Can you tell us briefly the history of Airkenya since its inception and what you have accomplished so far?
Airkenya was started as a joint venture of two companies, one, which was Air Kenya Ltd. and the other was Sunbird Aviation Ltd. They got together in 1985. Previously, they both had 10 years experience in the local aviation market. At that time Airkenya was doing small aircraft charters and Sunbird Aviation had started doing scheduled services mainly to the Masaai Mara and other game parks. The joint venture was called Airkenya Aviation, a combination of the two companies. Two years later, in 1987, the smaller company Airkenya, exercised its right to buy out Sunbird and from then onwards we have operated as Airkenya Aviation. Over the years we have dropped the Aviation and we operate as Airkenya.
You have also changed your image?
We had to revamp our image 3 years ago, and we started with our logo. Our original logo had taken the sun bird from Sunbird Aviation and taken the "Air" from Air Kenya. We then had it revamped by an advertising company, Saatchi & Saatchi, into a stronger image. Now it is much stronger than it was.
What kind of business do you offer?
What has happened over the years is that we have significantly increased our scheduled service operations. That accounts for an average of about 75% of our business being scheduled flights and 25% being charters. The scheduled services have now grown from only scheduled operations to game parks, to also operating scheduled services on the routes between Nairobi-Mombasa-Malindi, which until 1992 was reserved for the State company, Kenya Airways
There has been a basic change in our business and the number of passengers we carry. Last year (1998), on our scheduled flights we flew 155,000 people. Putting that into perspective we can say that we have become a regional airline. In the world ranking of regional airlines, last year we were No. 92 in terms of activity.
Kenya Airways has become the biggest success in Kenya's privatization history. Does Airkenya have any plans to follow Kenya Airways' steps?
Our schedules are at the moment limited to within Kenya because of bilateral agreements where airlines are operating across borders. During the privatization of Kenya Airways it agreed that was for 5 years from the date of the privatization deal, the Government would not give cross-border traffic rights to any other airline. That has recently changed. We have been pushing them. We need to grow to other regions, such as Tanzania. Over the last six months, COMESA countries have come together and they have set out a declaration that has been signed by the various presidents. One of the COMESA objectives is to have an "Open Skies" policy within COMESA, with the first liberalization starting October 1st 1999.
About two weeks ago, we were designated as the second carrier from Kenya authorized to fly to other countries of the COMESA region. Our authority will be to operate on a regional basis. That's exciting for us.
We have to look at how we fit into the market because the 4-5 years that KLM and Kenya Airways have been together have put them way ahead. However other airlines are not overjoyed at the liaison of KLM-Kenya Airways which has given them such a dominant position in the market. If we start operating the regional service, to be viable, we have to talk to other airlines (Swiss Air, Sabena, British Airways, Emirates, etc.) offering them a feeder service
Can you tell a bit more about your aperations?
It has to be understood that most of our operations are flights into game parks. Kenya Airways does not go into those areas. Out of our 155,000 passengers last year, two thirds were associated with game traffic parks flying on small aircrafts: 13, 18, 30 seats, up to 50 seats, a whole different operation from Kenya Airways airport- to-airport operation. We only really compete on the Mombasa route head-on. In fact we operate from different airports. Ours is closer to town, and that has its advantages.
We have built a steady support from a certain market segment. Our customers are different from Kenya Airways' where 60% of their traffic is on-ward traffic either coming into Nairobi in their way Europe, or coming from Europe going elsewhere. At Airkenya we are aiming at a completely different market. When we decide to fly into Dar-Es-Salaam, Entebbe, Harare, Lusaka, etc. we will go head-on with Kenya Airways, there is no getting away from that.
What is the profile of your clients?
They are mostly tourists, either travelling individually or in groups. Usually they contact their local travel agents in their country, and the come with standard packages. That is the way many people come into Kenya or East Africa for the first time. They start in Nairobi, then they go to see Amboseli, then to the Aberdares to see the Treetops hotel and afterwards Samburu, to see the desert area. Then they can come south to Nanyuki, from where we fly them to the Masai Mara and back to Nairobi. Most of them go down to the Coast for a week on the beach, or they go into Tanzania. We have a company in Tanzania called Regional Air Services which is basically a smaller version of Airkenya. There we have charters and scheduled flights in the north of Tanzania into the Serengeti, the Ngorongoro Crater, and Lake Manyara. We work with many major tour operators such as Abercrombie & Kent in the US.
In terms of nationalities North Americans constitute 35-40% of the traffic, followed by the British and then a split of the Europeans: French, Germans, Italians, Spanish. About 5% or our customers are Japanese. | You also have executive helicopters. Can you mention other services you offer as well as some figures about your company?
As I mentioned we own Regional Air Service in Tanzania, even thought it could have been called Airkenya Tanzania. The reasoning behind this is that, for the time being every aviation company can only be licensed in the country where it is operating. Hence you certainly need your own set-up there, that is why Regional Air Services was set up as a separate company from Airkenya. We started planning our penetration of the Tanzanian market five years ago and operations have been ongoing for two years. It was really done recognizing that many tourists, especially the Americans, were viewing East Africa as a double destination holiday. Places like the Serengeti, and the Ngorongro Crater are unique and different from Kenya, and what stopped people from going there for a long time was that the support facilities such as the lodges, hotels and air traffic was not as developed as it was in Kenya at the time. Then the Serena group went in and developed several high quality lodges, as did Conservation Corporation. We were the next link in the chain by setting up a scheduled service. Now the tour operators who are familiar with us here have the confidence to fly with us into and within Tanzania.
The helicopter services came around as a sideline type of activity. The proprietor of these helicopters needed a base to operate from and he wanted an association with an established company, so that's how Executive Helicopters came into being. However it is not a main line operation.
We have about 235 permanent employees and around 10 temporaries. The turnover last year (1998) was about US$ 15 million.
The tourism sector in Kenya has suffered serious drawbacks in the past few years. How has it affected the performance of Airkenya?
There are two distinct types of tourism in Kenya: the Coast tourism and the Safari tourism. Amongst the Coast tourism there is a heavy predominance of German tourists who want to lie in the beach and maybe have a two-day driving safari to Tsavo National Park, but basically, they come for the beach holiday. Then you have the American and the British end of the market who primarily come for the safari, to see the animals, the scenery etc., who may tag on something of the coast. In most cases, the Americans don't. It doesn't appeal to them. They can go to Mexico or the Caribbean if they want to lie in the sun. You have got to separate the two markets when you talk about tourism in Kenya.
There was a time when the number of tourists from Germany was very high, but when they started to feel the economic effect of taking in East Germany the Germans stopped traveling so much and the number of tourists going out of their country dropped quite dramatically. They were more concerned about jobs, inflation, unemployment, etc. That seriously affected the coast.
On top of it, Caribbean countries such as Costa Rica, the Dominican Republic, etc. started to dump capacity on the market, and that affected dramatically the Kenyan coast. There were also some civil disturbances at the Coast which were serious at the time, even though they did not affect tourists directly, except in terms of perceived risks. European tour operators noticed this risk and sent tourists to other parts of the world. Obviously, they made a sensible decision at the time, since sending somebody to an area where they knew there had been some disturbances could have cost them large sums in terms of insurance claims and liabilities. So again that affected the coast market.
The safari market, however, did not suffer to the same extent. It has to be accepted that we have had isolated problems of insecurity, but to a large extent these were over-exposed by the press. The Julie Ward case (she was murdered in a National park) happened almost eleven years ago and it is still talked about. Journalists wrote some negative reports about the country at that time, but that was the environment of Kenya at that time. Something like that would not happen now. There is a lot more accountability and transparency now. There is a very different attitude and a very proactive response to negative incidents now.
In the safari tourism market we did not suffer until one year ago. We were seeing 10-15% increase in traffic yearly. Over the last year, though we are down 10% from where we were a year ago. However in June this year we were higher and July is off to a good start. This might have been caused because there has been a lot of positive participation in trade shows worldwide. We are increasingly working with the Kenyan Tourist Board, and now the Government has been more open about problems. It is listening to the industry and is showing a more positive attitude. For the last six months, we have been a better industry, we have been campaigning quite hard and it is starting to show in the statistics.
What are your future plans for the next millennium?
To start with we have not increased our fares for the millennium. We have told suppliers that we will keep our standard rates for that period. Regarding our plans for the future we have probably got as far as we can go in terms of game parks scheduled services. We have increased our routeS it this year, with a new run into Tsavo National Park which hosts a couple of high quality camps. Scheduled services have to run for about one year to allow it to get into the brochures. You cannot commit yourself for three or four weeks, you have to have the nerve to hold on and run it.
Our future plan is to consolidate the tourist market sector that is traveling between Kenya, Uganda and Tanzania. We are also looking at more business-related traffic. We are also trying to expand our regional bases in places like Dar-es-Salaam, Entebbe, Harare, Lilongwe, Lusaka, Zanzibar etc. In fact Zanzibar is one of those flavors-of-the-month type of places - has been so for the last year-and there is no direct flight from Nairobi to Zanzibar. It is serviced by Kenya Airways through Mombasa. That is one of the routes that we have been trying to push.
We also want to maintain our market share which to game parks is close to 100%, but we have to be on guard since there is always people prepared to come and have a little nibble at you. |
