- CAPA Analysis
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Flying is by far the most convenient way to get to Kenya. The capital Nairobi is a major African hub and flights between Kenya and the rest of Africa are many. Most international flights to and from Nairobi are handled by Jomo Kenyatta International Airport. Kenya Airways is the main national carrier, while many domestic operators of varying sizes run scheduled flights within Kenya. Destinations served are predominantly around the coast and the popular national parks - where the highest density of tourist activity takes place.
The Kenya Civil Aviation Authority is a state corporation that is responsible for aviation industry regulation and providing air navigation services.
Airports in Kenya
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Zambia's booming economy increasingly reliant on Kenya and Ethiopian Airways. A flag carrier needed?
As southern Africa enjoys a commodities boom, Zambia, like its neighbour Zimbabwe lacks an international airline of its own, leaving the country reliant on a small number of foreign airlines to provide connections to tourism markets and trading partners. British Airways' decision to pull out of Zambia in Oct-2013 after 80 years of service is a considerable blow to European connections. BA will redeploy the capacity to Ghana where greater returns are in view following Virgin Atlantic's withdrawal.
Privately owned Proflight Zambia operates a domestic network in Zambia and the seemingly prudently run airline has regional expansion plans, but is unlikely to be able to extend its business beyond Africa in the foreseeable future.
Zambia’s Government has been attempting to negotiate a funding deal to relaunch a flag carrier to replace Zambia Airways, liquidated in 1995 after 31 years' operation. However, the unhappy history of African governments meddling in the affairs of their national carriers means private investors are reluctant to become involved. Meanwhile, Africa's hub carriers like Kenya Airways and Ethiopian Airways are increasing service.
fastjet has reported a USD42 million net loss for the six months to 30-Jun-2013, but its directors remain upbeat about the fledgling African LCC’s prospects, with its Tanzanian domestic operations exceeding expectations and making a profit on an underlying route basis. But the directors acknowledge in the unaudited accounts that the carrier will need to raise further funds in the future “which represents a material uncertainty over going concern”.
fastjet’s ambition to establish Africa's first pan-African low-cost carrier is continuing to encounter strong headwinds. On its own admission, the Tanzanian market is too small to sustain the company and international expansion is critical to its longer term survival.
But the first international route from Dar es Salaam to Johannesburg has, perhaps predictably, run foul of South Africa’s bureaucrats forcing the eleventh hour postponement of the route launch by about two weeks to the middle of Oct-2013. fastjet will compete against South African Airways (SAA) as the only other operator on the route and has promised to reduce fares by 60%. fastjet is taking online bookings for flights departing from 18-Oct-2013.
Africa’s unenviable record of government interference in the continent’s aviation system is demonstrated by no less than nine carriers currently surviving at the behest of their respective governments through a variety of financial support mechanisms collectively worth about USD2.5 billion.
In most cases this support serves only to distort any prospect of a level playing field, preventing privately owned carriers from competing effectively. Nigeria is even taking this a stage further as state support of private carriers is being undermined by a desire to relaunch a government owned national flag carrier. In other cases, such as Uganda, new state-owned airlines are planned to compete with successful privately owned operators in markets that often lack sufficient demand to support them both. Whatever the motives, and many of them are questionable at best, the outcome is sadly predictable.
In most cases Africa’s national carriers suffer at the hands of government mismanagement and interference, key among them is the continent’s largest airline, South African Airways (SAA) which is the subject of the biggest turnaround plan currently under way. This could offer a vital precedent if it succeeds - and if it doesn't.
Korean Air seeks new markets after betting the house on N America, seemingly without SkyTeam support
Korean Air in Sep-2013 deployed its A380 to Atlanta, making the city the third in North America to see Korean Air's A380 service. Like fellow SkyTeam member, Air France, Korean is focussing much of its A380 attention on US points - as befits Korean Air's status as the largest Asian airline in North America, despite its population of only 50 million.
But Korean Air is realising this position comes with the corollary of heavy exposure to the North American market. Some 36% of its ASKs are on North American routes, a single market proportion that no other Asian carrier applies.
Airlines are looking to reduce risk more than ever, and Korean Air is no different: the carrier is looking for new markets it can build with time to diversify itself away from North America. Yet North America will not lose prominence anytime soon for Korean Air. This is partially due to North America's strength but also Korean Air's weakness so far in finding new markets. It has entered Nairobi and purchased CSA Czech Airlines, both moves that will need considerable time to mature. Korean Air has broken Asian airline inertia and is thinking creatively – in some areas, at least – but now needs to bed down the strategy.
Cameroon’s overall aviation market has grown by 46% in the year to Sep-2013, driven by an influx of Western African carriers competing on regional routes and national carrier Camair-Co adding 77% to its domestic capacity.
The bulk of the growth has come from Western and Central African carriers including Karinou Airlines from the Central African Republic and Rwandair, while Turkish Airlines has provided the country with its third European link.
Camair-Co continues to hold a monopoly, but profitability remains elusive and the Cameroon Government in Sep-2013 replaced CEO Matthijs Boertien after just nine months in the job, naming a former finance minister as chairman to lead a turnaround and to find an investor willing to take a 51% stake in the carrier.
Nigeria’s aviation transformation programme is making good progress with the government’s extensive airport renovation project of 22 federal airports reaching the half-way stage and the remaining 11 airports to be remodelled by 2015.
Foreign carriers, attracted by Nigeria’s 170 million population and economic potential are also bringing in more capacity, in particular Ethiopian and Emirates, while Arik and Gol are preparing to reopen a direct link between Nigeria and Brazil for the first time in about 20 years.
But domestic carriers continue to struggle under the burden of massive debt, high operating costs and the prospect of increased competition from a proposed new national carrier and potential start-ups.