Sometime last year, the EAC Heads of State directed officials in their respective countries to look into the possibility of lowering the cost of cross-border air transportation within the region. This was a laudable step, as this column previously observed, for, in the interest of business or leisure, the prospects of affordable airfares are immense for investors, tourists and locals alike. Kenya Airways’ low-cost carrier JamboJet had just introduced one-way tickets within Kenya going for as low as US$33, inclusive of taxes and fees. In Tanzania, the cost was US$20 flying FastJet one-way within the country, though the customer had to pay for airport fees and taxes. According to Fastjet’s website, one can now fly from Kilimanjaro in Tanzania to Entebbe in Uganda for the same cost “exclusive of tax and charges”, and Dar-es-Salaam-Entebbe (Uganda) or Lusaka (Zambia) for US$50. But it is Kenya Airways – KQ as it is better known – that held the promise. It was projected that by this year, JamboJet would be plying 22 routes to major cities across the EAC and the larger Eastern Africa, including South Sudan, Somaliland, Ethiopia, the Comoro Islands, Madagascar and the DR Congo. The fares could have been as low as US$70. There is no reason to believe that this will not be achieved. But something happened along the way. KQ, the largest airline in the region, has since been weathering some unwelcome financial turbulence. As of March 31, 2015, KQ had recorded a whopping KSh25.7 billion loss, or more than US$257 million, from a similar date last year. KQ attributes the loss to competition from Middle East carriers, high operating costs and cancellation of flights to West Africa in the wake of Ebola outbreak. As one report observed, “the headwinds that have buffeted KQ have awakened the region.” Like those rallying in a family emergency, the Northern Corridor partners – Uganda, Rwanda and South Sudan – may yet steer Kenya’s national carrier to calmer economic skies. The four countries have hatched a plan to form a one airspace area that, if all goes as envisaged, could “turn around KQ’s fortunes.” The agreement could see Kenya Airways and RwandaAir, the only two operational national carriers in EAC, assume the role in the four countries opening them to bigger volume of business. The report quotes the Regional Director (Eastern and Southern Africa) in the Office of the International Civil Aviation Organisation (ICAO) saying that the liberalised airspace will not only reduce fares, will but also increase flexibility in travel. This is backed up by several studies conducted by the International Air Transport Association (IATA) which show that liberalised air space has led to “big progress in terms of economic growth and passenger numbers.” With Fastjet already operating Dar-Entebbe or Lusaka routes at a relatively low cost, this means that affordable airfares in the region are within our grasp. And while KQ may generally be going through some tough times, Jambojet has been doing just fine. Since the local carrier was launched last year, Jambojet now flies to seven destinations within Kenya. It has already flown over 500,000 passengers during the first year of operation. The possibilities in the region are immense. The example is given of how in the early 2000s, Kenya and South Africa agreed to have a more liberalised air market leading to a 69 per cent rise in passenger traffic. But, with the Northern Corridor agreement, it has been pointed out that the greatest benefit is expected to come from the classification of flights between the four countries as domestic, building on the recent move to allow use of national identification card as a travel document to ease movement within the bloc. It is nevertheless instructive that “the headwinds that have buffeted KQ have awakened the region.” Though inquiries are going on to find out what exactly went wrong, the simple economic lesson remains singular: market realities can be quite unforgiving. You either comply with the dictates of demand and supply, or simply perish. Such cases as the Ebola outbreak in West Africa are no justification. They are simply contingencies to be anticipated.
