airways, Virgin Atlantic, KLM and Kenya Airways planes have been parked at JKIA, with cargo Aircrafts relocated to Apron 3.