Why Nairobi-Mogadishu direct flights are yet to take off

The aviation regulator is yet to provide approval for resumption of direct flights between Kenya and Somalia following the recent meeting between the heads of state of the two countries.

The Kenya Civil Aviation Authority (KCAA) has not issued Notice to the airmen ((Notam), which will set off direct flights between Nairobi and Mogadishu.

KCAA said they will issue the Notam soon after they get some clarification.

President Uhuru Kenyatta and his Somalia counterpart Mohamed Farmajo agreed last week to restore relations after months of frosty affair between the two nations.

“We have not yet issued the Notam but we will do that soon after getting some clarification,” said KCAA Director General Gilbert Kibe.

Kenya had in May suspended direct flights from Somalia’s capital Mogadishu to Nairobi for security reasons but Somalia argued that the measure could have been politically instigated. The move required all the flights from Somalia to first land in Wajir before proceeding to the Jomo Kenyatta International Airport.

Mr Kibe had in May said the suspension would last until August 9 when a review would be carried out and a decision made on whether to maintain or lift it.

However, that was not done. But the recent meeting by the two heads of state in Nairobi opened the window for resumption of direct flights between the two countries.

Kenya and Somalia are currently engaged in a row over maritime border on the Indian Ocean coast. The case has ended up at the International Court of Justice.

In 2006, Kenya imposed a strict security policy requiring flights from Mogadishu to land in Wajir for security checks before heading to any other part of the country.

The idea, Kenya argued, would ensure the safety of passengers and cargo, as Al-Shabaab militants had taken control of vast areas of the country.

In September 2016, Kenya and Somalia signed an agreement to lift the ban, after both sides certified security arrangements for departing flights at Aden Abdille International Airport, the agreement was honoured in December of the same year.

Freight carriers plying Nairobi–Mogadishu route were hit by the new directive to have all airlines make a stopover in Wajir, saying the move added Sh1 million dent in their operating cost.

The operators, who were previously exempted from the stopover, are now required to make a security stop following a notice issued by KCAA.

Air freight cost had dropped by at least 15 percent between Mogadishu and Nairobi in 2018 following the resumption of direct flights to Somalia in 2017.

 

Source: https://www.businessdailyafrica.com/corporate/shipping/Why-Nairobi-Mogadishu-direct-flights-are-yet-to-take-off/4003122-5355260-2xjwi6/index.html

 

Kenya Airways still has some value proposition to investors

A hilarious quote from The Godfather (Part 1), “In Sicily, women are more dangerous than shotguns” got me thinking of something that’s equally dangerous; the vanity projects called African airlines.

According to the International Air Transport Association (IATA) 2019 report, while the global industry generated Sh685 per passenger in 2018, African carriers generated average losses of Sh109 for every passenger they flew.

While the global airline industry experienced another year (2018) of robust financial outcomes (IATA estimates that airlines generated a net post-tax profit of Sh3 trillion on EBIT margin of 5.8 percent), most African airlines fared poorly. What’s worse, 80 percent of air travel from or to Africa is still done by non-African carriers while African airlines cater to only 20 percent of the air traffic in the continent.

This got me wondering: Is the Sh45 billion ask akin to throwing good money after bad? Do investors believe things will be worse, the same, or somewhat better in the future? If one is leaning towards the same or better, then the airline stock equity upside potential appears highly attractive. But not too fast, the airline industry has plunged more than two-thirds since the beginning of the year.

First half 2019 performance has not been exciting – it posted a pretax loss of Sh8.56 billion, compared with a loss of Sh3. 99 billion in the same period last year. Besides, it faces the daily risks of labour issues, flight cancelations and high oil prices (jet fuel prices in the region are significantly higher than the global average).

Further, although the airline hedges a maximum of 41 percent of the current year’s projected fuel requirements via options, volatile jet fuel prices this year means its hedges are unlikely to have seen much benefit.

KQ also has to deal with fierce competition. Our neighbours (Ethiopian Airlines) are currently Africa’s largest in both revenue and profit. They have also managed to overtake Dubai as a conduit for long-haul passengers to Africa under its strategic expansion plans.

That said, KQ is not a vanity project. The “Pride of Africa” can still fly the friendly skies. Crucial factors such as the launch of the Single African Air Transport Market (SAATM) initiative, procurement of more efficient and cost-effective aircraft, launch of more strategic routes, normalisation of its labour issues and a focus on marketing could turnaround its fortunes. Indeed, these should drive returns and profitability.

Moreover, being a high-volume and a low-margin business, every penny counts. Focus on its “rationalisation” programme, deepening (and increasing) their regional partnerships – 41 percent of the airlines revenue in 2018 was realised from Africa – and non-interference from the government would be key to its future success.

This is one way the airline can increase return on capital, create value for its shareholders and reclaim its strategic position in African routes that are now being dominated by Turkish Airlines and Emirates.

To close, at the market level, long-term investors can still smile because the stock looks cheap and attractive at current prices despite the uncertainty. While it may be hard to make a case for adding shares to one’s portfolio right now, KQ is a compelling stock. No one doubts that it is still the “New Spirit of Africa”.

Source: https://www.businessdailyafrica.com/analysis/ideas/Kenya-Airways-still-has-some-value-proposition/4259414-5355164-10btm9p/index.html

Silverstone Air Suspends flights for a week

Silverstone Air temporarily suspended all it’s scheduled flights from November this week, following a directive from the Kenya Civil Aviation Authority (KCAA).

KCAA stated that they had made the decision after conducting adhoc compliance audits on the operations of the local airline.

They however pointed out that all other Silverstone Air Fleet remain operational as the outcome of the ongoing surveillance activities by the authority are waited on.

Silverstone Air assured their customers that they would work with customers to help minimise disruptions in their travel.

Members of the Kenya Association of Travel Agents (KATA) stated that though there were minor hiccups, most of their clients had been rebooked with other airlines.

Mr Patrick Kamanga of Deans Travel Centre said, “Our Support for Silverstone Air remains unwaivered. We hope the process can be quickly sorted and of course, safety assured for all.

KATA Chief Executive stated that despite the challenges which many other airlines have experienced at one point in time, Silverstone Air has made air travel accessible to most Kenyans through safe and affordable flights across the country.

KATA, he however emphasised, remains steadfast in ensuring the highest standards of professionalism are maintained by all her members in their operations.

IATA calls upon Africa to develop through Sustainable Development Goals

Governments and industries in Africa have been urged to focus on travel and trade as one of the priorities that will allow aviation to drive economic and social development in the continent.

The International Air Transport Association (IATA) said travel and trade is among four other priorities that will further enable the achievement of the United Nations (UN) Sustainable Development Goals (SDGs)

In a keynote speech given during the 51st Annual General Assembly of the African Airline Association (AFRAA) in Mauritius, IATA’s Director General and CEO Mr. Alexandre de Juniac stated that safety, cost competitiveness and gender diversity are other priorities that will see to the realisation of the SDGs.

“Across the African continent, the promise and potential of aviation is rich. Already it supports USD 55.8 billion in economic activity and 6.2 million jobs. And, as demand more than doubles over the next two decades, the critical role that aviation plays in Africa’s economic and social development will grow in equal proportion. With the right tax and regulatory framework, the opportunities aviation creates to improve people’s lives are tremendous,” he further said.

To improve safety aviation in Africa, the IATA boss called upon more states to incorporate the IATA Operational Safety Audit (IOSA) into their safety oversight systems.

Smaller operations, Mr. Juniac said, should consider becoming IATA Standard Safety Assessment (ISSA) certified as ISSA provides a valuable operational benchmark for carriers not eligible for IOSA.

African states, he added, need to implement ICAO standards and recommended practices in their regulations. Currently, only 26 states meet or exceed the threshold of 60% implementation.

“Our top priority is always safety. And we must never forget that global standards have helped to make aviation the safest form of long-distance transport. There is a good example of that in the safety performance of African airlines. The continent had no fatal jet accidents in 2016, 2017 and 2018. That is largely due to the coordinated efforts of all stakeholders with a focus on global standards, guided by the Abuja Declaration. But there is still more work to do. Taking these three steps will raise the safety bar even higher,” said Mr. de Juniac.

IATA called on governments to liberalize intra-Africa access to markets and urgently implement three key agreements that have the potential to transform the continent. The key agreements are The African Continental Free Trade Area (AFCFTA) – to boost intra-Africa trade through the elimination of import duties and non-tariff barriers, the African Union (AU) Free Movement Protocol – to ease the severe visa restrictions that African countries impose on African visitors and Single African Air Transport Market (SAATM) – to open up intra-Africa air connectivity.

“My message to governments on this triumvirate of agreements is simple—hurry-up! We know the contributions that connectivity will make to the UN SDGs. Why wait any longer to give airlines the freedom to do business and Africans the freedom to explore their own continent,” Mr. de Juniac said.

IATA also called for the industry to do more to improve its gender diversity and for airlines in the region to support the recently launched 25by2025 campaign.

The 25by2025 campaign is a voluntary program for airlines to commit to increasing female participation at senior levels to at least 25% or to improve it by 25% by the year 2025. The choice of target helps airlines at any point on the diversity journey to participate meaningfully.

“It is no secret that women are under-represented in some technical professions as well as in senior management at airlines. It is also well-known that we are a growing industry that needs a big pool of skilled talent. Africa can be proud of its leadership in this area. But we need to do more. The 25by2025 initiative will help move our industry in the right direction,” said de Juniac. 

5 tech trends to keep an eye on in 2020

It’s no secret that technology is becoming an increasingly integral part of not only the travel industry, but humanity itself.

Add to that the rapidly evolving expectations of customers – immediacy, accuracy and personalisation are key to winning them over these days – and travel professionals well and truly have their hands full.

Identifying trends is key to staying ahead of the pack when it comes to the use of technology in travel. Here are five big ones you should be taking note of in 2020:

Biometrics

As government authorities and travel companies look for faster, more efficient and seamless ways of identifying and authenticating visitors, passengers and guests, expect to see biometrics to become a more commonly adopted approach.

While fingerprints and facial recognition are already widely used at airports across the world, airlines and hotels are also starting to implement these types of biometric technology to help speed up the check-in and check-out process, improve security and even authorise payments. 

It must be noted, however, that the gathering of customer data through biometrics brings with it privacy concerns around how the data is used and who can access it.

Smart rooms

An increasing number of hotels are cottoning on to the Internet of Things, and for good reason.

From enhancing the customer experience through greater personalisation and the ability to control rooms remotely, to improving sustainability and quickly identifying and responding to maintenance issues, the IoT is evolving hotels to better serve the needs and wants of tomorrow’s guests.

AI and VR

Artificial intelligence (AI) and virtual reality (VR) are already playing respective roles in the travel industry, but it’s the extent of their roles that will be interesting to watch.

Right now, travel companies are mostly using AI to sort through customer data to analyse business performance and manage their inventory, and to respond to customers faster with the creation of chatbots.

More and more hotels are utilising VR to showcase their offering online and increase bookings with things such as simulated hotel tours and interactive maps. VR is also set to be used for a customer’s entire travel search and booking experience, and with sustainability a major focus for all travel organisations, we could soon see the rise of virtual vacations.

Blockchain

Blockchain’s potential has been talked about for some time, but the power of this technology is finally starting to be realised within the travel industry.

Essentially, blockchain is a public ledger that allows information on transactions between parties to be stored and distributed across a decentralised, peer-to-peer network. Check out the below video for a more detailed explainer:

The most obvious and important benefit of blockchain for the travel industry is its ability to facilitate secure, traceable payments. However, this technology also has the ability to simplify customer loyalty schemes, track luggage movements and improve ID authentication methods.

Big data

If understanding and utilising big data is not already a priority for travel businesses, they may as well start digging their own grave.

Big data is simply a term used to describe huge sets of data that can’t be processed using traditional methods.

For those in the travel industry who make the most of big data, the rewards are game-changing. They can better understand their customers and target them more effectively, accurately predict future demand, enhance product pricing, and manage their reputation a lot more easily.

Source: https://www.travelweekly.com.au/article/5-tech-trends-keep-eye-2020/

SAA grounds itself – flights canceled in wake of strike action

South African Airways (SAA) has cancelled nearly all its domestic, regional and international flights scheduled for Friday, 15

November and Saturday, 16 November 2019. 

The cancellations follow an announcement by the South African Cabin Crew Association (SACCA) and the National Union of Metalworkers of South Africa (NUMSA) that their members will embark on industrial action from Friday morning. This is notwithstanding SAA’s repeated overtures to the unions to acknowledge the severity of the current situation facing the airline.

In a statement, SAA says the rationale for grounding the flights is that “to minimise the impact of disruptions for its customers.”

“We are putting our customers first and regret the inevitable inconvenience that these cancellations may cause our customers. However, by acting proactively SAA can certainly help customers find alternatives,” said Tlali Tlali, SAA Spokesperson.

“Unless alternative arrangements are in place, customers are requested not to go to their departure airports during the disruption as SAA will be unable to provide any assistance. Information on the status of our flights will be regularly updated on our

website,” said Tlali.

Only flights operated by South African Airways will be affected. 

All flights operated on partner airlines, including SA Express, Mango, SA Airlink and all codeshare partners, including flights operated by our Star Alliance partner airlines. 

These flights can be identified by their flight numbers and will operate as normal: SA 1000 – 1999, SA 2000

– 2999, SA 7000 – 7999 and SA 8000 to 8999.

SAA will operate flights from selected outstations on Friday 15 November 2019 back to SAA’s base, OR Tambo International Airport.

Regional flights, which will operate on Friday morning, will return from Maputo (SA147), Lusaka (SA067), Harare (SA025), Windhoek (SA073), and Accra (SA210).

International flights, which will operate on Friday evening, will return from Frankfurt (SA261), New York (SA204), Munich (SA265), Hong Kong (SA287), Perth (SA281), and London (SA235).

The airline will assess the situation on an ongoing basis and Customers will be kept informed of all operational developments on a daily basis.

Tlali stated that, during the negotiations with the unions, SAA presented a revised offer for employees delivering a 5.9% increase subject to the availability of funds from lenders. NUMSA and SACCA are demanding an 8% increase.

The National Transport Movement (NTM) has not stated whether their members will embark on a strike or not.

SAA says it attempted to dissuade the unions from embarking on industrial action by providing firm commitment dates to SAA’s offer of 5.9%. Discussions are continuing to resolve the wage matter at the time of issuing the statement.

“SAA will spare no effort to work jointly with the labour unions to find solutions that accommodate the employee demands, safeguard the business and return operations to normal,” says Tlali. 

Our Source: https://www.jacarandafm.com/news/news/saa-grounds-itself-flights-cancelled-wake-strike-action/

Uganda Airlines’ Mombasa flight gives traders faster connection

The introduction of Entebbe-Mombasa direct flight by Uganda Airlines is set to boost trade and tourism between Kenya and Uganda as the route will cut the previous flight journey time by more than a half.

The 110-minutes flight trip would play a vital role to thousands of Uganda traders who depend on the Port of Mombasa to do business considering more than 85 per cent of Uganda imported cargo pass through the port.

The route will add value to travellers who used to spend more than three to four hours to fly from Entebbe connecting in Nairobi to Mombasa.

Mombasa is an important city for Uganda and the East African region as the port is a logistical lifeline for the greater hinterland as a much-sought -after tourism spot and the new air link would be a perfect boost for business travellers, traders and holiday makers and it will be a great opportunity for coastal tourism to link up with Uganda, the pearl of Africa.

The Ugandan Bombardier CRJ900 aircraft introduced on the direct flight to Mombasa from Entebbe landed in Mombasa on Monday, making it the second Kenyan city where the airline operates following an earlier launch of operations to Nairobi on August 27 this year.

Uganda Airlines manager ground operations Harvey Kalama said the flights will ease doing business considering Ugandans play a big role in port business and in Mombasa tea trade auction.

“We expect our clients to enjoy promotional flights in the next three months during holiday season but at the same time the route is vital to traders who operate in Kenya and Uganda,” said Mr Kalama.

The airline will charge $200 (Sh20,000) to travel between the two destinations one way and they expect to increase the flights per week in the next three months after the promotional period.

“This move to commence a direct flight between the two towns comes due to mutual business relationship between Kenya and Uganda. Uganda Airlines is resuming its operation because of growing tourist trade and business between two countries and there is a need to cater for Mombasa market demand of trade and regional tourism,” said Uganda Consul in Mombasa Katureebe Tayebwa.

Mr Tayebwa said they are in talks with the Port Management Association of Eastern and Southern Africa (PMAESA) to entice its members to use the airline considering that Uganda is a major stakeholder at the port.

Uganda remains a key trade partner for Kenya as its exports and imports passing through Mombasa are increasing annually.

The latest figures for 2018 from the Kenya Ports Authority 2017 annual performance report show that Uganda remained the leading Mombasa port user, with its import cargo rising steadily from 6.5 million tonnes in 2017 to 7.4 million tonnes of goods last year.

Tea is one of Uganda’s biggest exports, mostly shipped to Pakistan and the United Kingdom and Uganda exports about 60,000 tonnes indirectly through the Mombasa tea auction as Kenyan branded tea through 27 exporting companies.

Mombasa will be the seventh destination to fly since the airline resume its operations about two months ago and the airline will be operating three times weekly; Mondays, Fridays and Sundays. The carrier currently operates scheduled flights to Nairobi, Dar es Salaam, Juba, Mogadishu, Bujumbura and now Mombasa, Kilimanjaro and Zanzibar.

 

Our Source: https://www.businessdailyafrica.com/corporate/shipping/Uganda-Airlines-Mombasa-flights/4003122-5347628-2a9yrn/index.html

Race Against Time as Travel Agents Search for DIP Replacement in Kenya

Travel agents in Kenya have until December 15 to find and place an acceptable financial security with IATA following the announcement that the Default Insurance Program (DIP) will not be renewed for 2020. The shocking announcement follows years of uncertainty over a financial security product that has proved to be popular among the Kenyan travel agency community. 

In a communication to travel agencies, IATA said that they were not renewing the DIP cover for 2020 after the current provider Saham Assurance failed to meet new requirements they had introduced. The Kenya Association of Travel Agents (KATA) has been leading efforts to try and salvage DIP but so far, those interventions have not succeeded. “We are doing all we can including talking to both IATA and Saham to see if we can find a solution. DIP is such an important product for this market, and it has served us well for the last 20 years without fail”, KATA CEO told the KATA Weekly Travel News.

It is feared that many travel agencies especially the small and medium sized ones may fail to meet the deadline set by IATA given that it takes for instance a minimum of three months to obtain a security backed bank guarantee in Kenya. To compound the problem, travel agents have raised concerns at the delays experienced while processing the Global Default Insurance (GDI), a product that IATA has been fronting as an alternative to DIP. GDI is offered by Euler Hermes, an insurance brokerage firm based in the UK with no known offices in Kenya and only services travel agents through an online portal.

Recently, KATA hosted an emergency meeting for its members to assess the impact of the withdrawal of DIP in the market and explore alternatives that agents could pursue within the timeframe provided by IATA. Through the experience sharing at the meeting, it is evident that many are still struggling with the only two options available i.e. bank guarantee and GDI. Some agents have already had their applications for insurance cover declined without being provided with a reason. Banks are adamant that they will only provide guarantees backed by cash deposits or charged property.

KATA CEO Mr. Nicanor Sabula assured members at the meeting that the Association is in discussions with selected banks which are conversant with the travel industry to fast track the process for agents interested in getting bank guarantees. He faulted IATA for being inconsiderate to local markets when they make decisions that end up disenfranchising the market. “IATA is well within its rights to come up with new requirements that help secure the business. However, they are doing it the wrong way. It does not hurt anyone if sufficient time is provided to stakeholders to transition in an orderly manner.”

In the meantime, agents will be spending sleepless nights in the coming weeks as they work towards finding a financial security before the December 15 deadline.

Thomas Cook’s Nordic airline renamed after investors swoop

Thomas Cook Airlines Scandinavia is to be rebranded as Sunclass Airlines after the collapsed tour operator Thomas Cook Group’s Northern Europe division was acquired by a trio of investors.

The investors include Strawberry Group, the fund controlled by businessman Petter Stordalen, as well as Altor Funds and TDR Capital.

Strawberry Group and Altor will each hold 40% with TDR taking the remaining 20%.

This investment consortium will provide a “strong and long-term” Nordic majority ownership of the leisure company and its 2,300 personnel, says Strawberry Group.

Thomas Cook Airlines Scandinavia has continued operating despite the liquidation of its parent company in September.

The collapsed leisure firm’s Northern Europe operation is also known as Ving Group, and includes tour operator activities in Norway, Sweden, Denmark and Finland – among them firms such as Spies and Tjareborg.

Ving Group says its core business is chartered holiday travel with Thomas Cook Airlines Scandinavia accounting for 85% of its volume.

Group chief executive Magnus Wikner says the investors’ “long experience” in the industry combined with financial strength will give the company “long-term stability” and the opportunity to develop.

Stordalen says the company has a portfolio of “strong Nordic brands” and amounts to a “crown jewel” among the region’s tour operators.

“It’s a fantastic business that has ended up in a very unfortunate situation,” says Altor partner Harald Mix.

He says that, through a restructuring scheme, the new owners will secure SKr6 billion ($620 million) in liquidity and guarantees.

The various operations are being moved to a new group, with some of the component firms filing for a technical bankruptcy to enable them to be taken over by the newly-established group being set up by the consortium.

Thomas Cook Airlines Scandinavia will be renamed Sunclass Airlines. The carrier currently operates around 14 aircraft, a mix of Airbus A330s and A321s.

Ving Group stresses that bookings and trip organized through its tour operators will “continue as usual”.

Source: https://www.flightglobal.com/news/articles/thomas-cooks-nordic-airline-renamed-after-investors-461907/

Lufthansa Strike Update: Around 1,300 Flights Cancelled

Lufthansa is cancelling over 1,000 flights scheduled over the next two days due strike by the German cabin crew union UFO, which began at midnight on Wednesday and will last until midnight on Friday.

Somewhere around 180,000 passengers on Lufthansa flights are expected to be impacted by the cancellations.

Lufthansa said it was forced to ground 700 flights on Thursday and some 600 on Friday, with a large proportion of planes halted in the Germany’s busiest transport hubs at Frankfurt and Munich.

Flights by Lufthansa’s other airlines including Eurowings, Swiss, Austrian Airlines, and Brussels Airlines are not affected, the airline said.

Lufthansa provided a new, updated schedule on its website Wednesday. After experiencing “technical difficulties” due to high demand, the website is working again as of Thursday morning.

Lufthansa is offering all passengers with a booked flight through Frankfurt or Munich on Thursday and Friday a fee waiver for rebooking a new flight within the next 10 days. Lufthansa is also offering passengers who have flights cancelled outside of Frankfurt and Munich the ability to rebook free of charge on another flight.

Passengers on domestic flights can exchange tickets for a Deutsche Bahn (German Railways) train ticket free of charge.

The UFO union is striking because of a dispute over pay and pensions, and the union’s legal status. Lufthansa has strongly condemned the strike “in the strongest possible terms.”

Source: https://www.travelmarketreport.com/articles/Lufthansa-Strike-Update-Around-1300-Flights-Cancelled