KENYA: Kenya Airways Commences Non Stop Flights From Nairobi To New York

The long-awaited direct flight between Nairobi and New York City became a reality last night with the flagging off of the first Kenya Airways non-stop trip.

The national carrier’s Boeing 787-8 Dreamliner touched down at the John F. Kennedy International Airport on 29th october.

The maiden flight departed from Jomo Kenyatta International Airport (JKIA) at around 10:55pm and was expected to land on Monday at JFK International Airport at 6:55 am (1:55 pm Kenyan time).

Kenya Airways has now reduced the more than 24 hour long journey and it will be the fastest connection from East Africa to New York City, with a 15-hour duration eastbound and 14-hours westbound.

Flights to the United States are usually characterised by long stopovers in Europe and Middle East.

While flagging off the maiden flight, President Uhuru Kenyatta said the non-stop flight to the US was a confidence boost to Kenya’s economy and a positive signal for increased foreign direct investments.

The non-stop flight between Nairobi and New York City is set to provide a seamless experience for business and leisure travellers alike. It will open up Kenya and the region to the world to enjoy our hospitality and diverse culture, he said.

Kenya Airways group managing director and chief executive Sebastian Mikosz termed it as a great milestone, adding that it will act as a catalyst for attracting corporate and high-end tourism traffic around the world to Kenya and Africa.

This will also boost the economic growth of not only Kenya but the African continent, he said. The flight had a crew of four pilots and 12 flight attendants.

The national carrier will operate its Boeing 787-8 Dreamliner with a capacity of 234 passengers on the route.

Kenya Airports Authority (KAA) said the launch was a culmination of processes, audits and assessments by US Federal Aviation Administration (FAA) and the Transportation Security Administration (TSA), an agency of the US Department of Homeland Security, that has authority over security of travelling public in the United States.

This led to JKIA achieving Last Point of Departure status, setting the stage for Kenya’s national carrier to fly directly to the US.

KAA termed the flight as an endorsement by the international aviation community on the investment they have made at JKIA in improving infrastructure and enhancing security, safety and passenger experience at the airport.

Kenya Airways flights will be departing every day from JKIA at 11:25pm arriving at JFK Airport at 6:25am the following day.

From New York, the plane will depart at 12:00pm and land at JKIA at 10:30am the following day. The national carrier said the schedule will enable connections to and from over 40 African destinations through Kenya Airways hub in Nairobi.

The national carrier is a member of the SkyTeam Alliance, flying to 52 destinations worldwide, 43 of which are in Africa and carries over four million passengers annually.

It has modernised its fleet with its 32 aircraft being some of the youngest in Africa, including its flagship B787 Dreamliner aircraft.

KENYA: It Is Easy To Fly But Even Easier To Fly An Empty Aircraft, Says Kenya Airways Sebastian Mikosz

The new chief executive of Kenya Airways Sebastian Mikosz is known for improving LOT Polish Airline.

Kenya Airways is renegotiating its debt with local banks. What progress have you made so far?

We are hopeful the banks will convert part of the money owed into equity. I am not at liberty to divulge much information at this point but we are at the final stages of the negotiations.

Before your arrival, KQ had started a transformation journey dubbed Project Pride. Do you intend to carry on with it?

Project Pride had the advantage of being systematic. I believe what has been done so far has been beneficial. I want to continue with its methodology.

But for an airline, decisions take time to manifest. We are reviewing the financial status one line at a time and ticking what needs to be done. There are things that we can renegotiate in the short term, and we have started doing that, but there are also those that will take longer.

For example, we cannot pull out of an exclusive contract or out of an airport at the snap of a finger; or terminate people who have been assigned tasks till the end of year.

We are redesigning what is within KQ’s operation, there is a team for that. My job is to bring about financial results and there is a technical way of achieving that.

Part of what your predecessor did was release some of the wide body aircraft in a bid to cut costs. But considering plans to launch direct flights to the US, do you have the long-haul aircraft to handle the route?

We subleased some planes, three 777s to Turkish Airlines and two 787 to Oman Air. I don’t see us bringing back the 777s in the short term, and quite honestly also in the long term.

My decision is to stick to the 787. It is a very good plane. It gives us exactly what we need in the short term. We can fly it to Europe, Asia, big African airports and even the US when that time comes.

To control the cost of these long-haul aircraft, the more of the same type of fleet you have the better your margins. If you have different types, then you need separate crew, spare parts and different operations.

For an airline, having less than 10 aircraft of a certain type is not efficient. We have nearly 10 Dreamliners 787, so we are good at operating them. I hope in the future we will have more of these aircraft but from a wide-body perspective, we are good.

When should we expect the first direct flight to the US?

I would be cautious about commenting on the date because launching a regular flight is a complex operation.

Besides the security details, there are other procedures like negotiating the slots, having contractors in New York, putting the flight in the IT system, preparing the crew and, the most important part, having commercial agreements.

It is easy to fly but it is even easier to fly an empty aircraft.

You are mostly known for turning around LOT Polish Airline; how will you use the experience at KQ?

The situation at KQ is similar to LOT’s where issues are handled only in a certain way. There is a need for a shift in mindset. There is no African or other way of doing things; there is only a good way and a bad way.

I have seen companies in Asia, Europe and many other places suffer similar problems. All you have to do is make the right decisions and offer customers what they need. There is no easy way out and there will be decisions that will rub some people the wrong way.

You brought on board staff you had worked with at LOT. Why did you?

First of all they are not part of the management; they are working with the management. I brought in people whom I trust to work with the team.

How much capital is locked up in African countries that do not allow free movement of foreign currency?

We have large amounts in Burundi and Angola. For the other countries, we are trying to negotiate and pull the money out. This is an issue we have tried to negotiate within the African Airlines Association as it does not affect KQ only.

It is something that worries me because you have a profitable route but if you bring in the impact of the capital lock it becomes unprofitable.

KQ has been losing key talent, particularly pilots and engineers. How do you plan to address this issue?

We shall be professional about it, by focusing on training our pilots in Kenya. We presented the proposal to the board because we believe there is a huge potential of training young Kenyans.

The airline has its own training centre. There are other options like bringing in foreign pilots for a while but this will not resolve the issue.

There are concerns about the cost of KQ tickets. Wouldn’t it be wise to lower the price of tickets and attract higher load factors?

I disagree that our tickets are overpriced. We must remain competitive. The whole issue revolves around balancing revenue, yield, load factor and being profitable.

My job is to strike a balance and the more revenue I have the better I am able to do so. So load factor is one of the key measurements, but we have routes with low load factors like 55 per cent that are quite profitable.

Some emerging regional airlines are threatening to eat into your market share. How do you plan to respond to them?

I am here to work on KQ in the environment given to me. However, I appeal to the government to look at the broader picture of how our competition is structured and financed.

Look at Turkish Airlines for example, where the government controls everything; the same applies to Emirates, Etihad, Qatar and Ethiopia. We are operating in an open competitive market well aware that these guys can hit us.

Mr Sebastian Mikosz is aged 44.

Mikosz Sebastian has over 20 years of experience in executive management in the private and public sectors.

Mr Mikosz is a graduate of the Institute of Political Studies in France and holds a Master’s degree in Economics and Finance from Sciences Po Paris.

Before joining KQ, Mr Mikosz was CEO of online travel agent eSky.pl for 15 months.

He previously held the position of CEO of LOT Polish Airline.

Mr Mikosz has also worked with audit firms Arthur Andersen, where he started his career in 1997 in Paris, and Deloitte as a director at its Warsaw office.

He also served as vice president of the Polish Information and Foreign Investment Agency between 2003 and 2006.

Mr. Sebastian Mikosz has been Group Managing Director, Chief Executive Officer and Director of Kenya Airways Limited since June 01, 2017. Mr. Mikosz served as the President of Management Board at LOT Polish Airlines S.A. since February 2013, also served as its Chief Executive Officer and President.

Mr. Mikosz served as President of Management Board and Chief Executive Officer at eSKY.pl SA since February 2016. He served as President Member of Management Board of LOT Polish Airlines until 2010 and served as its Acting Chief Executive Officer and Member of the Management Board.

He served as President of the Management Board at Polskie Linie Lotnicze LOT since 2009 and also from March 2013 to August 2015. He served as Senior Advisor in the Corporate and Investment Banking Department at Societe Generale from 2011 to 2013.

He served as Managing Director at CCiFP from 2001 to 2003. In 2000, he worked on establishing the first independent online brokerage house in Poland. He served as General Director of the French Chamber of Commerce and Industry in Poland since 2001.

He served as Managing Director of the French Chamber of Commerce and Industry in Poland (CCIFP). He served as Vice President of the Polish Information and Foreign Investment Agency since June 2003 until September 2006 and supervised the Departments of Investor Assistance, Regional Cooperation and Research and Analysis.

He served as Managing Director at the Warsaw office of Amrop Hever, a HR consultancy company. He has gained his professional experience working in Poland and France. He has over 20 years of professional experience in executive management both in the private and public sector.

He started his career in 1997 with Arthur Andersen office in Paris, where he specialized in investments in the emerging markets. He also held various non-executive roles as Supervisory Board member.

He served as Chairman of the Supervisory Board at WRO-LOT Uslugi Lotniskowe Sp. z o.o. from September 2013 to May 2015 and EuroLOT from May 2009 to December 2010. He served as Vice-Director at Polska Agencja Informcji I Inwestycji Zagranicznych from 2003 to 2006.

He has been a Member of the Supervisory Board at Przedsiebiorstwo Handlu Zagranicznego Baltona S.A. since May 18, 2016. He has been a Member of the Supervisory Board at Eurobank since November 2015 and LOTAMS since February 2015.

He serves as Member of the Supervisory Board at Euro Bank S.A. Mr. Mikosz served as a Director at Deloitte Business Consulting from 2007 to 2009.

He served as a Member of the Supervisory Board at Eurobank from June 2011 to February 2013 and PKS Cieszyn from June 2003 to September 2009.

Mr. Mikosz holds a Master’s degree in Economy and Finance from the Sciences Po Paris. He’s bilingual in French and fluent speaker of English and Russian.


Tourism Observer

KENYA: Kenya Airways To Fly 10 Times A Week On Non-stop Flights To Cape Town And Commence Daily Flights To New York In October

Kenya Airways (KQ) will fly to Cape Town 10 times weekly following the introduction of direct flights to the South African city on Wednesday.

The three non-stop flights will depart Nairobi every Wednesday, Friday and Sunday as the carrier stretches its wings to capture the African market.

We are indeed very proud to increase our frequencies to South Africa to cater for the growing number of our customers who travel between Nairobi and Cape Town.

In addition to enhancing Africa integration, this new route will be beneficial to the tourism industry as it establishes vital links with our global network, said Kenya Airways Chief Commercial Officer Vincent Coste.

The national carrier began flying the Cape Town route via Livingstone in 2016, with seven weekly flights to the South African capital. This in addition to the three non-stop flights brings the tally to 10.

The carrier is set to have its maiden flights to New York as well as introduction of direct flights to Mauritius.

The carrier already has a pre-existing code sharing agreement with Air Mauritius, which flies between Port Louis and Nairobi.

This will mean that passengers from Kenya will from June have the option of flying daily to Mauritius.

KQ flies to 42 African destinations out of a total 51 globally.

Kenya Airways is set to commence daily flights between Nairobi and New York in October, marking a milestone for the national carrier that will cut the flight time between the two cities by more than seven hours.

Travellers have begun booking advance tickets for the airline’s maiden flight to the John F. Kennedy International Airport (JFK).

Kenya Airways has already secured a landing slot at JFK.

The trans-Atlantic flights, scheduled to depart Jomo Kenyatta International Airport (JKIA) at 10:30pm every day, will last 15 hours.

This is a reduction from the current flight time of over 22 hours, including lengthy layovers.

We are currently loading the flights onto our system. We shall go live and ready for bookings on Thursday, says Kenya Airways chairman Michael Joseph in a telephone interview.

The launch of direct flights between Kenya and the United States will mark a significant milestone for the business and for the country.

Passengers travelling to JFK will arrive at 6.30 a.m., in time for morning meetings, while the return flight from JKF will depart at 1.30 p.m. and arrive in Nairobi at 10.30 a.m. the next day.

Each trip will have a maximum of 234 passengers, 204 in Economy and the rest in Business Class of the national carrier’s Dreamliner aircraft.

Kenya Airways, known in short as KQ, had announced its preference to operate the flights through a code-share partnership with US carrier Delta Airlines, its SkyTeam partner.

Delta, Virgin Atlantic and KLM Air France are KQ joint venture partner and shareholder are, however, currently working out a time-consuming merger, which has seen KQ opt to go it alone for now.

When this merger is over, we may add another flight to the US with a connecting flight through West Africa, said Mr Joseph.

The government, KQ’s top shareholder, has recently stepped up its campaign to actualise direct flights to America, with the Uhuru Kenyatta administration anticipating it will boost exports to the US and help jumpstart the tourism sector.

With about 100,000 tourists visiting Kenya every year for leisure and business, the US remains the top source of visitors into Kenya from the Americas, according to Kenya Tourism Board (KTB) data

Imports from the US stood at Sh47.8 billion in 2016, mostly consisting of machinery and equipment while exports, mostly garments and apparels, stood at Sh43.4 billion.

Kenya has recently implemented a raft of recommendations by the US government to enhance security, among them separation of passenger arrival and departure terminals, clearing the flight path and fencing off the airport.

As a result, the US Federal Aviation Administration (FAA) last February gave Kenya the Category One rating, paving the way for direct flights subject to other permits being received by the airport and KQ.

Mr Joseph now says the airline has secured all but two permits required for it to fly to the US, a position the Kenya Civil Aviation Authority (KCAA) director-general, Gilbert Kibe, confirmed.

JFK is yet to be cleared as the last point of departure, a security-based permit to be issued by the US Transportation Security Administration, said Mr Kibe.

The other outstanding permit is the technical authority to operate from the FAA. I am confident that KQ will receive the two in time.

Mr Joseph, who also exuded optimism about securing the twin clearances, said it was standard airline practice to put ticket up for sale at the closing preparatory stages of entering a new market.

JKIA’s longstanding second-class status forced passengers flying from Kenya to the US to transit through Europe, the Middle East or the four African countries, South Africa, Ethiopia, Cape Verde, and Nigeria whose airports have the designation.

Airlines plying the JKIA and JFK route include Turkish Airlines (through Istanbul), Qatar Airways (through Doha) and British Airways (through Heathrow), KLM (through Amsterdam) and Emirates (through Dubai and/or Italy).

Ethiopian Airlines and South African Airways also have flights to the US while RwandAir hopes to commence such flights later this year.

KQ’s foray into the US comes at a time when the airline is facing an uphill task to turnaround its fortunes, with a recent restructuring of its balance sheet seen as the last chance.

The airline’s management, which recently announced a Sh3.8 billion half-year net loss for the business, hopes that the new route will help boost the their flat revenues.

Imports from the US stood at Sh47.8 billion in 2016, mostly consisting of machinery and equipment while exports, mostly garments and apparels, stood at Sh43.4 billion.

Kenya has recently implemented a raft of recommendations by the US government to enhance security, among them separation of passenger arrival and departure terminals, clearing the flight path and fencing off the airport.

As a result, the US Federal Aviation Administration (FAA) last February gave Kenya the Category One rating, paving the way for direct flights subject to other permits being received by the airport and KQ.

Mr Joseph now says the airline has secured all but two permits required for it to fly to the US, a position the Kenya Civil Aviation Authority (KCAA) director-general, Gilbert Kibe, confirmed.

JFK is yet to be cleared as the last point of departure, a security-based permit to be issued by the US Transportation Security Administration, said Mr Kibe.

“The other outstanding permit is the technical authority to operate from the FAA. I am confident that KQ will receive the two in time.”

Optimistic

Mr Joseph, who also exuded optimism about securing the twin clearances, said it was standard airline practice to put ticket up for sale at the closing preparatory stages of entering a new market.

JKIA’s longstanding second-class status forced passengers flying from Kenya to the US to transit through Europe, the Middle East or the four African countries — South Africa, Ethiopia, Cape Verde, and Nigeria — whose airports have the designation.

Airlines plying the JKIA and JFK route include Turkish Airlines (through Istanbul), Qatar Airways (through Doha) and British Airways (through Heathrow), KLM (through Amsterdam) and Emirates (through Dubai and/or Italy).

Ethiopian Airlines and South African Airways also have flights to the US while RwandAir hopes to commence such flights later this year.

KQ’s foray into the US comes at a time when the airline is facing an uphill task to turnaround its fortunes, with a recent restructuring of its balance sheet seen as the last chance.

The airline’s management, which recently announced a Sh3.8 billion half-year net loss for the business, hopes that the new route will help boost the their flat revenues.

Kenya Airways' destinations outside Africa are:

- Guangzhou, China

- Paris, France

- Hong Kong, China

- Mumbai, India

- Amsterdam, Netherlands

- Jeddah, Saudi Arabia

- Bangkok, Thailand

- London, United Kingdom

- Hanoi, Vietnam

- Dubai, UAE

Kenya Airways (KQ) has been feted as Africa’s leading airline at the 24th Annual World Travel Awards held in Kigali, Rwanda.

This is the second consecutive year the national carrier has won the coveted title, beating other nominees including South African Airways, RwandAir, EgyptAir and Royal Air Maroc.

KQ was also named the winner in the Business Class category for the fifth consecutive year, while Ethiopian Airlines bagged the award in the Economy Class category - winning it for the fifth year in a row.

Winning these awards would not have been possible without the passion and dedication of the Kenya Airways team and the strong support from our guests.

Our guests are at the heart of everything we do at the airline and these two awards confirm our undeterred commitment to them, said KQ boss Sebastian Mikosz in a statement Wednesday.

Ethiopian Airlines was feted as Africa's leading airline brand, coming out tops in the category against Kenya Airways, South African Airways, RwandAir, EgyptAir, Tunisair and Royal Air Maroc.

Cape Town International Airport in South Africa was named the region's leading hub while Diani Beach in Kenya was named as Africa's leading beach destination.

The World Travel Awards serve to recognise, reward and celebrate excellence across all sectors of the global travel and tourism industry within each key geographical region.

Last year's ceremony was held in Zanzibar, Tanzania.


Tourism Observer

KENYA: Kenya Airways May Merge With Kenya Airports Authority

Kenya Airways may merge with the Kenya Airports Authority (KAA) as part of a grand plan to deepen the airline’s recovery and maintain Nairobi’s status as a regional transport hub.

A policy paper which got the Cabinet’s approval on Tuesday, says the aim is to reposition KQ in a similar fashion as its main rivals, including Ethiopian Airlines and Emirates Group, which have relied on government backing to expand their reach.

The move also appears to be in reaction to the financial difficulties the carrier has continued to experience even after last year’s completion of a major financial reengineering drive, causing concern that it may not be able to withstand competition in the very near future.

Should matters remain in the current state, KQ, the biggest revenue driver for JKIA - Jomo Kenyatta International Airport, may collapse or significantly reduce operations within the next year.

JKIA will downgrade and eventually be relegated to the status of a regional airport as no foreign carrier will develop JKIA for the benefit of Kenya, KQ and the KAA said in a proposal document to the Cabinet.

The policy document named Project Simba notes that the carrier’s recent financial restructuring to the tune of Ksh75 billion ($750 million) was insufficient to resolve its challenges.

Project Simba says that the airline’s fortunes must now be hooked to a comprehensive national aviation policy.

Through a public-private partnership (PPP) that could be signed by September, Kenya Airways will take over all the staff and operations of the KAA in a move that will at once expand the range of its services to include ground handling, maintenance, catering, warehousing and cargo.

It is also envisaged that a special economic zone will emerge around the country’s main aviation hub, JKIA.

The government is further expected to support the joint venture by exempting it from certain taxes and allowing it to retain several levies as part of the plan to stop financial haemorrhage at Kenya Airways and bolster JKIA’s status as an East African aviation hub.

KQ chairman Michael Joseph, who helped craft the plan said finer details, including the new entity’s corporate structure and its implications on the airline’s shareholders, will be worked out in due time.

It is still early days. All the pending issues will be discussed, Mr Joseph said.

Michael Joseph said the government needs to stop looking at KQ as a profit centre on its own but should use it as a tool to deliver wider economic benefits, including attracting foreign tourists and multinationals seeking to establish regional headquarters in Nairobi.

While JKIA is fully owned by the government through the KAA, KQ’s ownership includes private investors whose interests will be addressed through the appointment of transaction advisers and the refinement of the project details.

The government’s stake in the airlines stands at 48.9 per cent, followed by 10 local banks (38.1 per cent). The rest of the KQ shares are held by local and foreign institutional and individual investors.

In contrast, KQ’s rivals such as Emirates, Ethiopian Airways, Qatar Airways and RwandAir are fully owned by their respective governments in what makes it easy to build synergies between the carriers and their home airports.

The proposed project is expected to help KQ add a minimum of 23 aircraft and more than 20 new international destinations over the next five years.

This, in turn, is projected to lift annual passenger numbers to 6.9 million from the current 4.1 million.

Fundamentally, the joint assets will result in synergies, boosting airline-related revenues, increasing exports of goods and creating 25,000 to 30,000 jobs in the future, the parties said.

It is envisaged that the PPP will have the KAA as the contracting authority and KQ as the private party.

The concession, which will run for a minimum of 30 years, will be held by a special purpose vehicle (SPV) that will be fully owned by the national carrier.

The concession will have variable and fixed fees, with the latter earmarked to settle the KAA’s current liabilities that amount to Ksh5.1 billion ($51 million) per annum.

The government is ready to tweak tax laws to afford the project the necessary fiscal space to implement the ambitious plans.

These include exempting the SPV from valued added tax and exempting KQ from paying the Railway Development Levy and import declaration fees on aircraft, parts and utilities.

Kenya Airways is on track to solvency and is banking on route expansion, cost optimisation and improvement of service after posting a $60.4 million loss.

During the year the carrier restructured its balance sheet and reduced its annual debt payment obligations, allowing it room to revamp its operations.

In his first year as chief executive, Sebastian Mikosz has seen the airline’s loan repayments drop significantly to $91 million, from $250 million in the year to March 2017.

As at December 2017, the airline’s total debt stood at $1.39 billion, with total assets of $1.4 billion. Its operating profit stood at $13 million, from $8.97 million the previous year.

The results are an improvement from last year, when it posted an after-tax loss of $99.6 million. The airline is now seeking partnerships, new routes and cost optimisation to complete its path to recovery by 2020.

We will next month seek the board’s approval to add more than 20 new destinations in Africa, Europe and Asia over the next five years.

We plan to use the five aircraft Kenya Airways sub-leased to other carriers to build capacity and carry additional passengers, Mr Mikotz says.

The airline will this year take back two Boeing Dreamliners sub-leased to Oman Air, with one of them expected in the country by September, which it plans to use to ply its New York route starting October and is expected to boost KQ’s revenues by between eight and 10 per cent.

The other Dreamliner and the three Boeing 777-300 aircraft leased to Turkish Airlines will be returned to the airline by end of next year.

We are looking at at least one European and one Asian route on top of the African network. We might announce two to three new routes to start operating next year, Mr Mikotz said.

Airline chairman Michael Joseph also said they plan to partner with other airlines.

We are discussing with South African Airways to join forces on aircraft repairs, route sharing and other issues. For instance, we fly to similar destinations in Africa, so why not share these? Mr Joseph said.

This year the airline also changed its financial reporting date from March to December in-sync with other aviation players such as travel agents, financiers and lessors.

Right now, we are restructuring the business, finding ways to increase revenues and keep costs manageable, Mr Joseph added.

The $60.4 million loss, the airline said was due to the 14 per cent increase in fuel costs mirroring global fuel prices, and a 20 per cent drop in customer numbers.

Last year the carrier airlifted 3.4 million passengers during the nine months to December earning $808 million, but its operating costs consumed $795 million.

This was a drop from 4.2 million carried in the previous year, which the airline blamed on the prolonged electioneering, which saw passengers change their transit points from Nairobi to other African airports.

KQ’s equity stood at $4.17 million in the period under review compared with negative $450 million in the year to March 2017.

The change in fortunes stems from a complex restructuring late last year, during which its main creditors, including 10 local commercial banks and the government converted $442 million loans into equity.

This saved it from downfall as part of a $2 billion debt restructuring programme.


Tourism Observer

KENYA: Kenya Airways Cuts Baggage Allowance,Seeks Exemption From Competition Regulations

Kenya Airways is seeking exemption from competition rules in its joint venture deal with Tanzania’s national carrier Precision Air.

KQ, which has a 41.23 stake in Precision Air wants regulatory approval to discuss revenue sharing, price setting, route schedules, sales and marketing on the two airline’s joint venture routes in Kenya and Tanzania.

The two carriers already have a code-sharing agreement that allows airlines to sell seats on each other’s planes on the Nairobi-Dar es Salaam route.

They have now applied to be exempted from competition regulations until April 2022.

In the joint venture agreement, the parties intend to align and coordinate reciprocal code sharing on the joint venture routes, said Competition Authority of Kenya director-general Wang’ombe Kariuki in a notice.

The routes in discussion are Nairobi, Mombasa, and Kisumu, Dar-es-salaam, Kilimanjaro and Zanzibar.

The parties intend to align and coordinate network management activities with respect to the Joint Venture including terms of routes, schedules, capacity and designation, pricing of ticket fares on the joint venture routes says Mr Wang’ombe.

The two airlines are also seeking exemption of competition rules in the management of any and all revenues attributable to the performance of the joint venture by any party.

These including without limit, setting up joint venues management systems and joint venue analysis systems, and joint marketing and sales activities with respect to joint venture.

Although competition laws forbid collusion to set prices, the law also allows companies to apply for exemptions. The Competition Authority gave the public 30 days to submit opinions on the proposal.

Meanwhile, Kenya Airways reduced baggage allowance on its intra-Africa routes to one bag, making it more expensive to fly with additional baggage.

The airline previously allowed users flying in Economy Class from one African country to another two bags of a maximum weight of 23 kilogrammes.

Flyers will now be allowed to have only one bag, with charges applicable for extra bags.

Baggage charges are a popular revenue makers for airlines.

Kenya Airways will implement a new baggage policy that will entitle its guests to 20 per cent discount on any extra bag purchases up to 24 hours to departure.

In addition to reduced extra baggage, fees within intra-Africa flights, guests will be entitled to one free bag in the Economy Class cabin at a maximum weight of 23 kilogrammes per passenger, Kenya Airways says.

The carrier however said the intra-Africa one bag allowance will not apply to passengers travelling to and from other continents, while Business Class passengers will maintain their allowance of two free bags at 32 kilogrammes maximum weight per bag.

Charges added onto the actual cost of a ticket have become a way for carriers to make additional income while keeping the cost of tickets low.

The carriers charge Economy Class passengers fees for baggage, legroom and seat selection.

The new baggage policy is part of Kenya Airways’ strategy to provide simplified and discounted competitive prices for passengers who book their extra baggage, any time before 24 hours to departure while enhancing customer service for our guests, says Kenya Airways Group Managing Director and CEO Sebastian Mikosz.


Tourism Observer

KENYA: Kenya Airways, Air France And KLM In Partnership - Higher Fuel Costs Reason For KQ High Losses

Air France has formally joined the Kenya Airways and KLM joint venture (JV), as the French carrier launched direct flights between Nairobi and Paris.

The new agreement, which was signed Monday, allows passengers to connect to 26 and 57 other destinations beyond Nairobi and Paris, respectively.

Air France, which merged with KLM in 2004, will operate three weekly flights between Nairobi and Paris.

The airline will fly the latest-generation Boeing 787 on this route, the Dreamliner with 30 seats in Business class, 20 in Premium Economy class and 225 seats in Economy class.

Air France, KLM and KQ customers will also reserve flights operated on a code share basis by one of the three airlines on Amsterdam and Nairobi routes following signing of the partnership.

We are back on the Nairobi and Paris route because of the growing economic ties between the two countries.

To date, we have over 80 French companies that have selected Nairobi as their regional hub and this is one of the many opportunities we are looking to tap.

Our latest route will serve to strengthen our African routes, said Air France, senior vice president Africa, Frank Legre.

The agreement allows the three carriers to conduct concerted marketing and sales activities, align and coordinate pricing of tickets as well as exchange of staff in select areas.

KLM and KQ entered into a master co-operation agreement in 1995, which has seen them share revenues on certain routes based on a pre-determined ratio after deducting expenses.

We are accelerating our offensive on the long haul flights by forging partnerships and new alliances. We are set to unveil new routes and partnerships soon said Air France, Executive Vice President, Customer Division, Anne Rigail.

Meanwhile, Kenya Airways is set to introduce a more spacious but higher-priced Economy class on its nine Dreamliner aircraft in a bid to grow its revenues.

The national carrier, known as KQ by its international code, says it will increase the recline angle and legroom on 27 seats currently assigned to Economy class and charge up to Sh10,200 more for the convenience.

KQ made the announcement Wednesday when reporting that its revenue for the nine months to December stood at Sh80.8 billion and that its net loss for the period was Sh6.1 billion.

Any time one of the aircraft is grounded for an extended period, we shall make the necessary adjustments to the first three rows in Economy, said Vincent Coste, KQ’s chief commercial officer.

Customers can book these seats for between $50 and $100 depending on the season and length of the flight.

Airlines have over the years increasingly paid more attention to business class customers who pay significantly higher than their fellow passengers on the same trip.

Offerings such as bars and lie-flat beds aimed at increasing the cabin space for this special set of passengers have, inevitably, disenfranchised those who sit in Economy class.

KQ is now looking to book extra ancillary revenue from this new offering which it says has proved successful including among its partner airlines such as KLM and Air France.

Dreamliners are the commonly used aircraft on long-haul routes such as Europe and the upcoming one to New York hence KQ’s decision to retrofit for extra comfort to woe customers.

This aircraft has 30 seats in Premier World or Business class and 204 in Economy.

At the moment, the airline charges between Sh3,100 and Sh11,780 for passengers in need of seats with extra legroom, with the cost varying depending on the length of the flight and your loyalty programme ranking.

National carrier Kenya Airways’ shareholder value has moved into positive territory riding on last year’s balance sheet restructuring that reduced its annual debt payment obligations, leaving room to revamp its operations.

KQ’s equity position stood at Sh417 million in the nine months between April and December 2017 compared to negative Sh45 billion in the year to March 2017, according to a financial report that was released.

The change in fortunes follows a complex restructuring of the business that saw Kenya Airways main creditors, 10 commercial banks and the government convert Sh44.2 billion loans into equity to save it from total collapse.

Financial results that were released on Wednesday, however, show that Kenya Airways is still a multi-billion shilling loss-making operation that produced a Sh6.08 billion loss for the nine months to December 2017.

The results do not have a comparable period because KQ has changed its reporting period from March to the calendar year.

Michael Joseph, who chairs the company’s board, said the change in reporting cycle has been done to sync the airline’s books with those of stakeholders such as travel agents, financiers and lessors.

We are now concentrated on the industrial restructuring of the business, which includes finding ways of increasing our revenues and keeping costs at a manageable level, he said.

KQ’s precarious equity position that left it with less assets than its debt load meant that if it were to be liquidated, shareholders would be left with nothing.

Kenya Airways’ total debt now stands at Sh139.6 billion compared to total assets of Sh140.1 billion.

The airline made loan repayments of Sh9.1 billion during the period under review, a significant drop from the Sh25 billion paid out in the full year to March 2017.

Despite this improvement in its leverage, the carrier posted a loss for the nine months to December mainly driven by a 14 per cent increase in fuel costs and a 20 per cent drop in customer numbers.

KQ airlifted 3.4 million passengers during the nine months to December earning Sh80.8 billion in revenues but its operating costs consumed Sh79.5 billion.

Sebastian Mikosz, the airline’s chief executive, said attention is now turning to route expansion, cost optimisation and improvement of service delivery.

Top on the list are the direct and daily New York flights set to commence in October and which Mr Mikosz expects to boost KQ’s revenues by between eight and 10 per cent.

Kenya Airways (KQ) has posted a Sh6.1 billion net loss for the nine months to December as it announced a change in its financial calendar to sync with the calendar year.

The national carrier's management has attributed the loss position to higher fuel costs and the negative impact of a prolonged electioneering period.

Fuel costs, which went up 14 per cent in the period, remain the biggest challenge to KQ's profitability.

However, the airline is optimistic of 2018's outlook amid a planned rollout of daily flights between Nairobi and New York this October, non-stop flights to Cape town and direct flights to Mauritius.

Chief executive Sébastian Mikosz said the full financial impact of the new US route will be felt in 2019, adding he expects a revenue boost of between 8 and 10 per cent.

The firm will be recalling its Dreamliner from Oman Air to serve this long haul route.

Kenya Airways will, in partnership with its European partners, roll out economy comfort class on all aircraft in the next 12-15 months as part of its strategy to increase revenues.

Michael Joseph, KQ's chairman, said Wednesday at an investors' briefing that Polish consultants are still part of the team alongside consultants from other countries, adding that focus on the Polish misplaced.



Tourism Observer

KENYA: Kenya Airways To Commence Flights To Mauritius

Kenya Airways will this June begin flying four times a week to Mauritius, giving customers wishing to travel the route more options.

The national carrier said that the new flights will also set it up to take advantage of traffic between the United States and Mauritius, a popular destination for Western tourists, once it launches direct flights to New York in October.

Nairobi-Mauritius route will have a great impact on Kenya Airways upcoming direct non-stop flights to New York by reinforcing its attractiveness to American premium leisure travellers, the airline said in a statement Tuesday.

Kenya Airways will fly on Monday, Wednesday, Thursday and Saturday to the Indian Ocean archipelago.

The carrier already has a pre-existing code sharing agreement with Air Mauritius, which flies between Port Louis and Nairobi on the other days of the week.

This will mean that passengers from Kenya will from June have the option of flying daily to Mauritius.

Kenya Airways and Air Mauritius have extended their codeshare agreement to offer their customers more connections at their hubs in Nairobi and Port Louis.

The two airlines already have a longstanding code-share agreement where Air Mauritius uses Nairobi as a hub to connect to destinations in eastern and central Africa.

Kenya Airways similarly uses Mauritius to connect to Air Mauritius networks.

The networks of both our airlines are complementary and we are confident that this agreement will allow us find the synergies for us to grow our respective networks. said KQ’s group chief executive Sebastian Mikosz.

The airline on Tuesday sent 115 of its engineers and technicians on compulsory leave, following a High Court order on Monday requiring their immediate reinstatement after nearly a month in the cold.


Tourism Observer

KENYA: Kenya Airways Drops Flights To Hong Kong,Hires Polish Experts

Kenya Airways from next month will discontinue flights to Hong Kong and Hanoi route.

The discontinuation is part of a plan in which the airline is seeking greater efficiency on its network.

The route changes were first announced last week by the airline’s chief executive Mr Sebastian Mikosz.

The airline says that it plans to reroute the aircraft used to fly to Hong Kong and Hanoi to African routes.

This network change will also allow KQ to allocate more seats across its African network where the demand outlook remains strong and capacity insufficient on certain routes, the airline said.

Last week, the airline had also indicated that the aircraft currently used to fly to Hong Kong and Hanoi could also be used to fly to the United States once Kenya Airways commences direct flights next year.

Customers flying to Asia will be served through Kenya Airways’ partners.

The airline retains a daily flight to Bangkok and Guangzhou.

Former Kenya Airways finance director Alex Mbugua has written a protest letter to the airline’s chairman, Michael Joseph, detailing what he claims are the series of scandals that brought the company to its knees.

Mr Mbugua, in a letter dated August 28, 2017, accuses former Kenya Airways chief executive Mbuvi Ngunze of corruption and backstabbing while also roping in former chairman Dennis Awori in the decision to fire him from the top job.

Mr Mbugua says heavy discounting of ticket prices with the backing of top executives alongside other fare abuses were to blame for KQ’s heavy revenue losses estimated at Sh50 billion.

The former finance chief, who left the company in a huff three years ago, says he is the one who initiated the forensic audit that Mr Ngunze and Mr Awori are bent on using to have him prosecuted.

I believe that there are other parties at large who would want me locked up for good to ensure that the huge revenue losses are buried with me forever, Mr Mbugua wrote in the letter.

In his letter, Mr Mbugua pleads with Mr Joseph to intervene, even as he promises to sue the airline if information supplied by the company is used against him in court.

The firm is betting on debt, management and operational restructuring to return to profitability.

Mr Mbugua declined to comment on the letter, saying he did not know about it.

The board chairman, however, confirmed having seen it.

I have received it and it is with our legal advisors. No other comment, said Mr Joseph.

The Director of Public Prosecution (DPP) and the Banking Fraud Investigations Unit (BFIU) have gone after Mr Mbugua whose court case, alleging wrongful dismissal, is set to be determined on October 5.

Mr Mbugua says he is being positioned as the fall guy despite not featuring in a forensic audit report by Deloitte which recommended further investigations of four managers – Jane Kiboi (treasury manager), Githinji Itegi (supervisor, treasury and controls), Elias Ngao (former funds supervisor) and Jackson Njiiri (acting funds supervisor).

Mr Ngunze allegedly signed for a $7 million bank guarantee with collapsed Dubai Bank without board approval, and with a fake signature of the former finance chief.

Deloitte stated in their report that they had subjected my signature and that of former CEO Mbuvi Ngunze on the Dubai Bank opening letter and a bank guarantee letter of $7 million to handwriting experts, reads part of the letter.

On both instances, my signature was found to be forged, but that of Mbuvi was found to be genuine.

Mr Mbugua says he recently learnt that Mr Mbuvi was involved in the Dubai Bank saga from 2014 when he was still chief operating officer, exchanging correspondence with the lender’s former CEO Binay Gupta (sic) who later fled the country.

Mr Ngunze also made several trips to Dubai with Ms Kiboi – who reported to Mr Mbugua — without the knowledge of the former finance chief.

What is more curious is that these trips happened while Mbuvi was the COO and therefore had no business getting involved in treasury matters, Mr Mbugua said.

Mr Ngunze also went against company policy when, through his personal assistant, he approved Ms Kiboi’s day-time stay at Nairobi’s Ole Sereni Hotel on July 18, 2014 at a cost Sh14,790 and which was charged to his expense account.

Mr Mbugua says that about a year after he was appointed CEO, Mr Ngunze was informed by a whistleblower of a suspicious forex transfer of five million rand from South Africa to Citibank’s Nairobi branch.

Mr Ngunze also ordered an internal audit to be conducted at the treasury department without Mr Mbugua’s knowledge, a move the former finance director says was an unsuccessful calculation to incriminate him.

Mr Ngunze and Mr Awori would, however, eventually hound him out of office.

The duo demanded his immediate resignation in Mr Mbuvi’s office on January 11, 2016 but he refused to do so and was fired eight days later.

Mr Mbugua says Mr Ngunze has been coaching KQ staff on how to respond to enquiries by investigators, adding that the former CEO is not impartial.

Mr Mbugua’s letter lends credence to the view that mismanagement and/or corruption played a big role in KQ’s downward spiral.

The airline narrowed its net loss 61 per cent to Sh10.2 billion in the year ended March when its net worth sunk to a negative Sh44.9 billion.

Meanwhile, Kenya Airways chief executive Sebastian Mikosz has sent mixed signals regarding the tenure of five Polish nationals hired to help turn around the ailing national carrier.

While stating that the five expatriates will be hired on an initial three-month contract, Mr Mikosz fell short of clarifying whether the contracts are subject to extension.

The advantage of these guys is that I trust them and I have worked with them.

They could hit the ground (running) within I think three weeks.

Will they stay? Will they not stay? That is not decided, said Mr Mikosz at a press briefing.

Mikosz said the aviation veterans were hired from Poland— also his home country— because he wants to take advantage of their previous experience turning around an ailing airline.

The decision to hire Mr Mikosz, who took up the top post at Kenya Airways in June this year, was heavily hinged on his experience at Lot Polish Airlines, where he pulled a non-profitable entity out of the red.

The new employees were part of the team that revamped LOT Polish Airlines.

Their employment at KQ, which first became public on Wednesday through a leaked memo, was effective September 1.

He added that the new team would not be replacing any members of Kenya Airways’ senior management but would, rather, work with the existing team to improve operations.

Kenya Airways board chairman, Mr Michael Joseph, told journalists that the board had approved the new hires.

However, their recruitment has brooked protest.

In a statement, the Central Organization of Trade Unions (COTU) deemed the decision to hire the Polish nationals as “unacceptable”.

COTU says that hiring foreigners would exacerbate tensions at the national carrier.

Therefore the current chief executive officer Mr Sebastian Mikosz should bear in mind that Kenya has people,some people more qualified than him and there is no need for him to hire first line managers from his own country of origin, said COTU.

The five new employees are Monika Kiełtyka-Michna, former chief corporate officer at LOT Polish Airlines; Edyta Kijewska-Teny, a data and IT systems expert; Magdalena Serwach, a corporate governance expert; Marcin Celejwski, a former chief commercial officer at LOT Polish Airlines; and Michał Śmierciak who once ran LOT Polish Airlines’ procurement centralization.

Mr Mikosz said that he had presented the Kenya Airways board with a five-year plan that will guide the airline’s recovery.



Tourism Observer

KENYA: Sebastian Mikosz Kenya Airways CEO Appointed To IATA Board

Sebastian Mikosz The Kenya Airways CEO
Kenya Airways chief executive Sebastian Mikosz has been appointed to the International Air Transport Association (IATA) board an interim basis.

Mr Mikosz will stay on the board until next year when IATA holds its annual general meeting in Sydney, Australia, from June 3-5.

I am honoured to be appointed to the Board of IATA. This for me represents an opportunity to bring knowledge, experiences and passion for my profession to serve current, prospective and future communities, while also focusing on diversity and inclusion in the aviation industry, Mr Mikosz said

The KQ chief executive has more than 20 years of professional experience in executive management both in the private and public sector.

Mr Mikosz, who took over at Kenya Airways in June, has previously been CEO of eSky.pl, the leading central European online travel agent.

He has also been president and CEO of LOT Polish Airlines, one of the oldest airlines in the world - a position he held twice including an in depth turnaround of the company.

Kenya Airways is eyeing New York as its first destination when it starts direct flights to the US next year.

The national carrier sees the city as a convenient East Coast aviation hub to mark its entry into the US, before spreading its wings across the world’s biggest economy.

The airline, which last week received regulatory approval to operate direct flights to the US, also estimates that it will move 60,000 passengers in its first year of operation on the route.

We are currently focusing on New York due to the importance of point to point traffic with Nairobi. However, we are also studying other options on the US territory as we may expand our network in the US in the near future, Kenya Airways (KQ) Commercial Director Vincent Coste said in an interview.

In its submissions to the United States government, KQ had said that it plans to launch direct flights in April 2018, although the company has since indicated June 2018 as a more likely date.

New York’s JFK Airport was the United State’s fourth-busiest airport in 2016, according to Airports Council International.

The city is the country’s economic hub and being on the East Coast, it would be easier to reach relative to other hubs such as Atlanta International Airport, Chicago’s O’Hare, and LAX on the West Coast.

KQ received a foreign air carrier permit on September 5th from the United States Department of Transportation (DOT).

Meanwhile Jetways Airlines, is set to launch daily flights to Diani in November targeting tourists visiting the Kenyan Coast famous for its white sandy beaches and marine sports.

The airline will operate two daily flights to and from Wilson and Ukunda Airstrip. This will be the second scheduled flights route for Jetways, which also flies the Wajir.

Ukunda Airstrip is used by both commercial and chartered aircrafts. Passengers will pay Sh10,000 for a one-way ticket. The firm is flying to Wajir at a promotional fare of Sh6,000.

The airline says it is targeting holiday makers visiting Southern Coast regions that include Tiwi, Diani, Galu, Kinondo and Chale Island.

Diani Beach is one of the most exclusive locations for Kenya beach holidays and has consistently been voted one of the top beaches in Africa,it is home to several organisations such as The East African Whale Shark Trust which works to protect whale sharks,reads a statement on its portal.



Tourism Observer

KENYA: Sebastian Mikosz To Steamline And Make Profitable Kenya Airlines

Kenya Airways’ new chief executive Sebastian Mikosz is expected to increase its passenger numbers, further cut its operational costs, optimise its assets, review its networks, and reduce its dependency on shareholder bailouts.

The Polish national and aviation turnaround specialist is expected to push the national carrier towards self-sustenance in the short term, The EastAfrican has learnt.

Transport Cabinet Secretary James Macharia said that the incoming chief executive got the job because of his strong aviation experience, reputation and record, which saw him turn around LOT Polish Airlines to profitability after years of government bailouts.

Kenya Airways is facing the same issues his previous airline did. We were impressed with his strategy, as KQ shares a similar challenge. He is up to the task,Mr Macharia said.

His credentials that got him the job. We will be banking on them to make a success out of our airline.

In him, we got the best candidate and his credentials will be a plus to our national carrier. We believe he has what it takes to navigate us back to profitability in the short term,Mr Macharia said.

Mr Mikosz is expected in Nairobi mid this month. He is reputed to be a cost management sleuth, a factor that KQ badly needs to come out of the red.

Kenya Airways needs $600 million to stay on a straight course.

Mr Mikosz was tapped twice, in 2009 and later again in 2013, by the Polish government to head the LOT Polish Airlines, in which the state has a 69.97 per cent stake.

LOT, like KQ today, was in the middle of a financial crisis, had lost its market share, faced a labour crisis and consistently posted losses, which threatened to send it into bankruptcy.

Within six years, in his two stints as the chief executive, he reduce the headcount, improved liquidity and changed the operations style cutting net losses to $42 million, from a massive $187 million.

But during his first stint at LOT, he faced opposition over his proposed workforce and salary cuts, while cutting down its dependence on government aid, and eventually quit after he failed to meet the government’s timelines in the turnaround plan.

The KQ board is pushing for a quick turnaround. In a previous interview, former board chairman Dennis Awori hinted at seeing the airline back to profitability in the next year or two, with a projected profit of $20 million.

We want him to do the turnaround in the shortest time possible as we have a great outlook for Kenya Airways, Mr Macharia said this week.

The incoming chief executive managed to convert the regional European airline into a long range carrier, optimising the use of its Boeing 787 Dreamliner fleet to achieve success.

He is now expected to replicate that with KQ, whose strength has been intra-Africa networks, where it has been pushing the long haul customers to its Sky Alliance partners, including its other shareholder KLM, through codeshare agreements.

We hope to start flights to the United States soon, and through his strategy, we should see more of such operations across the globe, farther in the Americas and East Asia, Mr Macharia said.

In an interview with the Financial Times, Mr Mikosz said that he wanted as little government aid as possible for the Polish Airlines.

I am always not happy reaching out for government assistance. We want the aid to be as small as possible, so we are pushing ahead with cost cutting measures to squeeze as much savings as possible from all the aspects of our operations, he said.

Kenya Airways board chairman Michael Joseph said that outgoing CEO Mbuvi Ngunze will stay on as an advisor till the end of July.

KENYA: Polish National, Sebastian Mikosz Appointed Kenya Airways CEO

Kenya Airways (KQ) has appointed Sebastian Mikosz, a Polish national, as its group managing director to replace Mbuvi Ngunze who resigned last year a midst a labour crisis.

Mr Mikosz is will assume office on June 1, 2017.

In a statement announcing the appointment on Thursday, KQ chairman Michael Joseph said the new CEO is expected to lead the turnaround plan of the troubled airline.

Mr Ngunze is also expected to stay on as an advisor until the end of July, until when the carrier’s capital optimisation campaign is completed.

The incoming chief executive has been a player in the Polish aviation sector, having led Lot Polish airline for several years until he quit in mid-2015.

Mikosz, who previously served as Polish Airlines CEO, has more than 20 years experience in executive management in both public and private sector.

"He was the CEO of esKy.pl, a leading central European online travel agency and LOT Polish Airlines,"Joseph said.

He congratulated the new appointee and promised the crew's support.

"We wish him every success as he assumes his new responsibility. We have no doubt that with support we will strive to greater heights."

Mikosz's appointment ends months of the global search for the airline's CEO in a recruitment process by international firm Spencer Stuart.

Ngunze headed the troubled airline for the past two years and was due for retirement in March.

The outgoing CEO resigned in November last year amid pressure for him to leave.

The calls intensified after the airline encountered hitches that forced the delay of flights. The union accused Ngunze and his team of being unable to get the airline out of its financial woes.

Management changes saw former chairman Dennis Awori resign prior to the airline's half-year performance update and Joseph appointed to replace him late in October.

On April 28, Ngunze said he was asked to delay his exit to help implement KQ's recovery strategy amid the search for his replacement. They worked on the capital optimisation programme.

KQ is working closely with US investment bank PJT Partners which has been keen on helping it raise new debt and equity funds.