Kenya Airways Scaling Up Its Network of Operations

Dr Titus Naikuni

The Kenya Tourism Bill will steer Kenya Airways, the Pride of Africa,  to higher heights once passed into law, Kenya Airways, CEO and managing director, Dr Titus Naikuni has said.

The bill will ensure that the industry is regulated by bringing in competitive standards. However, the bill will need to be accompanied with right policies to ensure higher growth in the industry, Dr Naikuni said.

The legislation will also accelerate the certification of Kenya Airways by European Aviation Safety Agency (EASA) which will bring down the operational cost for aircraft certification after leasing currently done by Europe for Kenya.

The CEO who was unveiling the company’s financial year performance said that the airline had registered a 73 percent rise in profit after tax to $41.62 million driven by an expanded route network, increased frequencies and in spite of the internationally rising fuel prices.

The performance was attributed to a sustained focus on growing the route network and an increased number of flights to existing destinations.

Kenya Airways has the potential to establish hubs across Africa, but the aviation regulators are holding it from spreading its wings. The CEO said the regulations require them to have partners in interested countries otherwise they will not be allowed to carry the passengers, and such partnerships are not easy to achieve.

That notwithstanding Dr Naikuni said, “We have relentlessly pushed our reach to new and promising markets regardless of the increasingly competitive business environment.”

During the period under review, Kenya Airways recorded two milestones, by surpassing the 3 million passenger mark in the month of March 2011 and exceeding the one billion US dollar mark in turnover.

Embracing information technology led the company expenditure on commission to go down as increasing number of customers are booking their air tickets online.

Turnover at $1 billion was 21 percent higher than the previous year which stood at Sh 70.7 billion. The passenger revenue for the year was $ 887.06 million which is 20 percent above prior year at $ 738.82 million. The total number of passengers carried by the airline stood at 3,137 million compared to previous year’s 2,890 million an 8.5 percent increase.

Kenya Airways is among the few companies favored by a strong US dollar. Cargo and courier services generated revenue of $ 76.47 million a 20 percent growth over previous year of $ 63.53 million. Total Cargo tonnage was 2.2 above the prior year with a yield growth of 13.7 percent. Operating margin was at 6.8 percent – an improvement from the previous year’s 2.6 percent.

The results are set against a backdrop of other airline companies which are more involved in cargo and courier in Africa than home grown airlines. Naikuni explained that one of the reasons is because of the low production of goods produced from the continent for exportation.

Total expenses rose by 16 percent to $ 941.18 million from $ 810.59 million this was largely caused by the weaker shilling, increased operations due to new destinations and increases in employee costs of $ 11.77 million. The increase in the operating expenses was, however, offset by gains made from expanding the route network and frequencies.

Kenya Airways has launched 5 new routes including; Rome, Muscat, Juba, Luanda, Nampula and has also reopened Malindi after a period of review. The airline is set to launch flights to N’djamena in Chad later this month. This will bring the number of Kenya Airways destinations to fifty-four .

Naikuni said prospects for the airline, especially in the Africa market, were promising and that the company would open 8 new routes in the 2011/12 financial year. “Africa is the next frontier in the global economy, ripe for higher growth supported by increased trade and rise in number of tourism arrivals,” he said.

Kenya being a tourism destination, the airway expects more tourist arrivals not only in Kenya but Africa – this will increase the number of passengers, in the incoming financial year. Peace in the continent, particularly in the Arab countries will also contribute to the scaling down of oil prices and increased network.

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Chad, officially known as the Republic of Chad, is a landlocked country in north-central Africa. It is bordered by Libya to the north, Sudan to the east, the Central African Republic to the south, Cameroon to the south-west, Nigeria to the southwest (at Lake Chad), and Niger to the west.

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