18 April 2010

Kenya: State Loses Sh300 Million Daily Over Cancelled Flights

Photo: NASA
A plume of brown volcanic ash from Eyjafjallajökull Volcano, Iceland, is disrupting air traffic to and from Europe to Africa.

Nairobi — The cancellation of flights to Europe is costing the Kenyan economy more than Sh300 million daily, players in affected industries have said.

The horticulture industry has been hardest hit as it is losing an average of Sh231 million, with national airline Kenya Airways bleeding Sh77 million for every day it is forced to cancel flights to Europe because of a volcanic eruption in Iceland that has affected business globally.

Media reports said airlines worldwide are losing £130 million (Sh16.9 billion) a day while Kenya Airways has lost Sh308 million in the four days it has not had flights to Europe.

The horticulture industry in Kenya is worst hit by the crisis and is also losing money by the day.

"On the average, we ship some 1,000 tons worth $ 3 million (Sh231 million) per day therefore our losses are climbing by the day," Fresh Produce Exporters Association of Kenya chief executive officer Stephen Mbithi told the Nation.

"We have handled drought, El Nino, post-election violence, food miles and many more but we have not seen anything like this," said Mr Mbithi.

He described the situation as "simply disastrous" and said it is likely to substantially reverse the gains the sector has made over the past two decades, especially with the small-scale farmers.

At the Kenyan Coast, some hotels are also suffering unexpected business losses.

Serena Beach Hotel general manager, Mr Charles Muya, said the hotel is expected to suffer a loss of more than Sh3 million after more than 100 holidaymakers in Europe have been affected by the flights setback.

"We are counting losses of more than Sh3 million since the tourists who were supposed to come for holidays were supposed to stay here for six weeks," the hotelier said.

Sarova Whitesands Beach Resort general manager Mr Mohamed Hersi said the hotel has for the past three days lost over 100 tourists after their flights were cancelled.

However, the Kenya Association of Hotelkeepers and Caterers Coast branch chairman, Mr Titus Kangangi, said the impact of the flights hitch would not be felt much, owing to the low tourist season.

Expectations had been high that flights would resume by Sunday morning but it had become apparent by Saturday that the ash cloud hanging over Europe had dimmed any hopes of a quick resumption of international trade.

The ash from Iceland's Eyjafjallajökull volcano is dangerous to aircraft because the tiny fragments of the erupted rocks can get into jet engines and also damage the plane itself.

It is hard to predict how much longer the volcano will be erupting but University of Nairobi lecturer Prof Isaac Nyambok told the Nation it could be anywhere between a week to even six months.

There are rare cases in which volcanoes have erupted for a year.

Iceland lies on the boundary of two tectonic plates, he said, which are currently tearing apart, giving the chance for the energy from the earth's core to melt the rock, which then surges out through the volcano.

Kenya Airways chief executive officer Titus Naikuni said in an interview the overall effect is likely to become worse than the situation after the terrorist attack in the United States of America on September 11, 2001.

"The only good news is that we have not had any fatalities or accidents," said Mr Naikuni and added, "It will start unfolding on Monday and Tuesday when people go back to the offices and start calculating the losses."

The CEO said it would take a week to clear the backlog if and when flights resume but they have already been hit hard. About 2,700 people were booked on the airline since Thursday and 70 of their staff are stranded in Amsterdam and London.

"As we are talking, Air France and KLM have freighters grounded here while Virgin (Atlantic) and KLM have passenger planes grounded in Nairobi," he added.

Mr Naikuni said industries that require spare parts from Europe could also be affected if their machines break down and Kenya Airways' losses could be significantly less than those of other, larger airlines.

The airline later cancelled flights yesterday afternoon and asked passengers booked on the Amsterdam, London and Paris routes to re-confirm their bookings before the travelling date or going to the airport.

Water minister Charity Ngilu could also be forced to stay longer in the United Kingdom capital city as trains to other parts of Europe have been overbooked.

Cargo holders at JKIA have started asking owners of stored produce to pick it from their facilities, meaning they will have to pay to take it back and possible disposal.

"The headache now is where to take the produce. Do we dump the flowers in Dandora? What about the fruits? Where does one take so many? They might have to be donated to charities," said an equally distraught Kenya Flower Council CEO Mrs Jane Ngige.

The industry will meet on Friday to discuss the way forward.

Only about five per cent of fruits are shipped by sea. Flowers are also going to the Far East and Asian markets, like Japan and Dubai.

The industry fraternity has scheduled a meeting on Friday to discuss the way forward, top on the agenda being exploring sending flowers to the US through South Africa.

With reports that the skies could remain no-go zones for longer, the sector has started rescheduling duties, with a majority of packers being asked to go on leave until the situation is under control. Hiring of casual workers has been suspended, and employment frozen.

"The dilemma facing farm owners is, harvesting must continue to pave way for the next crop, therefore they are paying workers and not selling the produce," added Mrs Ngige.

Worse still, Dr Mbithi says, is the financial crisis that is going to face the small farmers whose produce was mature for this seasons sale. "They will most likely lose all the expected proceeds and fail to go into the next season," he said.

Prof Nyambok said the effects could be bad for most of Europe as sulphur dioxide is produced and it combines with water to form sulphuric acid, meaning parts of the continent are likely to experience acid rain.

"People there will need to take a lot of interest in the matter because they would also experience a very harsh winter and now I presume the heat will be unbearable," said Prof Nyambok, who is a geologist.

Unlike Saturday and Friday, there was little activity at the international departures' section at the Jomo Kenyatta International Airport and the few passengers who turned up went back to the hotels almost immediately.

Reported by John Ngirachu, Catherine Riungu and Mathias Ringa

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