The first airline ticket on the blockchain and more

This week in the travel tech industry, the first airline ticket through a blockchain has been issued. TripAdvisor has launched self-service advertising and Amadeus for Developers offers Artificial Intelligence APIs to stimulate the next wave of travel tech innovation.

Hahn Air becomes the first airline to fly a passenger holding a ticket issued via the blockchain using Winding Tree’s open-source travel distribution platform on a scheduled flight from Dusseldorf to Luxemburg.

The first “blockchain passengers” were Maksim Izmaylov, founder of Winding Tree, Davide Montali, CIO of Winding Tree, and Frederick Nowotny, head of sales engineering at Hahn Air.

Using the Winding Tree platform, Hahn Air is able to list inventory, manage the reservation requests, and receive payments once the booking process is complete. Accepted payment methods are cash, credit card, or cryptocurrency (LIF token or Ether).

Blockchain technology holds many advantages for the different parties involved in the process of booking an airline ticket:

  • It is open-source, meaning all market participants such as airlines, travel companies and distribution systems can easily connect and exchange transactions.
  • All market participants can directly interact with each other and perform transactions without intermediaries thereby reducing costs.
  • It is 100% secure. All of the necessary information is stored in a decentralised ledger which is verified by millions of sources and therefore cannot be changed or tampered with.

“We at Hahn Air are constantly exploring new technologies and we are proud to now demonstrate our technical capability to issue blockchain-powered Hahn Air tickets. We are pleased to be partnering with Winding Tree, the most established company when it comes to distributing travel inventory in the blockchain. Our goal is to investigate and monitor the opportunities this technology holds for travel distribution, even if widespread acceptance is still a vision of the future,” Nowotny said.

TripAdvisor Media Manager is a self-service platform that empowers small and medium-sized businesses and agencies to control their own cross-platform advertising campaigns on TripAdvisor. It is available to global advertisers, supporting more than 15 currencies, and offers a wide variety of targeting options to reach their core customers.

The launch of TripAdvisor Media Manager follows the introduction of a suite of new-to-market advertising services and solutions that enable tourism and non-endemic advertisers to reach more relevant, high intent audiences on and off the TripAdvisor platform.

“We’re excited to enable local and small businesses to easily and quickly create and upload their own campaigns that they can push live on TripAdvisor in a streamlined way. The real benefit is the ability to quickly grow a business by reaching nearly 460 million loyal, engaged and connected travellers who want to hear from brands that are relevant to them,” said Christine Maguire, vice president, advertising revenue for TripAdvisor.

Designed to help individual suppliers, niche partners and advertisers reach qualified audiences, businesses can ensure their content reaches consumers through three targeting options: user location, browsed destinations or recent travel planning activities on TripAdvisor.

The intuitive, automated platform lets advertisers upload their own creative for fast TripAdvisor review and approval. The native listing format enables advertisers to build their ads directly in-platform to seamlessly fit in with the TripAdvisor mobile experience. Advertisers can set their own campaign budget and schedule, and then monitor results and adjust as needed in a real-time dashboard.

In an industry first, Amadeus makes ready-to-use, AI-driven insights and functionality available to innovators and developers, helping them create exciting new travel solutions.

Amadeus is empowering start-ups and independent developers to gain an edge by launching a new set of AI Application Programming Interfaces (APIs) as part of the Amadeus for Developers program. These APIs will allow developers to build solutions that can predict travel intent, traveller behaviour, and flight delays, amongst others – without needing any prior background in AI or data.

This is the first time in the travel industry that AI capabilities are made available to start-ups and independent developers via open APIs.  Amadeus is providing ready-to-implement predictive models based on valuable insights and functionalities fed by Amadeus’ vast sources of travel data.

These APIs enable travel innovators to create exciting AI-based apps with brand new features and disruptive business models that can transform the travel experience. The insights are offered under Amadeus’ Self-Service API catalogue for partners, and any developer can start testing the APIs in less than three minutes.

Early adopters already demonstrated the value of these AI APIs at Amadeus’ hackathon in London on 9-10 November 2019. The hackathon showcased experimental uses of the APIs which include a ‘buddy’ app to reduce travel stress, and solutions to help travellers find activities to do at their destination and during flight layovers.

“At Amadeus, we constantly look for opportunities to take friction out of travel. That’s why we’re very excited to make these ground-breaking AI-driven insights and tools available to the travel industry for the first time. They will empower innovators to create amazing applications thanks to the power of AI and simplify the traveller’s journey” said Stefan Ropers, president, strategic growth businesses, Amadeus.

 

Our Source: https://www.traveldailymedia.com/travel-tech-this-week-november-28-2019/

 

Turkish airline AtlasGlobal temporarily suspends all operations

Turkish airline AtlasGlobal, previously named Atlasjet and launched in 2001 has just suspended all flights. The reason for the suspension is quite vague: they announce on their social media channels that it is entering into a new phase of restructuring in order to provide aunique flight experience“.

That unique flight experience will not happen for the passengers that booked until 15 December as AtlasGlobal redirects all passenger to its call centre. From 16 December, the airline promises to relaunch all sales channels including website, mobile apps, etc… and plans to relaunch on 21 December.

The airline is mostly flying out of Istanbul airport and has 16 Airbus aircraft in its fleet.

Official statement

Dear Passengers,

As per the decision taken by our airline, we have entered a new phase of restructuring in order to provide you unique flight experience. As of the 26th of November 2019, we have temporarily suspended all our flights.

During this period, all flight irregularities on the tickets until the 15th of December 2019 will be assessed by our teams.
All procedures regarding involuntary change and/or refund will be announced on the 16th of December 2019, on our website. Please contact callcenter@atlasglb.com with your PNR and flight information should you have any further inquiries and questions.

Tickets sales will be suspended until the 16th of December 2019 on all our sales channels including our website, mobile apps, etc.

Our Source:  https://www.aviation24.be/airlines/atlasglobal/turkish-airline-atlasglobal-temporarily-suspends-all-operations/

Jambojet Launches Flights to Kigali

Kigali — Jambojet has made its inaugural flight to Kigali, becoming the first low-cost carrier to fly the route.

The airline, which recently expanded its fleet with two brand new De Havilland Dash 8 – 400, will be flying once daily from its hub at the Jomo Kenyatta International Airport to Kigali International Airport.

Jambojet Managing Director and Chief Executive Officer, Allan Kilavuka, said the airline is taking advantage of the huge opportunity the African market has to offer.

“We mark a major milestone in our regional expansion strategy. Our aim is to grow our footprint across the continent while offering a unique product for these markets. We expect that our low-cost model will enable more people to fly affordably, conveniently, and safely,” Kilavuka said Monday during the inaugural flight.

The airline is also eyeing South Sudan, Mogadishu, Tanzania, Democratic Republic of Congo, Union of the Comoros and Malawi.

Jambojet currently flies to five local destinations namely Malindi, Ukunda, Mombasa, Kisumu, Eldoret and one regional destination-Entebbe, Uganda – from its hub in Nairobi.

Since inception in 2014, Jambojet, which was, in July 2019, awarded the coveted IATA Operational Safety Audit certification (IOSA), has flown over 3million passengers, 30 percent of whom are first-time flyers.

Our Source: https://allafrica.com/stories/201911260732.html

Tanzania Seeks to Partner Uganda in Aviation Sector

The revival of Uganda Airlines and Air Tanzania have raised the stakes for the aviation industry in the East African region as the two state-owned flag carriers fight for a slice of the sector currently dominated by international carriers, SADAB KITATTA KAAYA.

As Uganda Airlines launched two additional routes to Mombasa in Kenya and Tanzania’s Kilimanjaro International Airport, Tanzanian authorities were looking at possible partnerships with Uganda to cut out the possibility of unhealthy competition between the two countries’ airlines.

Uganda Airlines resumed commercial flights on August 28, almost three years after the revival of Air Tanzania in September 2016. But since the two airlines are fishing from the same pond for passengers on their regional routes, Atashasta Nditiye, Tanzania’s deputy minister of Works, Transport and Communications, suggests that the two airlines can complement each other with Uganda Airlines feeding Air Tanzania’s long-haul routes.

With two Airbus A220-300 and Boeing 787-8 Dreamliner in its fleet, Air Tanzania operates routes to Mumbai, India and Guangzhou, China, and plans to start flights to Thailand which are popular trade and tourism destinations for East Africans.

“Instead of competition, we can complement each other by Uganda Airlines flying passengers from its various destinations to Air Tanzania’s hub at Julius Nyerere International Airport, Dar-es-Salaam for Air Tanzania to take them to its long-haul destinations,” Nditiye said.

The second area of cooperation is in revamping the East African Civil Aviation Academy also known as Soroti Flying School, proposing that Tanzania’s civil aviation authority works together with Uganda’s civil aviation authority to revamp the flying school.

“We need to work together and empower Soroti flying school so that it builds capacity to train more pilots and other aviation personnel from the region,” Nditiye said.

Soroti Flying School, as is popularly known, was established by the East African Community (EAC) in the early 1970s. But with the collapse of the EAC in 1977, the school was taken over by the Ugandan government that has in recent years been struggling to keep it afloat.

With the revival of the regional bloc in 1999, ownership of the school became a major issue as partner states pushed to have the school’s ownership revert to the EAC. Nditiye’s proposals on the management of the flying school seemingly caused discomfort within the Ugandan delegation. To that effect, Aggrey Bagiire, Uganda’s state minister for Transport, told journalists that the Tanzanian minister spoke without information.

According to Bagiire, there are ongoing efforts by the Ugandan government to solve the issues that have for long dogged the operations of the flying school. For instance, Bagiire said, “President Museveni bought new aircraft” for the school that its fleet now has two twin-engine planes and seven single-engine planes.

Depending on their level, flight instructors earn on average between $4,000 (Shs 14.6 million) and $6,000 (Shs 21.9 million).

Much as its fleet has improved, the school still struggles to get fuel to run the aircraft which might affect the students.

“We need more money for fuel because fuel is key in aviation. When students are training to get licensed, flight time is considered, and if there is no fuel for them to fly the planes, they may not progress,” Bagiire told The Observer.

The flying school’s runway is meanwhile in the process of being improved so that student pilots stop moving to Entebbe to train how to take off and land at night because the school has no runway lights.

Our Source: https://allafrica.com/stories/201911251010.html

KATA flags off team on a Mt Kenya Charity Climb

The Kenya Association of Travel Agents (KATA) CEO Mr. Nicanor Sabula today morning flagged off a team heading to Mt Kenya on a charity climb.

KATA, the main sponsors of the event, raised funds during the KATA 2019 Annual Convention through its members and raised Ksh 100, 000 for the Tin Roof Foundation.

“It is with great pleasure that we get to participate in this noble cause. We are assured that the funds will be put in good use in support of the various associations Tin Roof Foundation supports,” Mr. Sabula said.

Mr. Shawn Koonce, the President, Tin Roof Foundation stated that the funds raised by the KATA members will be donated to the foundation to support its youth volunteering and development programme, ‘Simply Do Good’.

The contributions, he added, will be invested in expanding the Simply Do Good programme to over 20 campuses in 2020. This, he maintained, will help to create a new generation of leaders in Kenya who have integrity, a passion for community service, aligning well with the KATA Future Leaders Initiative.

“This year KATA has sponsored a significant portion of the Mt Kenya charity climb which due to its multi-charity involvement sends a strong message on the partnership, collaboration and empowering young leaders to take initiative and make an impact in their communities,” Mr Koonce said.

He further said, “through your support, KATA will be boosting a total of six organisations working in areas including maternal health, women and youth empowerment, education, youth leadership and sports development. We believe the multi-organisational climb message of “We can rise together” is one that resonates with KATA’s ethos.

KATA welcomed the opportunity to be a part of Simply Do Good community service projects alongside the young people sponsored.

As he flagged off the team from the KATA offices in Westlands, Mr Sabula thanked them for the collaboration and wished them a safe climb atop Mt Kenya.

 

KCAA lifts suspension of Silverstone aircrafts as Travel Agents call for resumption of services

The Kenya Civil Aviation Authority (KCAA) has lifted the suspension it had imposed on Silverstone Air’s Dash 8 Series Aircrafts last week. In a statement released to the public on Tuesday by the Director General Capt. Gilbert Kibe, KCAA confirmed that the airline had provided satisfactory corrective measures following comprehensive compliance audits conducted between 24th October and 15th November 2019.

Last week, the airline announced that it was suspending operations for the sake of safety of their customers after KCAA temporarily grounded the airline’s aircrafts to pave way for investigations following a series of reported mishaps.

Travel agents are now calling for the resumption of full services by the airline after the Aviation regulator gave the airline’s aircrafts a clean bill of health. Led by Patrick Kamanga of Deans Travel Centre, the Mombasa travel agents expressed eagerness to have Silverstone Air back in business in anticipation of the high number of passengers booking travel for the peak season.

KATA CEO Nicanor Sabula says that this being a peak season especially for local travel, the capacity of Silverstone is required in the market to meet surging demand for flights to popular tourism destinations as well as for those travelling to join their loved ones in the village for Christmas. “Whereas I do not agree in the first place with the decision by KCAA to completely ground an entire fleet of the airline, the fact that they have now reassured the travelling public of their safety is paramount.”

“I am now urging the management of Silverstone Air to reconsider their decision to suspend their operations indefinitely despite the setback they suffered in the last week. I must say that in the wake of the unfortunate decision by KCAA, Silverstone Air acted in a very responsible and professional manner, “he added.  

Silverstone Air has remained non-committal on when they are likely to resume operations with the Commercial Director Mr. Patrick Oketch stating that for now the airline has prioritized the sorting out passengers that had booked flights for December through January.

Using technology while you travel makes sense, but try to avoid these big mistakes

The arrival of November marks the unofficial kickoff to the travel season, be it over Thanksgiving weekend, Christmas road trips to see family next month or perhaps a winter vacation down south.

But in the digital age, travelers face a few extra risks that we didn’t have to worry about before laptops, smartphones, tablets and other devices were included among typical travel gear. It’s worth it to make sure to avoid some unsafe behaviors, which could be exploited by criminals, to avoid putting yourself (and your data) in harm’s way.

Here’s some travel-related tech mistakes you might be making, and how to fix them.

Avoid posting pics to social media 

While it may be tempting to post vacation photos in the moment, remember these posts are also broadcasting the fact your home is vacant at that time (insert the “face palm” emoji).

Yes, there are countless stories of travelers returning to a cleaned-out home, because they posted holiday pics to Facebook or Instagram, and didn’t quite know whom all their online “friends” were. Even if you’ve got a closed social network – where you’re super-selective about whom can see your posts – a friend could always leave their feed open and others could see it (say, at work).

Instead, if you want to #travelbrag (a hashtag coined by Hotels.com), wait until you get back home. It can wait!

Don’t use public Wi-Fi hotspots

While airports and hotels offer free Wi-Fi, you’re putting your information at greater risk when using these public “hotspots.” Malicious types can more easily access your data on these than when you are on a private network. And you might think you’re joining a legitimate network, like “Miami Airport Wi-Fi” when in fact it’s a fake (“rogue”) network setup by someone nearby, who’s seeking to access travelers’ info.

Also, those who provide free Wi-Fi can (and often) collect and sell data about your browsing habits.

Another misconception: a public Wi-Fi hotspot is safe if there’s a password required, often given out by the establishment. It’s not much safer than not having a password if it’s freely given out to everyone indiscriminately.

If you can avoid them altogether, don’t use public Wi-Fi. Instead, consider your smartphone’s cellular connection by creating a personal hotspot. If you want to use free public Wi-Fi, at least use a Virtual Private Network (VPN) to browse anonymously. A VPN – ExpressVPN ($99/year) is an example – is a service you connect to that protects your data from outsiders.

Otherwise, your online activity can be tracked by your service provider, the government, advertisers, and malicious types. And no, this isn’t the same as enabling your browser’s “Private” or “Incognito” mode, as that simply wipes your history and cookies when you close the browsing session (but what you’re doing while online can still be seen.

And once you’re on a Wi-Fi hotspot, refrain from inputting personal information, such as passwords and usernames. And of course, never conduct financial transactions, such as paying bills, shopping online, day trading or filing taxes.

Be smart with your smartphone 

All smartphones let you lock it with a PIN code, password, pattern or biometrics login (using a part of your body) to confirm it’s really you.

So long as you lock your device in some fashion, no one else can access your information should your device be lost or stolen. A thumbprint or face scan is most convenient, if your device offers it. 

The same advice could be applied to your laptop or tablet: require a password to use all your tech. That way, if it’s lost or stolen, no one can access your private information. 

Also, if you haven’t done so already, be sure to set up your device’s “Find My Phone” feature, so you can locate it on a map, if lost or stolen. If it’s stolen, never try to retrieve it yourself. Instead, work with the local authorities, just to err on the side of caution.

Use a smartphone case and screen protector, in case you drop your phone while traveling.

Some travelers choose not to have any important files with them on the road. Instead, they store everything in the cloud – such as OneDrive, Google Drive, iCloud, or Dropbox – and access what they need, virtually. Or you can use “remote desktop” software, such as Splashtop, to log into another PC, perhaps at home, and use it on your laptop while away, as if you were sitting in front of your home computer.

Don’t overdo it on data

Since it’s not recommended to use public Wi-Fi hotspots – at least not for more than, say, reading the news – be sure to have a healthy data plan if you’re using your smartphone while traveling.

But you can minimize the amount of data you use, in a few ways. For one, remember you can download a lot of content while you’re on your own private Wi-Fi network, before you leave home. Google Maps, for example, lets you download entire city maps to your phone to use offline should you expect to navigate around a new city.

The same goes for entertainment: Rather than having the kids eating up precious data while streaming Netflix or Amazon shows or movies in the backseat, you can download most (but not all) videos to your phone or tablet before you depart. Most music services such as Spotify let you do so, too.

 

If you’re using your phone outside of the U.S., remember you’ll incur roaming fees, so contact your carrier to inquire about the best travel plan they have, so you don’t come home to a surprise on your wireless bill. Those who travel overseas might consider renting or buying a local SIM card to put into the phone, as it’ll likely be cheaper than paying your carrier.

Here’s a few more travel tips to keep your data and devices safe and secure while you are on the road:

  • It’s not recommended to use a communal/public PC in a hotel’s business center or airport lounge, as a cybercrook could secretly install software to capture your passwords. But if you do, at least remember to log out of your online activity (such as a webmail service or social media account) before you leave.
  • Don’t use public printers at a hotel’s business center, especially if it’s sensitive financial or work documents, as those could be hacked, too. And what about that print job you don’t think worked? It might spit out those papers after you’ve left.
  • Consider a “privacy shield” on your laptop to avoid over-the-should snoopers. Unless they’re directly in front of your screen, which is where you are, it will look blacked out, as if the display was turned off. You can buy one based on the laptop’s screen size, such as 13 or 15 inches.
  • It’s incredibly important to back-up your phone’s important files – irreplaceable photos, videos, contacts, text conversations, and so on – just in case the device is lost, stolen, or damaged. You can back up files to your favorite cloud-based service or to your home computer using a USB drive or Wi-Fi/AirDrop. While you’re at it, keep a digital scan of your passport on this cloud drive, just in case this is stolen or lost, too, which could be helpful should you need to get a replacement.

Source: https://www.usatoday.com/story/tech/columnist/2019/11/02/travel-enhanced-technology-but-raises-some-safety-concerns/4114402002/

 

Boost for trade as Air India set for direct Mumbai-Nairobi flights

Air India is set to resume direct flights between Mumbai and Nairobi on November 27 following a two-month delay.

The direct flights were to begin on September 27 but were delayed to this month due to operational hitches.

“The planning for flights usually takes time and that is why there were operational delays. But all is now set for the flights this month with air tickets currently being sold…The maiden flight is scheduled to depart Mumbai for Nairobi at 6.25 am (local time),” said Indian’s High Commission to Kenya in a statement.

India’s national carrier is scheduled to fly four times a week between Nairobi and Mumbai and will cut travel time from between 10 and 11 hours to six hours. This will save travellers hours spent on flights that usually involve long layovers in Dubai, Middle East.

The commission notes that the flights are expected to shore up trade between India and Kenya as well as other East African Community countries.

Trade between India and Kenya is estimated at $2 billion annually.

According to 2018 data from India’s department of commerce, Kenya exports to India grew from $7.2 million to $137 million in 2017.

The data also indicates that India imports to Kenya went up from $1.974 billion in 2017 to $2.071 billion last year.

Air India used to operate directly between India and Kenya but later abandoned its operations.

Some of the key economic sectors that are expected to greatly benefit from the Mumbai-Nairobi direct flights include tourism, agriculture, health and pharmaceuticals as well as education.

“This week, we had a delegation of 40 Indian investors who met various Kenyan government authorities with a possibility of setting up or expanding their businesses in Kenya. It is expected that these flights will bring more people to Nairobi,” adds the statement.

In July this year, Indian High Commissioner to Kenya, Rahul Chhabra first disclosed that the flights would resume, noting that this was expected to shore up trade and connectivity between the two countries.

“I am excited to announce that Air India is launching direct flights between Mumbai and Nairobi on September 27 that also coincides with World Tourism Day. This will improve trade between Kenya and India and is a testimony that India attaches great significance to the people of Kenya,” added Mr Chhabra then in Eldoret.

Data released in January by Tourism CS Najib Balala showed that India ranks among the top five markets for tourist international arrivals in Kenya.

In the last three years, the number of visitors from India has doubled from 60,000 to 125,000 annually and it expected that the direct flights will boost the number. In August, Bollywood, India’s biggest film industry, also announced it would shoot a film next year in Kenya that is expected to showcase Kenya’s rich tourism potential. A huge number of Kenyans travel to India mostly for medical reasons, such as for cancer treatment, transplant surgery and joint replacement.

India is one of the most popular destinations for medical travel, with low travel fares and more affordable treatment options.

The India’s commission in Kenya said that there are plans to link Kenya’s and Indian’s hospitals as well as institutions of higher learning through satellite connectivity to boost health care services. The Indian government also offers 400 fully-funded scholarships to Kenyan students yearly to study in various institutions of higher learning.

Last November, Kenya Airways started its maiden direct flights from Jomo Kenyatta International Airport (JKIA) to New York City, US, in a historic flight in Kenya’s aviation industry.

Achievement of this milestone has not come easy for the Kenyan airline.

The US Federal Aviation Administration (FAA) imposes stringent conditions on African airports for clearance to fly directly to the US. Normal flights from Kenya to the US take up to 22 hours for the 11,849km between Nairobi and New York. But passengers now save up to seven hours, as the flights take 15 hours.

Source: https://www.businessdailyafrica.com/corporate/shipping/4003122-5355262-qqtfm6z/index.html

 

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