Tackling operational cost in Africa

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Tackling operational cost in Africa

Allan Kilavuka, CEO of Kenya Airways, says that African airlines must get the support they need to bring social and economic benefits to the region. Interview by Graham Newton.

Can you tell us about your strategy and the fleet and network expansion?

We are excited by the opportunities in Africa. Kenya Airways is an African carrier, and our mission is to connect Africa to the world and the world to Africa. We want to leverage Nairobi as a hub and especially for intra-continent traffic.

The airline is growing, and we are predicting that will continue. That means we need to increase our fleet by about 30% over the next five years. It won't be easy, however, as there is not much availability, and we also want to simplify our fleet.

The aim is to reduce fleet types to just two, which will enable a substantial reduction in cost and far greater efficiency in operations. Depending on what we achieve in terms of fleet, we will also be looking at new markets, again with that emphasis on connecting Africa to the world and promoting trade and tourism within the continent.

Why are you expanding cargo services and what improvements can we make in this sector?

Cargo is important not only for Kenya Airways but also for Africa. We see ourselves as enabler for trade across the continent. At the moment, cargo is about 10% of revenues but the goal is to increase this to 16% in five years.

Most of our cargo is carried in the belly of passenger aircraft but we have two dedicated freighters and will add two more in 2024. In the next couple of years, we also hope to add a widebody freighter.

Of course, the air cargo sector is in great need of simplification, especially in Africa. But I look at this as another huge opportunity for collaboration and digitalization. Everybody in the value chain can make an impact and help reduce cost and increase efficiency.

At the moment, there is a lot of paperwork and little commonality. We can start harmonizing at a regional level-for example, in East Africa-but there is a long way to go.

What can be done to reduce operational costs in Africa?

This is the issue for African carriers. There are three aspects to this:

Infrastructure deficits-airports and air traffic management systems tend to be old and that makes them more expensive to operate. Airlines end up picking up those costs.
Taxes-in Africa, aviation is seen as elitist. We know this is not true. Africa is a big place and flying is the only viable way to travel for most journeys because road and rail connections are poor, if they exist at all. Nevertheless, aviation is taxed heavily, it faces numerous challenges, and the regulatory compliance requirements among African states are not harmonised. Kenya now has a free entry policy, but many countries do not and that curtails their trade and tourism.
A lack of automation and technology-many processes still rely heavily on manual labor. It is expensive and time consuming and open to error. There are numerous opportunities for collaboration across the value chain.
Are you confident that liberalization in Africa-through the Single African Air Transport Market-will happen?

Yes, I am confident it will happen. But these things take time to mature, especially in Africa, and we must accept it will be a gradual process. After all, there are 54 countries in Africa. That's 54 different ideas about how it needs to be done and the timeframe involved. Africa is a very diverse continent, and each country has unique circumstances.

So, the best way would be to take a regional economic community (REC) approach. In East Africa, there are five countries. Let's start there and then we can roll out the process and lessons learned to other countries.

Do governments in Africa understand the value of aviation?

Not well enough, unfortunately. If they did, there would be more support for the industry. Aviation doesn't get enough understanding from governments and that means it doesn't get enough investment. It is not seen as a solution to the continent's challenges other than as a tax opportunity.

But if there is an emergency or healthcare situation, aviation is vital. The industry can also provide considerable social and economic benefits but to fully enable those benefits, we need governments to take a strategic view of the industry and to develop good aviation policies. So far, that hasn't really happened.

Do you feel that safety in Africa is improving?

There has been a significant improvement but of course more needs to be done.

Kenya Airways has been certified under IATA's Operational Safety Audit (IOSA) for a long time and we want to share our experience and help other carriers. I do see smaller airlines approaching us for help and that is great.

One area that we have to strengthen is civil aviation authorities. We need to be proactive and improve their quality. That will take support from governments and the industry.

How difficult is it to get aircraft spares and how is this affecting your operations?

It has always been difficult in Africa. We once had an aircraft grounded for a year because of a lack of parts. That leaves a lot of money on the table. The problem is that OEMs are focusing on new aircraft as opposed to repairing older models. But the situation is improving, and it shouldn't affect operations too much.

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How important is sustainability? And can Kenya become a producer of sustainable aviation fuels?

Often, when people talk about sustainability, they are only talking about sustainable aviation fuels (SAF). SAF are important but they are expensive. And sustainability is a broad term and a concept that must be integrated into all aspects of the airline business.

So, at Kenya Airways, we view sustainability holistically. That means we focus on how we can reduce waste, make our flights more efficient, or improve our ground operations. Ground vehicles have several alternative fuels available, for example. And we are also investing in solar energy and expect to have that up and running by the end of 2025.

And let's not forget sustainability is also about people. We are very active in trying to ensure we have more women and other minorities in key positions. Diversity and inclusion are a big part of what will make the industry sustainable in the future.

Is it difficult for you to attract and retain staff?

No, Kenya Airways continues to attract and retain top talent. We believe that our employees are our key assets and have put in place programs aimed at ensuring they experience a fulfilling career. These include personal growth and career development; a competitive compensation and benefits; staff welfare and employee wellbeing; and a company culture that embraces diversity, inclusion and equity (DE&I).

In fact, we are on a culture transformation journey, known as Reignite. Part of the goal is to be an employer of choice.

Overall, through our Employee Assistance Programs (EAP) we ensure we take good care of our staff while promoting a culture of engagement, empowerment, and loyalty among Kenya Airways' workforce.

If you could make one change in African aviation, what would it be and why?

Kenya Airways advocates for greater collaboration among African countries to harmonize regulations, improve infrastructure, and enhance airspace management.

Simplifying bureaucratic processes and promoting open skies agreements would facilitate seamless connectivity, spur economic growth, and elevate African aviation to new heights.

This press release was sourced from IATA on 27-Mar-2024.