This archive report was first published on 6 May 2020.
Kenya Airways Diversifies Amid COVID-19 Pandemic ¶
Published on May 6, 2020
Kenya Airways, the national carrier, has been heavily reliant on passenger services, which account for 90% of its revenue. However, with the COVID-19 pandemic wreaking havoc on the global economy, the airline is now forced to diversify its revenue streams to stay afloat.
According to Kenya Airways CEO Allan Kilavuka, the airline has been working on diversifying its business to reduce its reliance on passenger services. "We have been heavily reliant on passengers but we now need to spread out our business. We are working on how to diversify to other revenue streams," he said.
The airline plans to diversify 40% of its business to other revenue streams, including cargo services. However, the lack of long-haul cargo aircraft has hampered the carrier's ability to conduct a serious freight business. Kenya Airways currently owns two B737F aircraft, which can only provide regional services, and there is limited cargo to transport within Africa.
As a result, the airline has converted its passenger aircraft into freighters, but this venture is not viable due to the high cost of using passenger aircraft and the limited space available for cargo. The airline is expected to make at least Sh200 million from about 53 missions, but this is a fraction of its revenue.
Cargo business has become lucrative during the pandemic, with only a handful of carriers operating from Kenya to other parts of the world. The national carrier is banking on the cargo business, which generates about Sh11 billion annually, to pay salaries and utilities.
However, the shortage in capacity has seen the horticulture sector express its concern over the high charges that freighters are levying, with the cost having doubled due to high demand and low freight capacity.
