Malawi’s Department of Civil Aviation stopped Kenya Airway’s rights Sunday following complaints from Air Malawi that the airline had terminated an agreement with the Malawian national carrier which gave it leeway to operate between the twin nations.
This means that while Kenya Airways can continue making stop-overs in Lusaka on its Lilongwe-Nairobi flight, it cannot pick passengers from Lusaka to Lilongwe and vice versa.
Reports from The Daily Times of Malawi indicate that Air Malawi begun flights to Lusaka this week after complaining that Kenya Airways had driven it out of the route through rock bottom prices.
“We are not operating on the route, we are in discussions with the authorities in Malawi,” said Mr Chris Karanja, the communications manager at Kenya Airways, while confirming the withdrawal.
The move is set to hurt Kenya Airways, which says the route is one of its most lucrative in Southern Africa, as it deepens its growth strategy of connecting more African cities to Asia and Europe through its Nairobi hub. The national carrier used to have daily flights on the route and would scale them upwards during peak times.
Kenya Airways started operating on the route in 2008 following a commercial agreement with Air Malawi.
However, it terminated the agreement in February 2009 but continued operating on the route, forcing Air Malawi to launch a complaint with the Department of Civil Aviation, according to Tony Chimpukuso, Air Malawi’s Traffic and Industry’s Affairs Manager, in reports in the Daily Times.
“The Lilongwe–Lusaka–Lilongwe route was among the most lucrative for Air Malawi until Kenya Airways acquired Fifth Freedom Traffic Rights, whereby they were allowed to pick passengers either on their way to or from Nairobi,” said Mr Chimpukuso.
He added that the agreement between the governments of Malawi and Kenya had a condition that required Kenya Airways to have a commercial agreement with Air Malawi to operate the Lilongwe-Lusaka route.
“We earlier had an agreement, Kenya Airways terminated it on technicalities but continued to exercise Fifth Freedom Traffic Rights on the Lilongwe-Lusaka-Lilongwe route on their own contrary to the MoU (Memorandum of Understanding),” said Mr Chimpukuso.
Kenya Airways is said to have deployed larger jets on the route, which gave it room to offer lower prices relative to Air Malawi, which was operating on smaller and aged fleets, forcing it to withdraw from the route.
Yesterday, Kenya Airways refused to give details on what led to its fallout with Air Malawi. Following KQ’s withdrawal from the route, Air Malawi resumed flights and has partnered with Air Botswana to operate joint flights on the route. Air Botswana is also eyeing the Nairobi market with the introduction of two weekly flights to Gaborone.
The recent incident is one of the many regulatory hurdles that the expansionist Kenya Airways faces while operating on the continent. African routes generate half of its revenues.
The airline has hinged its growth plan on spreading its reach to more African cities and increasing frequencies in exiting and lucrative routes on the continent.
Africa’s aviation sector is set to grow, powered by resource-rich and robust economic growth, and a burgeoning consumer market.
These and other factors are driving business and leisure travel, whetting the appetite of carriers like the Emirates, Kenya Airways, and newly formed Fastjet.
Kenya Airways’s passenger traffic in the first quarter remained flat or dropped in most regions other than African routes, which accounted for 52.9 of the 841,238 of its travellers.
The airline’s profit dropped 51 per cent to Sh1.7 billion ($340 million) in the year to March as its costs, led by labour and fuel expenses, rose faster than revenues leading to its becoming the worst performing counter at the Nairobi Securities Exchange over the past year.
KQ’s share price fall by 46 per cent in the past year to the current price of Sh12.45.