Dark clouds hang over KQ after Covid-19 crisis
A looming recession, jitters flying, new Covid-19 flying requirements, and the unpredictability of the coronavirus pandemic are some of the hurdles national carrier Kenya Airways will have to contend with when it gets back to the skies.
The airline, which is currently banking on cargo to earn some revenue, is staring at a tough future, even as its biggest competitor Ethiopian admits that the going is going to be rough post the coronavirus period. Already, South African Airlines has folded, with Corona dealing it the last blow after the Pretoria administration declined to extend it a further bailout.
“The aviation sector is in its biggest crisis ever — suffering even more than most other economic sectors,” Alexandre de Jennica, the chief executive officer of the International Air Transport Association (IATA) said.
LESS CASH
But post-coronavirus, there will be a new flying order. With recession and less cash available for travel, airlines are bracing for fewer booked seats, even as the fear to travel checks on.
But post-coronavirus, there will be a new flying order. With recession and less cash available for travel, airlines are bracing for fewer booked seats, even as the fear to travel checks on.
On top of this, will be stringent measures for flyers, including possibly having a Covid-19 negative certificate, another costly addition to an expensive ticket, which will see reduction in the number of passengers.
Already, in its repatriation flights, Kenya Airways is demanding the certificate from those who booked seats in its London, Mumbai and Guangzhou flights, an indication this will be the new order.
“All guests are required to arrange for their own Covid-19 tests prior to travel. Guests are required to present a copy of Covid-19 medical results at the check in counter and the results must be negative,” the airline said in a notice for the passengers planning to take these repatriation flights.
Transport Cabinet Secretary James Macharia told Nation that apart from truck driver, others who are required to carry the certificates are travellers arriving into the country from abroad, adding that this could soon be the new norm as the country looks to reopening businesses.
“Upon resumption of our normal services, the safety of our passengers and our crew will still be our utmost priority. The aviation industry will have to adjust to the new normal and we will work closely with the government and comply with all protocols that will be in place to keep our passengers, crew and staff safe,” Kenya Airways managing director Allan Kilavuka told the Nation, alluding to passengers being required to have the Covid-19 certification before flying.
ECONOMIC FORTUNES
This new reality means an added cost for passengers already pressed to the wall by the sudden negative turn of economic fortunes.
KQ will also now have to contend with the fact that the country is entering into recession and as such, it will not be the only firm fighting for the government’s attention and funds.
Already, National Treasury Cabinet Secretary Ukur Yatani downgraded the country’s 2020 economic growth outlook to between 1.8 per cent and 2.5 per cent from the forecasted 6 per cent over the Covid-19 impact.
“Most of the economic activities have so far been slowed down by restrictions resulting from containment and cessation of sections of the population, and stoppage of international passenger travel,” Mr Yatani said.
This means that for the bailout request the airline had already submitted to the Treasury, all other factors need to be looked at, leaving the airline at a precarious position financially.
“We are still in discussion with the government over a bailout request, and also on concessions sought on taxes, and airport fees,” Mr Kilavuka said.
Tourism, one of the biggest cash cows for the country, and from where Kenya Airways gets most of business, connecting the country’s holiday spots with the millions of visitors, has also taken a hit, and is projected to remain so in the mid-term.
LOWER REVENUES
This means that the airline will record lower passenger revenues from its traditionally stronger networks, as customers readjust to the new economic and health realities of flying, and its new stringent requirements.
This means that the airline will record lower passenger revenues from its traditionally stronger networks, as customers readjust to the new economic and health realities of flying, and its new stringent requirements.
“We have to restart and reset the industry from a new slate going forward. We also need to make sure we utilise the ever-evolving digital world which we are all now compatible with,” Tourism CS Najib Balala said.
The KQ boss said that they will have to look at the situation holistically as they expect the bounce back to be slow across all sectors in the economy.
“Airlines support different sectors through providing links to markets and destinations for both passengers and cargo. Engagement with these sectors is key, and this is ongoing to identify opportunities to ensure recovery across all sectors,” Mr Kilavuka said,
The national carrier is also now dealing with a new teething problem — its cargo capacity — as world airlines turn to this segment to remain afloat.
For KQ, the lack of investment in cargo freighters has come to bite, as it now has to forego business at a time there is increase tonnage of cargo to be moved around as a result of low capacity following the grounding of dozens of airlines.
Currently, the airline has converted a few of its Dreamliners for freight services. KQ does not have long-range cargo aircraft and the two B737Fs it owns can only do regional services, with limited cargo in this network.
“If we had funds, we would have invested in the cargo business. As it is, we are reviewing the plans for cargo business as part of our future,” KQ chairman Michael Joseph said.
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