Kenya Airways has raised concerns over plans to liberalize the African skies saying the move will impact heavily on its growth.
The airline says the agreement, signed at the end of January this year, leaves the airline heavily exposed to competition from countries that are yet to open their air space.
During the January 28 agreement in Addis Ababa, Ethiopia, 23 African heads of state appended their signatures to the Singe African Air Transport Market that seeks to create an open-air policy for the African air space.
By signing the charter, member countries are expected to give their peers unrestricted access to their air space without stringent conditions. Aviation stakeholders are hoping that it will ultimately replicate the European Common Aviation Area.
However, Kenya Airways Managing Director Sebastian Mikosz said the agreement is likely to compound the airline’s revival strategy.
“Any type of subsidy and any type of external support is very closely monitored, so you don’t have people fly openly, but then they don’t have the same business models. Look at our main competitors in Africa and check what type of support they and state protection they have in markets,” Mikosz said.
He said Kenya Airways is studying the impact of the agreement which commits African countries to a single market that forces them to phase out protectionist policies towards African airlines.
“I consider that Kenya is extremely modern in that regard, because we are extremely an open market which gains to many airlines to fly to Nairobi. It is very beneficial, but we have to be cautious,” he said.
Mikosz said the airline which has the Kenyan government as the majority shareholder with 49 percent of shares, plans to buy more aircraft to serve its widening network, with other plans to introduce direct flights to Cape Town and Mauritius.
“Direct flights [are] what the passengers are looking at. If you take the map of networks in the world, all the tendencies are to create point-to-point connection, so people don’t go through the hubs, but rather direct connections,” he noted.
The airline, which has changed its financial year from the end of March to December, posted a net loss of 6.1 billion shillings which it blamed on higher fuel costs and the negative impact of a prolonged electioneering period.
Mikosz said the full financial impact of the new US route will be felt in 2019, adding the aspects of a revenue boost of between 8 to 10 percent. The airline has cut down net losses from 25 billion shillings in 2015 to post an operating profit of 1.3 billion shillings.
Mikosz further said the airline had lowered its after-tax losses from 10 billion shillings in 2016 to 6.1 billion last year.
“Kenya Airways is not just a business, and it should not be seen just as a business. Kenya Airways is part of Kenya’s economy. Its [a] GDP contributor, it brings jobs to Kenyans, and it brings headquarters to Kenya,” said Michael Joseph, the airline’s chair.
“Kenya Airways should be looked at differently from just a standard business for profits or dividend producing business,” said Michael.
