Airline competition in Africa – and The Winners are: The Passengers

THE BATTLE FOR THE AFRICAN SKIES HEATS UP AS KQ AND ET STRIVE FOR SUPERIORITY

(Posted 22nd November 2013)

As Kenya Airways’ second nonstop flight from Nairobi to Guangzhou in China is now underway, using the airline’s brand new B777-300ER flagship aircraft – Kenya Airways since the 18th of November flies three times nonstop and four times via Bangkok using a B777-200 for that service – the proverbial ‘Battle for the African Skies’ has come back into focus, often written about here before and equally often declared to be a battle at stalemate as both airlines, Ethiopian and Kenya Airways continued their moves on the chessboard of aviation.

Ethiopian Airlines is of course the original, erstwhile pan African airline, which for decades connected the African continent from East to West and from North to South, leaving all copycats eventually trailing in their wake or suffering financial collapse, until the new Kenya Airways came along.

In those days, especially after the 1994 political earthquake shift in South Africa, pundits back then saw SAA emerging as a main contender, or perhaps North Africa’s Egypt Air as that country emerged as an industrial and tourism powerhouse on the continent. Soon however it became evident that the geographical location of South Africa at the extreme end of the continent, was not quite so suitable to allow SAA become a mainstream hub and spoke airline for services coming in from Europe. However it was ideally located for connecting flights from for instance Australia, South and even North America, to distribute traffic into the wider African continent but the main traffic streams, until today, are not coming from there. Key markets from Europe and the Gulf, Eastern Europe and parts of Asia therefore needed but one look at the world map and knew that entry points nearer to the equator or located in Northern Africa would be better suited to take up such a role, and hence was much of the future of aviation development in Africa determined there and then, going by geographical rather than political considerations.

When Dr. Titus Naikuni joined Kenya Airways as CEO in 2003, he had served on the company’s board prior to that in his then capacity as Permanent Secretary in the Ministry of Transport as part of the World Bank’s Dream Team before then President Moi pulled the plug on the experiment to inject technocrats into his government and reverted to his usual ad hoc appointments of political sycophants, Kenya Airways had but 25 aircraft, using a mixed fleet of Boeings, Airbus and Saab Turboprop equipment. One of the first major actions taken in the early days of the Naikuni era was to integrate loss making Flamingo Airways, an early attempt to launch a low cost offspring in the Kenyan market but at a time when the concept was still far to alien to the traveling public – Flamingo required direct and online bookings but lacked the payment transaction platforms now available – while continuing to use the turboprops for several more years to fly to such places as Lamu and other domestic routes like Malindi where loads did either not justify the use of the larger Boeing 737’s or where the runways could not at the time accommodate larger jets.

Soon was the Airbus fleet retired and so were eventually the aged B737-200’s as more and more B737-300 and then B737-700 and B737-800 joined the fleet.

As the Kenya Airways network started to grow, so did the fleet, now comprising 45 jets of Embraer E170 and E190 make, of B737-300/700/800 make and of B767 and B777’s, but also including a B747-400F and two B737-300F as a result of making a strong entry into the air cargo market over the past three years.

Soon did it become apparent to regular aviation observers that a very similar strategy was unfolding in Nairobi under the Naikuni reign as has been in place in Addis Ababa for long.

Since those days a second dimension came into play though, membership in one of the three main airline alliances. Star Alliance was the first to reach out into the continent, and succeeded to sign up three major players, Egypt Air, South African Airways and then their biggest prize in Africa, Ethiopian Airlines two years ago.

Kenya Airways’ equity partner KLM, later to become KLM / Air France after the two carriers merged, was quick to realize that this quantum shift would lead to a potential diversion of traffic into Africa in favour of airlines associated under the global industry leader Star Alliance, unless they too could offer network connections within their SkyTeam alliance, offering passengers access to earn and burn air miles and experience a seamless service from their airport of embarkation to their final destination. Kenya Airways therefore soon became an Associate Member of SkyTeam before being admitted as a full member to the alliance after all required system harmonization had been accomplished.

Like Kenyan and Ethiopian long distance runners compete globally in each and every athletics meeting and the series of marathons run in key cities around the world, so has the aviation race become an open ended marathon too. And like in a marathon, the lead has changed a few times and from the more recent neck on neck has Ethiopian now again pulled ahead, aided mainly by being launch customer for the long delayed B787 Dreamliner. This, while giving them a competitive advantage in terms of launching new destinations in North America, South America and the Far East, however also made them the guinea pig for Boeing and an expensive learning curve that was, as first the B787 was grounded for several months worldwide following a series of battery related incidents before, to add injury to insult, a parked B787 of Ethiopian caught fire in London as a beacon malfunctioned. Those problems are now largely overcome however and the 6 B787 on the Ethiopian fleet, combined with more recent deliveries of B777 aircraft, including the world’s largest twin jet the B777-300ER have given ET the edge for now.

But fast forward to early 2014 and starting from March will Kenya Airways increase their fleet size once again significantly – while at the same time retiring their aged B767-300ER fleet – when they start taking delivery themselves of their B787’s on order, 6 in 2014 and the remaining 3 in 2015. An additional B777-300ER will also join the Kenya Airways fleet as will further B737-800NG’s begin to arrive, the new birds finally featuring Boeing’s state of the art SkyInterior design.

Kenya Airways ‘Plan Mawingo’ strategy document foresees that by the year 2022 the airline will fly to 115 destinations worldwide, covering all continents, with a fleet of 119 aircraft including 12 freighters. That will mean a continued race between Ethiopian and Kenya Airways for superiority in the African skies, as KQ is committed to connect each and every commercial and political capital in Africa by the end of next year, a quest supported by now 20 Embraer E190 jets which are amongst the most cost effective ‘birds’ presently in use, offering the range to cover the continent when flying out of Nairobi.

And a third dimension comes into play too now, the crucial infrastructure on the ground. Ethiopia is committed to construct a new airport to eventually relief the Bole International Airport while in Nairobi plans are afoot to triple the capacity of the Jomo Kenyatta International Airport with the construction of a new runway, new taxi ways, new apron and aircraft parking spaces and the launch of a new mega terminal dubbed ‘Project Greenfield’. It is anticipated that this will be the new home of Kenya Airways and their SkyTeam alliance partners when ready, leavin other carriers to use the presently under construction new Terminal Four, while the present Concourse with Units One and Two, and the domestic section at Unit Three will undergo a complete overhaul, modernization and expansion. The fire in August which destroyed the main arrival hall has also paved the way for that part of the airport to be completely reconstructed and when ready meeting the criteria of making JKIA a Category One airport, allowing direct flights into the United States, for which a strict separation of the passenger streams between arrival and departures is a key prerequisite.

(Proposed new Jomo Kenyatta International Airport including second runway and new ‘Greenfield Mega Terminal’)

Both Kenya Airways and Ethiopian Airlines are now and will in the future compete along all these three axis, on infrastructure on the ground, destinations around the world and their fleet sizes and composition and of course through their respective airline alliances. My prediction is that both will remain way ahead of the other airlines in Africa and both will remain neck on neck, a good thing as competition on this level will keep both managements on their toes, avoid complacency and give passengers from within and from outside Africa the choice of two top rated quality airlines – ultimately a credit to Africa and evidence that aviation is not just the domain of America, Europe, the Middle and the Far East. Happy Landings.