JAMBOJET REPORTS PRETAX PROFIT FOR H1
(Posted 17th November 2015)
Jambojet, Kenya Airways low cost subsidiary, has reportedly made a first half (H1 2015/6) pretax profit of 53.3 million Kenya Shillings, signaling a major turnaround of fortunes for the company.
At the same time last year was the company by over 244 million Kenya Shillings in the red.
The sharp turn to the better is largely attributed by industry observers to change in the airline’s strategy, dumping the Boeing B737-300 from the routes to Eldoret and Kisumu. Even a combination of the two destinations did not yield profit as loads were generally too low for the larger aircraft while at the same time passengers complained about the required involuntary detours. The introduction of the Bombardier Q400NextGen was seen as a game changer however. With this aircraft type is Jambojet now serving both Kisumu and Eldoret nonstop while the same aircraft type is also deployed to Lamu, Malindi and the south coast resort airfield in Ukunda. The Boeing B737-300 now only serves the route between Nairobi and Mombasa. This change from a pure jet operator to a mixed fleet also helped to raise loadfactors to about 75 percent, up from in average only 60 percent a year ago. This gives Jambojet by broad estimates a market share of just over one third.
As with other low cost models is pricing a key element and the longer in advance one books the lower the fares are, while last minute bookings literally cost as much as full fares on other airlines. Checked baggage costs extra as do drinks and snacks served on board.
Jambojet, besides operating on domestic routes, also holds designations by the Kenya CAA to fly to such regional destinations like Entebbe, Kigali and Juba but has yet to commence flights on these routes. The airline’s now almost redundant additional B737-300 could be deployed on regional routes but there is no indication as of now if and when this will happen.
Jambojet’s parent company Kenya Airways flies multiple daily frequencies into regional airports like Entebbe, up to five times a day and given the high loads and profitability on these routes is unlikely to yield any frequencies to its own subsidiary. Notably does KQ deploy the Embraer E190 on most of these flights, a smaller jet compared to the B737 and therefore again better suited to serve off peak departure times.
The recent decision by the KCAA to grant rival LCC Fastjet an air service license, albeit presently only for local destinations, is set to further intensify the fight for market share when Fastjet will eventually launch operations in Kenya. Key to their success will be a hard look at their hitherto used workhorse aircraft, the Airbus A319, which going by past experience from the Kenyan domestic market will only be suitable for flights between Nairobi and Mombasa, while some of the other destinations handed to Fastjet under their ASL will require a smaller aircraft to be able to viably operate on these routes given the available passenger numbers and the presence of other, now more established LCC’s on these routes, in particular Jambojet.
While the launch of flights by Fastjet will bring the two LCC’s for the first time head to head is the fallout expected to be rather more severe for other local Kenyan semi LCC’s, which without comparably deep pockets can expect a run for their money on the key domestic routes from Nairobi to Kisumu, Eldoret and Mombasa, leaving them arguably to seek their fortunes to secondary airports across the country.
