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april/may 2016 travel news 9
Into The Abyss - A Kenya Airways Story
There are three images, one in our Opening Shoot and two in the News section that will
serve to remind us that while the world aviation industry is happily ordering more Boeing
777-300ER aircraft to their fleets, Emirates now has 170 of them - with more on order,
while our home-town hero Kenya Airways has parked three of these almost brand-new
aircraft, because it says it does not make economic sense for them to fly them at this
moment in time.
That might be the case, but pray tell why they are they still sitting at Embakasi more than
six-months after they last flew a revenue earning flight for the airline – costing a fortune in
debt servicing for starters. Surely an airline on the waiting list (3-4 years as of today) for new
777-300ERs (list price US$330 million) would consider buying these aircraft, obviously at
an almost new, with a second-hand discount. Leasing out is another possible alternative.
I’ve spoken on social media a lot about the state of affairs at our national airline. We
Kenyans have a love-hate relationship with OUR airline, so proud when it was making
record-breaking profits so disappointed with the present state of affairs.
That the airlines management is playing the blame game to cover for the massive losses
the airline has incurred over the past three years is obvious. It appears that everyone but
the airlines management is to blame.
Blame Game Reason # 1 – the downturn in Kenya’s tourism industry for causes known to
all of us. In the years of plenty I clearly recall Kenya Airways management telling all who
would listen that most of their traffic was through Nairobi and not to it, making the point that
a downturn in Kenya’s tourism would have no impact on the airline whatsoever. Meaning
it was network traffic from say Malawi to India or Zambia to London both through Nairobi
rather than, for instance, Nairobi to London point-to-point traffic. They boasted at the time
of up to 70% of the passengers on a typical flight from Europe to Nairobi were destined to
points beyond Nairobi and v.v.
Blame Game Reason # 2 – fuel hedging, this is when the majority of the world’s airlines
bought fuel on the futures market which is highly speculative, but is known to save them
money when oil prices are high. Right now we all know oil prices have tanked, which
should be a bonus to all airlines and the likes of you and me at the petrol station. Airlines
who had bought forward have had to take the losses incurred between buying high and
now selling low. Most seem to have managed the pain without incurring massive losses,
most reporting record profits because of the self-same low fuel prices.
Blame Game Reason # 3 – KLM, a minority shareholder, for imposing itself on the airline
through management appointments all the way from the CEO on down. KLM it is said also
has too much undue influence on the airlines decision making processes. I’m told that
they ‘bully’ the airlines management – and that they in turn are unable to stand up to this
type of intimidation.
Blame Game Reason # 4 – non-specific foreign exchange losses. Income I’m assuming
is mostly US$ based while expenditure in the main, is also safely presumed to be in the
self-same US$. Head office expenditure is in Kenya shillings, which over time immemorial
has depreciated against the dollar.
Blame Game Reason # 5 – competition, mainly from Middle East airlines. Surely this is
not something that just jumped out of the hat? Competition is a business reality, you meet
it or you perish.
I’ll leave it you to make your own decisions, based on what only can be termed rather lame
A Kenya Government Senate Select Committee formed to look into the Kenya Airways
losses, reported problems with the airlines management in defending its Board decisions.
The Committee Chaired by Professor Anyang’ Nyong’o (Senator-Kisumu) concluded that
the following led to the latest mega-loss of Kshs.25 .7 billion (US$257 million):
· Poor management decisions
· Operational Inefficiencies
· Failure to counter competition
· Poor customer relations
· Frequent flight cancellations
· Poor investment decisions when buying/leasing aircraft
· Poor human resources policies
· Non-competitive ticketing system
Broad brush strokes without being at all specific, you’d agree? You'd also agree right on
There is one overriding issue here, which has not been addressed in much detail whatsoever
here and in most other forums. And that is the management of the airline, or the distinct
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