Travel agent’s industry announces 90% pay cuts for CEO’s in march 2020 and unpaid leave for employees from April 2020

March 26, 2020 / Comments (0)

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The Kenya Association of Travel Agents (KATA) has called upon the government to act urgently in shielding the travel industry from the economic effects brought on by the COVID- 19 pandemic that has caused global devastation.

KATA Chariman Mr. Mohammed Wanyoike stated through a brief update on the ongoing devastating impact of the Coronavirus on the travel industry in Kenya, that the industry is currently witnessing a grounding due to the announcement that international flights have been denied entry into Kenya effective midnight on Wednesday 25th March,2020.

“We are witnessing the shutdown of the travel industry. The economic effects are getting worse by the day and could become more permanent if the government does not act now.” he said.

Chairman, Mr. Mohammed reported that “the industry has evaluated its internal position consultatively and has taken up immediate measures to safeguard the health of the Travel Agents industry by the CEO’s taking a 90% pay cut in March 2020 and all industry employees going on unpaid leave from April,2020 for a period of two months. Travel Agents business is aligned onto Airlines, and hence in the absence of operating Airlines the Travel Agents businesses are 100% vulnerable”

The travel sector has continued to witness a drastic decrease in travel owing to the travel restrictions put in place by the Governments of Kenya, USA, UK, and European Governments, Middle East and Asia including India. As such, mid of March, some airlines cancelled their scheduled operations into Kenya. These airlines include Air India, Etihad Airways, South African Airways and RwandAir. Our National carrier Kenya Airways has suspended flights to and from key business and tourist destinations within their network.

Mr. Mohammed further said, “During the month of February 2020 the Travel Industry in Kenya recorded a decline in passenger number bookings of 50%, followed by a drastic cancellation of flight bookings, conferences and events resulting in a revenue loss to the sector of 85%. Over 95% of forward bookings for the month of April 2020 have also been cancelled since Europe, America and the Middle East issued lock down notices for non-citizens. The Travel industry has recorded Zero bookings this week and the forecast for April to June 2020 is the same. This is an unprecedented occurrence, and travel agents have no cashflows to support their employees in the coming months should the government fail to intervene”

Other notable findings in the travel impact analysis include:

  • Total spending on travel in Kenya in 2019 was Kes. 1.7billion on tickets, airline operating fees, and ancillary products and services. This has been projected to plunge by 60% by the end of 2020.
  • The estimated losses by the travel industry alone are severe enough to create job loss across the sectors. The full impact of the crisis is expected to last at least three quarters, with Q2 2020 being the low point.
  • The travel industry has over one thousand travel agencies, and it is projected that a majority of the travel agents are facing an imminent risk of collapse.

The association pushed for immediate intervention saying that it is imperative that the Government steps in to provide immediate relief measures for the industry.

“Temporarily shutting off travel from US, Europe and India has already exacerbated the situation caused by the heavy impact of coronavirus on the travel industry and the over 500,000 Kenyans whose jobs depend on travel. We have and will continue to engage with the government on policy steps that are necessary to ensure that travel agencies, 80% of which are small businesses can continue keeping their employees.”

“There are countless stories of travel businesses working hard to earn a day’s living. But the cold reality is that they cannot support their employees if they don’t have any customers, and they don’t have customers because of the actions needed to stop the spread of coronavirus. Government intervention is required to address the operating expenses of these travel agents going forward”, Mr. Mohammed emphasized.

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