2 November 2012

Kenya: Local Aviation - Room for Growth


A series of airlines have cancelled their Kenya services casting doubt over the future of the country's aviation industry, but there is still growth potential in East Africa's biggest economy.

Despite a string of airlines departing Kenya's market this year, an analyst at the Centre for Aviation has rebuffed suggestions of trouble spewing inside the county's aviation sector, arguing that there is still "huge" growth potential for the country and East Africa.

Brendan Sobie, chief analyst at the Centre for Aviation (CAPA), argues that even in challenging times for the global aviation industry, Kenya continues to provide an aviation environment conducive to attracting international carriers.

The strength of Kenya's aviation industry was put into question this year by the announcement that Gulf Air, Bahrain's state-owned carrier, would withdraw its services from Kenya, barely a month after British airline Virgin Atlantic also departed the country.

An official statement released by the Gulf airline said that its five weekly flights between Nairobi's Jomo Kenyatta International Airport and the carrier's central hub in Bahrain will be discontinued from November 13 for "commercial reasons".

Kenya's aviation industry has been constrained by a combination of tight regulation and growing insecurity associated with the neighbouring Somali insurgent group al-Shabaab.

However, Gulf Air's pull-out may not reflect fairly on the country's wider industry. "I wouldn't take much from Gulf Air's departure as they are in restructuring model," Mr Sobie argues. "Their withdrawal from Kenya is more about Gulf Air's troubles and not a reflection on the overall Kenyan market."

The country's flag carrier Kenya Airways remains competitive. "Kenya Airways is one of the strongest carriers in Africa. Their strength means Nairobi is well positioned to benefit as economic ties with other regions, particularly Asia, increase. Nairobi is also well positioned as a hub for services within Africa - which is important as the intra-Africa market has big growth potential," he says.

"Other international carriers that can work with Kenya Airways and use Nairobi as their gateway to Africa, or part of Africa, would be particularly attracted to the Kenya market," Mr Sobie adds.

Gulf Air is the Middle East's oldest airline and stiff competition in the East African region from other Gulf carriers, including Emirates and Qatar Airways, has made it harder to stay afloat financially. Kenya had been Gulf Air's third biggest market after South Africa and Nigeria and its last remaining destination in East Africa after the airline withdrew its Entebbe route earlier this year.

With the global industry hurt by falling demand, rising fuel costs and high taxes, airlines are increasingly under pressure to cut their costs. Monarch Airlines, Air Berlin and France's Corsair cancelled charter flights to Mombasa this year due to high landing costs and a decline in tourism. Brussels Airlines, Tui Travel and 1Time, a low-cost South African airline, also pulled out of their Mombasa routes.

In Africa, the 1999 Yamoussoukro Decision outlined ambitious plans to open skies, but implementation has been painfully slow and stiff regulatory environments have been a further constraint for carriers.

"Africa overall has always been an under-served market. High fares don't help," Mr Sobie argues. "As the market opens up and low-cost carriers are established, there will be monumental change."

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