NAIROBI, KENYA, NOVEMBER 12 —The recent move by Kenya Airways to reduce the number of flights on the newly launched Nairobi-New York route has raised questions over the airlines capacity to sustain profitable operations on the route.
This is one among others;the costs that come with operating the ultra-long-haul flight, a unique operation at the carrier which has deployed its state of the art Boeing 787 Dreamliner with a capacity of 234 passengers to serve the 15-hour long flights.
KQ,as it is known by its international code, requires four pilots and 12 flight attendants as well as 85 tonnes of fuel each way, making it an exceptional operation.
The route which was launched on October 28 has had flights depart from Jomo Kenyatta International Airport(JKIA-KQ’s hub) at 23:25, arriving at JF Kennedy airport in New York at 06:25 the following day.
From New York, it departs at 12:25 landing at JKIA at 10:55 the following day. KQ is the first airline to offer non-stop flights between East Africa and the United State, while allowing connections to and from over 40 African destinations through its Nairobi JKIA hub.
A month into its operation on the Nairobi-New York route, the national carrier which also serves Africa, Europe,Middle-East, the Indian sub-continent and Asia has been forced to cut the number of flights, putting its profits at stake.
This comes as the airline continues to struggle with loses for the last four years. Despite its turn-around strategy helping it reduce its losses to Ksh4 billion in the half year period ended June 2018 the airline is yet off the hook with ongoing developments putting its earnings in limbo. The airline reported a Ksh5.6 billion net loss in 2017.
KQ’s worst year was 2016 when it reported a Ksh26.2 billion loss. This was a deep from Ksh25.7 billion loss in 2015.
The airline hired Polish Sebastian Mikosz’s as Chief Executive Officer in May 2017, to help with execution of the turnaround plan which commenced during former CEO Mbuvi Ngunze’s tenure.
New management efforts helped increase revenue by 3.1 per cent to Ksh52.1 billion as other costs fell 41.3 per cent to Ksh2.9 billion in the year to June 2018.
According to the carrier, the gains were as a result of savings across staffing and fleet operations. Higher fuel prices however remain a threat to its margins in the short term.
“Although reporting improved performance, fuel price volatility continues to be a major challenge,” KQ said in a recent statement.
The price per barrel has been on an upward trend since the beginning of this year closing at US$74 as at June 30, 2018 representing an increase of 12 per cent in global fuel prices within the first half of the financial year.
CEO Mikosz has however defended the move to reduce flights on the New York route saying it is a strategic business decision , insisting that the airline is strongly committed to the route.
Effective January 15, KQ has cut the number of flights to five from seven that it launched on the route in October 2018, where it will be flying only on Tuesdays, Thursdays, Fridays, Saturdays and Sundays.
The airline has pegged the reduced number of flights to low demand during the winter season.
The winter schedule for all its flights took effect from October 28 and will run until March 30, 2019.
It cancelled 10 scheduled flights on the new route between November 5 and December 5, with more trips expected to be affected going forward.
“The decision to adjust our schedule is to cater for seasonality in line with global practices that allow airlines to reduce or add frequencies based on low or high seasons,” Mikosz said.
According to management, it is common practice for airlines to reduce frequencies, downgrade or even upgrade flights to balance costs and revenue.
Airlines that choose to reduce the frequency of flights either lease out aircraft, use the period to carry out fleet maintenance or park the aircrafts to cope with the weather.
“We continuously monitor performance on all our routes and adjust our business model as required,” the national carrier said in a recent statement.
It is expecting to make a full come back during the summer period-meaning it has to wait until June next year to maximise on the high number of travelers.
The direct flight have however been lauded for offering faster connectivity between East Africa and the US, as opposed to the traditional connections through the Middle East and Europe.
The airline however continues to face competition from other carriers, including neighbouring rival Ethiopian Airlines which also flies to the US.
President Uhuru Kenyatta has been at the forefront of marketing the national carrier.
According to the President, the direct flights will open up new opportunities between the two countries, which already have existing strong bilateral ties, with the US remaining a key market source for international tourists to Kenya.
The two have a long standing trade relationship with Kenya being a significant beneficiary of the African Growth and Opportunity Act (AGOA), as one of the leading apparel exporters to the US in sub-Saharan Africa.
“There is no greater safari, holiday and business destination you will find in the African continent as you will find in Nairobi and many other destinations that Kenya has,” President Kenyatta told investors and the business community in New York during one of his visits.
“We believe this will not only bring an increase in the number of tourists to Kenya and from Kenya to the United States, but also a door to open new opportunities of many things that we can do together,” the President alluded.
KQ has been keen to tap into the Kenyan diapora market-in a campaign aimed at ensuring those travelling home and back to the US take advantage of its direct flights.
Kenya Airways chairman Michael Joseph has remained optimistic of the Nairobi-New York route which he has termed “a new beginning”for the airline.
He believes the route will add to its earnings as the airline continues its run back to profitability.
“We have been through quite a traumatic time over the last four years but the turn-around strategy has begun paying off,” Joseph said.