Tuesday, March 20, 2007

Prospects of the US-Kenya Airline Route

The ongoing expansion of JKIA (Jomo Kenyatta International Airport) will enable the airport receive a Category One status from the United States FAA. This new status will allow airlines to launch direct flights between the US and Nairobi, which would boost the local aviation industry. Odds are that passengers that usually connect through Europe and South Africa will start using JKIA.

After all, it would be more economical for travelers originating from central, east and south east of Africa to fly through Nairobi. The near future could see JKIA becoming a stop-over-port for flights serving South East Asia, Australia, New Zealand, and Indian Ocean islands.

The direct route between East Africa and the USA will be a battleground for domestic and foreign airlines. Kenya Airways, which previously thought it would be the only player, will have to fight it out with tough competitors like Virgin and Ethiopian airlines. One can only hope that the Kenya Airport Authority will grant landing rights to KQ's competitors.

JKIA’s new status could also have a “big-bang” effect on the US-Africa route, which is currently being served by three airlines, i.e., South African, Ethiopian and the US-based Delta Airlines.


kenyaonly said...

agree with you kenyanomics, this is one of the most lucrative routes that have yet to be discovered, i see one of the major airlines pushing a A380.

Whispering Inn said...

Part of the reason why there're no direct flights btn US and Kenya is the supposed threat of terrorism.

The US has to be satisfied that we can keep terrorists from boarding planes and flying to the US for God-knows-what.

And right now we're not exactly giving them that satisfaction -- what with Kenya/Somali border being wide open, Kenya/Sudan border too, the Artur's airport saga, and the costant travel advisories America dishes at will against Kenya.

A renovated and upgraded airport will no doubt make a difference, but we must deal effectively and urgently with the perceived threat to America that a direct route would (allegedly) pose.

Yzerfontein said...

State interference needs to be minimised. Where other countries offer slots and open skies it certainly makes sense to do the same for them. In South Africa, we have the perverse situation where flights are subsidised by a government (SAA & Mango flights) which claims to be pro-poor.

bankelele said...

Interesting point. The numbers are there, but if it was feasible, Naikuni would have made it happen by now. The airline feeds in nicely with partner KLM through Amsterdam. Also, I don't think Miami is KQ's preferred destination.

Kenyanomics said...

@ KenyaPekee—All knives are drawn. Singaporean Airlines will start flying to Nairobi this April. We’re talking about the world trendsetter that has already ordered ten A-380s. I would not be surprised to see one of them fly the route.

@WhisperingInn—The terror pretext will surely be a concern. I hope the US does not use it to justify its AFRICOM establishment (see my Feb 17 post on the possibility of a US military base in Kenya).

@Yzerfontein—Inteventionalism will be a big mistake. I don’t think Kenya is interested in subsidizing the industry. KAA might—on the other hand—refuse to grant landing rights to other airlines. It has happened to Ethiopians before. The subsidized SAA is just a mess, despite its size and success. I understand that an average director of SAA sits on more than 20 different boardrooms.

@Bankelele—KQ’s expanding network in West Africa could enable it lock the US-West African route under its wings. I agree that Miami is not the best choice for KQ, Atlanta is. Interestingly, the Atlanta based Delta airlines knows that, which could explain its aggressive campaign to venture into the lucrative US-Africa route. Delta is currently flying to Accra, South Africa through Dakar, and will start flying to Lagos this December.

Odegle said...

i cannot wait for this expansion to complete. am not looking so much as to the gains for the airlines but rather the multiplier effects this will have plus the exposure that we stand to get.

as for terrorism, i suppose given Kenya is US' preferred partner in the region, the alerts will subside.

coldtusker said...

KQ should expand into more profitable Africa routes before tackling the USA. This is a competitive low-margin route.

Atlanta is a far better choice than Miami but KQ should consider NYC (JFK & EWR) though NYC is very competitive & slots may be limited but there are lots of feeder routes.

Delta is based out of Atlanta but KQ needs "feeders" and the SkyTeam partners are NWA & Continental.

coldtusker said...

Kenyanomics: JKIA can't be a hub for SE Asia to Europe/USA... since it is faster/cheaper to fly EAST to LAX/SFO from SE Asia.

Also it is faster (cheaper) to fly SE Asia-India-UK or SE Asia-Mid East-UK/US.

Australia-USA can be done thru Tokyo/Singapore.

Kenyanomics said...

ColdTusker--Where have you been? I agree that Atlanta is a fair choice compared to Miami. NYC is even better. I look forward to seeing how thing will unfold given the following scenario. By choosing ATL, KQ will be taking the war to Delta, which is already flying to Africa. And by choosing NYC, KQ will be taking the war to Ethiopian, which flies from both Washington DC and New York.

The African route cold be a low margin one, but remember the continent has the fastest growing air transport industry. This makes the continent a hunting ground for airlines.

On another note: Virgin has gotten a greenlight to operate within the US, under its newly formed Virgin America flagship. This places Virgin at a front seat in concurring the route. Check this out: Virgin America feeds on the US side, whereas Virgin Nigeria feeds on the other side of the Atlantic.

coldtusker said...

Kenyanomics - Been busy!

KQ needs to face up to the Virgin threat. The following is direct competition.

NBO-Asia on SingAir
NBO-W.Africa on VN

Good news for KQ... the Nigerian airports are way behind Kenya thus I doubt there will be direct Nigeria-USA flights for at least 2 years! Please correct me if I have made a mistake.

VA provides strong competition for KQ from USA-LHR-NBO. VA gets 100% of revenue while KQ has to share with KLM/NWA/Air France/United.

Kenyanomics said...

ColdTusker. I also thought Kenya outdid Nigeria on air transport infrastructure. But Americans have not raised a finger against the West Africans. See the following press release from Delta Airlines--:Delta to fly Lagos

Kelila said...

Good for people to know.