VENTURES AFRICA – Kenya Airways has revealed plans to launch Jambo Jet, a low-cost subsidiary to handle regional flight operations, as competition brews among budget operators in the industry for control of African routes.
The launch of Jambo Jet, KQ’s budget line, marks a reverse strategy after the Kenyan national carrier absorbed its then low-priced unit Flamingo Airlines to group operations in 2004.
According to the CEO of Kenya Airways, Mr Titus Naikuni, the airline is looking to establish the subsidiary this year to ride on the rising passenger numbers within the region and match competition from budget operators, especially from European carriers looking at Africa.
Commenting at an investor briefing, which highlighted a drop in KQ’s profit from Sh3.5 billion ($41.2 million) to Sh1.7 billion ($20 million) last year, Naikuni disclosed that the airline has made a lot of progress with Jambo Jet and is waiting on “approval from the Kenya Airports Authority” pending its proposed launch this financial year.
He added that the regional unit will have a leaner costs structure compared to those of international airlines and it will be hinged on low fares and fewer comforts and passengers could be asked to pay for extras like food and baggage., signalling cost-effective structure aimed at strengthening KQ competitive edge as European second largest low cost carrier, Easyjet launches a new Africa-focused operation.
This is the latest signal from KQ of its intention to wrestle the dominance of regional routes from rivals Jet Link, Fly540 and Air Kenya that have in recent years been aggressive in pursuit of the ever growing passenger base.
The market landscape is set to shift with the entry of EasyJet, which will remodel Fly540 and brand it Fastjet that said it will keep fares for across the East African routes at between $70-$80. With average cost of flights in the region set at $141 (Sh12, 000), FastJet’s fares, coupled with its operational standards, would be a major attraction.
Africa’s aviation market, although bugged poor regulations and substandard operations, with recent crashes in Ghana and Nigeria, is set to soar as the continent emerging economies, investment potential and burgeoning consumer market constantly drive business and leisure travel.
The launch of Jambo Jet would be part of a global strategy synonymous with international carriers, as the trend of establishing subsidiaries to handle local routes, freeing executives with the task of more complicated international travel, seems a potent way of optimising operations and cutting costs accruing from procurement, staff productivity and fuel expenses.
South African Airlines runs local Mango Airline while British Airways has a majority stake in Comair, which serves southern African nations including Lesotho, Namibia and Botswana.
Kenya Airways is a member of the SkyTeam alliance, which guarantees its passengers access to member airlines’ facilities and network. The Pride of Africa placed third at the 2011 Skytrax World Airline Award for the African region.