Kenya Airways Chief Executive Forecasts 76pct Travel Market Lose by December

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The chief executive of Kenya Airways (KQ) says travel is not going to be cheap with projections the airline will lose 76 percent of its passenger market by December 2020.

Mr. Allan Kilavuka, in a Thursday webinar with fellow industry stakeholders, discussing available strategies for consideration for Tourism Recovery he said 55-65 percent of people travel for leisure.

“Therefore we are going to lose 51-76 percent of our market between now and December as business traveler last are the ones that are going to travel first,” Kilavuka was quoted by the Ministry of Tourism and Wildlife (MOTW).

According to Kilavuka,  the distance between aircraft seats is going to be the new norm. “This is going to spike the cost of air tickets.”

Mr. Allan Kilavuka, CEO @KenyaAirways: Travel is not going to be cheap. 55-65% of people travel for leisure. Therefore we are going to lose 51-76% of our market between now and December as business traveler last are the ones that are going to travel first. pic.twitter.com/kdaMVxZUpM

— Ministry of Tourism, Wildlife & Heritage (@Min_TourismKE) May 14, 2020

The International Air Transport Association (IATA) said with the Covid-19 pandemic, KQ’s passenger demand will dip by an estimated 2.5 million fewer passengers resulting in a $0.54 billion revenue loss, risking 137,965 jobs and $1.1 billion in contribution to Kenya’s economy.

Already, KQ has made a request to the Treasury for KSh7 billion emergency bailout for the maintenance of the grounded planes and payment of staff salaries.

“We can survive if we get some revenue from cargo, but only just survive. For us to meet our full obligations, we need government support urgently. Aircraft engines have to be maintained often and it is important that we get funds for this,” says Kilavuka.

In February, it received a KSh5 billion commercial loan to complete the scheduled engine overhaul program on its E190 Embraer fleet.

Damian Cook, chief executive E-Tourism Frontiers, a global programme to develop online tourism in emerging markets around the world indicated that the sector will not resume as it was before and it was critical to preparing for a new normal. “We need to be ready for that,” he said.

Cook sees a new normal where travel will become more personal, purpose-driven, and experiential.

“All impacts are increasing operational costs and reducing frequency which is driving us towards a lower volume higher yield travel model volume models will be unlikely to sustain until 2023 and it is doubtful they can sustain,” he said in his presentation. “With reduced wealth and new social concerns travel will be a more valued experience.”

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