THE COST OF GETTING TO THE TOP
Details emerged over the weekend from Nairobi of the potential cost of Kenya Airways drive to become the number one airline of choice in Africa, connecting the continent via their Nairobi hub.
Only recently did The Pride of Africa sign a record breaking deal of 10 firm orders and 16 options with Brazilian manufacturer Embraer, which upon completed delivery, should all options as expected be turned into firm orders, will double the airlines current fleet. Also coming on line, as and when Boeing is able to delivery that is, will be at least 9 B787 aircraft on firm order, with a further 4 options, which will eventually replace the ageing 5 aircraft B767 fleet Kenya Airways has been flying already beyond its intended use and essentially allow KQ to add more long haul destinations such as flights to the US, India and the emerging tourism markets for Kenya in the Far and South East.
The cost however is mindboggling with figures ranging from 2+ billion US Dollars upwards over the coming years according to sources in Kenya. The forthcoming share rights issue by Kenya Airways is expected to create a core fund to finance this expansion but borrowing and retaining profits at the expense of higher dividends will be other avenues the airline will have to use to be able to pay for the ambitious expansion plans.
At the same time there is intensive lobbying going on to have government boost aviation infrastructure at the countrys main airport in Nairobi on the double, where a second runway is a pre-requisite to roll out the fleet expansion while more terminal space and parking spaces for aircraft too are required to handle the added passengers and aircraft movements. Delays by past KAA management are now coming home to roost as capacity constraints are not only hampering Kenya Airways growth plans but also prevent more airlines to fly to Nairobi while others would like to boost their number of flights.
Only days ago has KQ announced the start of flights to Jeddah and Beirut too is on the cards, just as soon as the next two Embraer E190 aircraft join the fleet in coming weeks to allow the re-deployment of B737NGs to the new longer distance routes. Watch this space.