Kenya should protect KQ to beat its rivals

In territorial competition, preferential treatment at home has a bearing on the overall performance of a business. Kenya Airways (KQ) has, however, had to bear the brunt of a shortsighted system.

The airline is responsible for about 60 per cent of overall traffic at the Jomo Kenyatta International Airport (JKIA) and contributes 83 per cent of Kenya Airports Authority (KAA)’s revenues collected at the airport.

Kenyan aviation as a whole has lost its own country’s market share over the last couple of years by 13 per cent to its competitors. From 2015 to 2018, all competing carriers in the region increased their market share — Ethiopian Airlines by 20 per cent, Qatar Airways by 12 and RwandAir by 22, all while KQ lost four per cent.

Passenger satisfaction has taken precedence and air tickets are trading at a historic low. Customers are now benefiting from an unparalleled combination of choice, competition, access and affordability. Conditions have driven these carriers to provide new and expanded services with the full support of their governments, a vital weapon that KQ has had to go to war without.

Against this backdrop, the African sky has in recent times seen new players coming up and existing ones growing aggressively, most of whom are heavily supported by their governments through protectionist measures. For instance, unlike KQ, which is 48.9 per cent owned by the government, Ethiopian Airlines, RwandAir, and the three Gulf carriers (Emirates, Etihad and Qatar) are all 100 per cent State-owned.

Considering the government stake in the carrier, it is curious that KQ gets no preferential treatment in its own hub of operation.

Unlike competitors who enjoy government protection and subsidies, KQ spends heavily on fuel costs, handling services, maintenance and many other services it buys in other airports.

Further, when competitor planes land at JKIA, only a limited stream of income goes to KQ. Not all the airport suppliers are linked to KQ through equity or exclusivity contracts.

A carrier like Ethiopian Airlines, which was half the size of KQ in 2010, has been growing exponentially in recent years.

Ethiopia expanded Bole International Airport, raising its capacity to 22 million passengers annually. And now, still, with the help of government, Ethiopian Airlines is in the process of acquiring shares and building strategic partnerships with 10 other African airlines.

In contrast, the conditions surrounding KQ and the JKIA are alarming. The JKIA is congested, reaching its maximum capacity estimated at about 7.4 million passengers, denying Kenyan aviation a platform on which to compete favourably.

While Rwanda is building a new airport with the capacity twice their current traffic, there seems to be no major investments in expanding the capacity of the Jomo Kenyatta International Airport.

Kenyan aviation players face imminent danger of being swept out of the market by competitors who benefit from market protection or government subsidies.

Steve Nyamota is an aeronautical engineer and Kenya Aviation Workers Union branch chairman.