Kenya Airways: A Trailblazer in the African Skies

Kenya Airways has finally matured into Africa's first world-class airline.

Even more crucial, however, is the need to expand the cargo handling capacity at JKIA. If this does not happen in tandem with the rise in cargo movements, JKIA is likely to experience congestion. Mertens estimates that the resultant excess tonnage would top 20 tons a day. The ensuing congestion would create a bottleneck situation in Nairobi due to lack of capacity into West Africa.

As cargo freight volumes grow, the general theme is that freighter operators will respond to the challenge of profit by using larger aircraft in order to drive down unit costs. In order to cope with market demand and growth, additional freighter aircraft will be required.

  • Boeing forecasts that the world's freighter fleet will increase over the next 20 years from 1,775 to 3,078 aircraft.

  • IATA notes that this expected growth in the air cargo industry will require not only additional aircraft, it will also require expansion of airport cargo facilities, improvements in cargo handling capabilities, advanced communications technology and a more liberal approach to the regulation of air cargo operations.

In Africa, air is the preferred mode for shipping urgent documents, automobile electronic components, mobile phones, high fashion apparel, pharmaceuticals, optics and small manufacturing equipment, along with many perishables such as seafood, fruits and vegetables and fresh cut flowers. Kenya Airways has shrugged off the gloom that has pervaded the international aviation industry since the leveling of the World Trade Center in the September 11th terrorist attacks which badly squeezed profit margins in the travel industry. The firm has recorded a significant 324 percent profit, a four-fold increase in half year net profit to Kes 1.51 billion ($18.9m).

A successful restructuring program initiated by McKinsey, a reputable global consulting firm, has buoyed the airline's profit margins. The McKinsey study identified cost cutting opportunities that could generate between $40m and $50m in cost savings. Since the implementation of the study in October 2003, the airline has managed to cut down costs by up to 70 percent.

Kenya Airways is set to take the delivery of two more B777s later this year that are expected to fly the long-haul markets in Europe, Asia and the US. If the airline continues growing revenues at its historic, ten year, growth rate of 13 percent, its revenues could top Kes 55 billion ($678.5m) over the next five to ten years. Route expansion into Bangkok and Hong Kong and soon Shanghai, China, and the expected upgrading of the airlines' hub at JKIA to a category 1 status by the US Federal Aviation Authority (FAA) that will allow the airline to fly directly to US airports are some factors that could work in the airlines' favor.

Nairobi-Miami Route

One route that could be a major attraction and has elicited a heated debate between the airline, the Kenyan government and US aviation officials is the Nairobi-Miami route. According to a study prepared for the Miami-Dade Aviation Department by SH & E International Air Transport Consultants, the Nairobi-Miami route has the potential of generating $40.7 million in passenger revenues. These forecasts are based on the assumptions of KQ operating a 300-seat Boeing 777 aircraft on three round trips non-stop.

While the Kenyan government and the Kenya National Chamber of Commerce and Industry (KNCCI) are working in conjunction with the Miami-Dade Aviation Department to seek direct air links between Nairobi and Miami to enhance trade and tourism, the KQ management have categorically declined to fly to Miami due to what Naikuni says is a "very saturated market" and compared it to knowingly "putting your finger in the mouth of a lion."

During a recent visit to Kenya for talks on flights to Miami, Miguel Southwell, the assistant aviation director at the Miami-Dade Aviation Department said that they hope to collaborate with the Kenya Civil Aviation Authority (KCAA) and JKIA to build a long-term sister-airport relationship between JKIA and Miami International Airport.

The arrangement is also expected to provide an opportunity for Kenya to export to the US a wide range of products that are eligible for entry into the country under the African Growth and Opportunity Act (AGOA).

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