The Herald (Harare)

15 February 2013

Zimbabwe: Kenya Airways Takes On Saa, Ethiopian Airlines

NAIROBI. - When Kenya Airways marked 36 years of its presence in the skies at a colourful event in Nairobi three weeks ago, it did not mince words on its resolve to give its rivals a run for their

money.

The Kenyan carrier is focused on becoming Africa's airline of choice as it takes on continental giants South African Airways and Ethiopian Airlines.

This year, it unveiled a 10-year strategic plan to raise stakes through a radical fleet expansion programme buttressed by a strategic choice of feasible routes to fly.

But insiders are keen to point out that KQ's rivalry with South African Airways has been long standing, especially in the race to fly to every African city while offering reasonable yet affordable fares on its 59 destinations in Africa. Over the years, it has sought strategic partnerships with major airline alliances in a bid to ward off competition from SAA, which is billed as Africa's leading airline.

Last year, SAA won the Best Airline in Africa Award at the 2012 World Airline Awards held at the Farnborough Air Show, beating KQ to fourth position.

By passenger volumes, SAA carries more than 7 million passengers a year on a route network that serves destinations in 26 countries in Africa to Europe, Asia, North America and Australia against KQ's three million passengers annually. SAA serves more than 700 destinations globally, both directly and through code-sharing arrangements with partners.

According to top KQ officials, the key setback is not only battling the onslaught from airlines such as SAA but also how to make headway in a turbulent market, where small national carriers and private companies struggle to compete with major airlines that control 70 percent of traffic to Africa.

Trying to jealously guard its national market has been a key challenge for KQ but its management believes the competition posed by SAA and other local airlines offers a major acid test to its profitability as it celebrates its milestones since its launch under the East African Airways in 1977.

"We have had the opportunity to celebrate the achievements we have had so far and at the same time to re-energise for the future," says KQ chief executive officer Titus Naikuni.

Naikuni and his team acknowledge SAA has over the years ruined the party for the Kenyan carrier especially in African routes, citing the former's extensive grip of Central and Southern Africa and the lucrative West African circuit, including destinations such as Cote d'Ivoire, Ghana and Senegal.

"We're a de facto national carrier for some of the countries. I don't ignore the fact that Ethiopian and South African Airways are major competitors and we compete and sometimes co-operate in some situations," Naikuni says.

To minimise the harm on its profit margins, KQ has entered partnerships with KLM Royal Dutch Airlines besides being a member of the Sky Team. Through the Sky Team, KQ can now offer services to passengers from 1 000 airports in 187 countries in what it believes beats rival SAA to its game. It believes using the Sky Team alliance of 17 global airlines (including Delta and KLM), it will cash in on easy connections thus making flights smooth through seamless travel by passengers, something it believes gives it an edge over its South African rival.

KQ has used Air Uganda, RwandAir, Precision Air and low cost airlines such as Jetlink and Fly 540 to frustrate the possibility of SAA's penetrating routes such as South Sudan, Zanzibar, Seychelles, Mayotte and Entebbe.

The airline has a working relationship with these airlines to the detriment of its key rivals - SAA and Ethiopian. Precision serves several destinations in Southern Africa, which is SAA's home turf.

Naikuni admits competition on regional routes within Africa is on the rise, driven by increased travel on the continent and falling revenues on European routes. But this is still difficult to fully exploit given SAA and Ethiopian's firm grip of the continent. In Southern Africa, for instance, KQ has hardly improved its capacity despite increased frequency in routes such as Nampula, Gaborone and Harare. This is squarely blamed on dominance by SAA.

KQ ranks third after SAA and Ethiopian in terms of size and passenger volumes. However, Naikuni admits some parts of the continent remain virgin and should be exploited, resources permitting.

As a result of the onslaught by SAA and other key rivals, the going has been tough for the Kenyan carrier.

It reported US$56,1 million net loss in the first half of the year ending September 30, 2012. - CAJ News.

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