Recently, a local TV station hosted businessman Chris Kirubi. First things first, we all agree that Kenya Airways (KQ) is in trouble and it needs help. So the question is what help and how?
I was shocked by two suggestions fronted by Mr Kirubi. JKIA is allowing too many airlines into Nairobi hence they must be reduced, I could not believe that. He posed why should other airlines ferry people say to Dubai while our own KQ is half empty? It‘s about strategy, price, customer care etc and that is why people will choose Emirates and Ethiopian Airlines etc.
These other airlines are all ferrying people into Nairobi who need to connect to the rest of Africa and who is taking that business? It is KQ. This prescription by Kirubi if it was to happen it will also kill JKIA as a hub. He should go read about the history of Emirates Airlines.
In 1985, Gulf Air then owned by then Gulf countries made an ultimatum to Dubai that they either cut down other airlines into Dubai or they pull out. The father of current leader Sheikh Rashid Al Maktoum the late Sheikh Rashid Maktoum decided to bite the bullet and refused to stop other airlines. Gulf Air stopped and overnight they lost 75 per cent of the traffic.
Emirates Airlines was born out of necessity and by then KQ was already nine years old. So to my dear friend Kirubi protectionism will never ever take us anywhere. This is what is killing Mombasa not allowing other airlines to get there.
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Soon, Rwanda is unveiling a world class airport mini Changi Int airport at Bugesera, they are building their airlines slowly but surely. If we don‘t put our act together Kigali will be the hub with their ease of doing business and efficiency they can easily do it.
We then do not even have to stop the other airlines they will have an alternative and they will switch anyway and Kirubi‘s wish will be realised.
The second shocking prescription he gave is that all agents must book 50 per cent to remain licensed. I can‘t believe this. A 1970 solution to a 2015 problem. It is a free market besides KQ‘s woes is not revenue.
They made Sh110 billion revenue up form Sh106 billion. The problem is cost, cost and again cost which is in the hands of the management.
No one wants to address the elephant in the room. First dreamliner purchase deals which is called fleet ownership cost jumped from Sh12 billion to Sh25 billion, and what was the exit plan?
Second, fuel hedging and exit plan that cost them Sh6 billion, why hide behind confidentiality clause when you want tax payers money to bail you out and thirdly, operating expense of Sh4 billion? These three items created a Sh22 billion hole in KQ‘s P &L. Before any bailout is dished out, Sh60 billion is what Kenya‘s tourism earns in a year. We need a proper forensic audit by an independent audit firm otherwise it will be throwing good money after bad money.
If nationalism alone was enough to make an airline successful, Nigeria Airways would be ruling the skies. Shutting out other airlines and forcing agents to book KQ will not solve their woes. The problem is inside KQ not outside. Let us be realistic and yes KQ can soar once again.
Mohammed Hersi, Chairman
Kenya Coast Tourism Association