AIR TRANSPORT

KQ considering fare review to meet operating costs

CEO Kilavuka says costs are high

In Summary

•He says the airline is thinking of reviewing its ticket prices upwards to compensate for diminished demand.

•Air transport expert Moses Muriandi said KQ has no option but to review prices downwards if it intends to have a slice of the local market.

KQ plane departs from JKIA.
KQ plane departs from JKIA.
Image: FILE

Kenya Airways may  review its ticket prices to cover for increased operation costs, CEO Allan Kilavuka has said.

In a media interview ahead of the resumption of domestic flights, Kilavuka said the airline has had to come up with several measures to ensure the safety of passengers, pushing up operating costs.

Kenya stopped commercial domestic and foreign flights in March as a precautionary measure to curb the spread of coronavirus.

''Running an airline is a costly affair, especially in this current situation. We are thinking of reviewing our ticket prices upwards to compensate for diminished demand,'' Kilavuka said.

 

The airline's planned increase in ticket prices is likely to put it at a disadvantage in the domestic market where other local players are offering lower prices.

Currently, KQ's one-way ticket to Mombasa costs at most Sh14,600. The hike is likely to push it above Sh15,000.

This will be almost three times compared to Safari Link, Skyward and its sister airline -Jambojet that are offering a maximum of Sh6,000 for the same route.

Safarilink is charging Sh7,700 for its Vipingo route, an alternative to Mombasa.

It is flying to Kisumu at an average Sh5,700 per ticket, way cheaper than KQ's Sh12,897 tickets.

A spot check by the Star shows Skywards is selling its Mombasa (via Ukunda) tickets at Sh5,950 while Fly540 tickets are averaging Sh4,200.

Air transport expert Moses Muriandi said KQ has no option but to review prices downwards if it intends to have a slice of the local market to compensate for low demand in international routes.

 

''KQ has been relying on international arrivals, mostly tourists flying to the Coast. It has to lower prices in order to compete with budget airlines and the Standard Guage Railway (SGR),'' Muriandi said.

Kilvuka said the airline has so far lost Sh10 billion in revenue and expects this to hit Sh40 billion by the end of the year.

"Our business makes sense when flights are running. The more they sit idle, the more losses we incur,'' Kilavuka said.

Yesterday, the airline resumed domestic flights and is expected to commence international ones on August 1, depending on the severity of the pandemic.

It started with two daily flights to Mombasa and one to Kisumu and will review operations on-demand basis.

Kilavuka said they expect the demand to pick in the first two weeks, especially on the Mombasa route, but slowly return to other local destinations mostly serviced by its subsidiary, Jambo Jet.