KQ faces heavy turbulence as subsidiary eyes its customers

By Macharia  Kamau

The announcement by Kenya Airways (KQ) that it would be pulling out of the Nairobi-Eldoret route beginning April was not unexpected.

Jambo Jet, KQ’s wholly owned subsidiary, was expected to ‘steal’ customers from the mother airline on the routes that it would be operating.

And aviation experts note that the new kid on the block might further cannibalise KQ’s current traffic on domestic and even regional routes once it starts making flights to cities in the neighbouring countries outside the country.

And as Titus Naikuni exits as the chief executive later on this year, the low cost carrier could be his last genius idea that might substantially grow KQ’s profits by upgrading many bus tickets to air tickets.

It, however, has potential to dilute the national carrier’s earnings on domestic and regional routes where the airline has a solid footing, with a market share of over 90 per cent in many of the routes.

According to Charles Wako, an aviation expert and immediate former chairman of the Kenya Civil Aviation Authority, the airline could make or break KQ.

He noted that the airline could also be employing a strategy to push out other players using a rock bottom prices approach and later raise the fares.

Local airlines have in the past complained that KQ has used its muscle to price other players out of the market.

“Given the history of KQ, I would not rule out the possibility of having low prices and pushing everybody else out of the market and then raising the prices once it has control on some routes,” he said.

“Here there is a need for regulatory authorities to check competition to ensure that the dominant companies don’t run out other companies by using the big brother strategy,” said Wako last week.

Jambojet plans to commence operations April 1 with domestic flights to Mombasa, Kisumu and Eldoret. It later expects to fly regional with flights to Bujumbura, Kigali, Dar-es-Salaam, Mwanza, Zanzibar, Kilimanjaro and Addis Ababa.

Aviation space

The airline is charging between Sh2,800 and Sh3,800 for a one way ticket to the domestic destinations, fares that have excited the market and will without a doubt shake up the domestic and regional aviation space currently dominated by the major airlines and a number of smaller air operators.

Businessman James Mureu said such low fares would ease movement of business people to major towns.

“We are excited as business community. Everybody could travel by air since the cost almost matches that of buses,” said Mureu, who is also the Chairman of Kenya National Chamber of Commerce Mombasa branch.