Airline lobby paints gloomy picture of African skies as Kenya Airways bleeds

Flying Kenya Airways back to profitability may take more than just sound management, industry snapshot by International Air Transport Association to Parliament shows.

High fuel prices, multiple taxes and complicated visa application process have conspired against African airlines, including KQ, with just two airlines declaring profits last year. This is the reality IATA officials laid bare before National Assembly’s Transport Committee in Nairobi on Thursday.

Too tough is the going that the umbrella association for 265 airlines has told the committee that it sees Africa’s airlines posting a combined loss of $500 million (Sh50.7 billion).

The Maina Kamanda-led committee will be in for tough time to make recommendations on reviving the loss making national carrier with the startling statistics that IATA laid bare. “For a single person a US airline carried last year, it made a profit of $39 (Sh3,949) while Europe made $25 (Sh2,531). For Africa, carrying a single person made them a loss of $7 (Sh708.9),” IATA Vice President Raphael Kuuchi told the house.

Attempts by members of the committee to pin down IATA officials on why firms such as Ethiopian airline were making profits were met with shock statistics that governments in Africa, including Kenya, have imposed high taxation to condemn their airlines to fail.

“The picture is not rosy—taxes in Kenya have been very high than in other places in Africa,” said Kuuchi. While fuel prices have gone down, on average, African airlines pay 21 per cent higher to get fuel than the world’s average price for airlines.

This, added to an average of $55 (Sh5,578) on every air ticket when other regions such as Middle East charge less than half ($20), IATA explained, makes air tickets in Africa 42 per cent higher than in other regions.

He added that while in other markets, airlines are utilised for an average of 14 hours in a day, the high prices for many African airlines have condemned them to an average of just nine hours. KQ has had to ground five planes from its fleet and has so far managed to dispose off three.

Looming crisis

Kuuchi alluded to the committee that the Government’s strategy to bail out KQ is not effective because it comes in bits. “When an airline is in trouble and needs bailout, if money comes in trickles it may never help. It has to be supported at once,” said Kuuchi.

Mathioya MP Clement Wambugu asked why the strategic agreement between KQ and KLM had left KQ bleeding but the body was cautious not to comment directly on the Kenyan airline.

Instead, Kuuchi told the house committee that it was upon any business that enters into a relationship with another to evaluate its position and make a decision whether to carry on or opt out.

According to Kamanda, the committee will be meeting KQ management and transport ministry before compiling final report to the house. He ruled out the possibility of the committee intervening in the looming crisis at KQ.

“If there is problem in management, this committee cannot stop the happenings [at the airport]. If pilots see a problem and want it addressed, the management needs to listen,” Kamanda told press.

The body said that the key strategies that could heal the sick airlines in Africa is for their respective governments to ease taxes and open up skies so that airlines can increase frequency of trips.

On Friday, National Assembly Majority Leader Aden Duale warned that Parliament will not entertain any bail out plan for the troubled national carrier until the Chief Executive Officer Mbuvi Ngunze leaves office.

Speaking in Mombasa on the sidelines of the Speaker’s Roundtable attended by Speaker Justin Muturi and bringing together the entire leadership of the House and members of the Kenya Private Sector Alliance (Kepsa), Duale said legislators would only consider bailing out the airline if the top management is changed. Apart from Ngunze, Duale said the Chairman of the KQ Board Dennis Awori, must also leave office.

“Unless both Ngunze and Awori leave, the National Assembly will not approve any move to pump more money into the airline. It is as simple as that,” he said. The Garissa Township legislator further said the House will be calling for major changes in the operations at KQ, including a re-look at their contract with business partner KLM.