Shortly after the deadly COVID-19 (coronavirus) pandemic started in Kenya, the country has been forced to lock down its borders and airports from both local and international travels. The Kenya government has also employed the use of passenger airbuses as cargo planes for the export of flowers, fresh fruits, vegetables like green beans and peas as well as meat to Europe and Asia to meet high demand.
Due to the slowdown of production in Europe and Asia where the pandemic is biting hard, there has been a high demand for essential products from underdeveloped countries where the impact of the pandemic on production has been minimal and airlines charge a premium for their services. This could account for why the Kenyan Ministry of Transport permitted the Ethiopian Airlines to diversify its licence for passenger planes, using six of them to freight cargo from Nairobi and Mombasa to Europe and Asia.
This licensing agreement between the government and the Ethiopian Airlines isn’t welcomed by the heads of Kenya Airways who worry that rival carriers will take a huge chunk of the export business. This has made Kenya Airways(KQ) contest the government’s decision to issue such a significant licence to the foreign carrier with consulting them. The head of the Kenyan national carrier is concerned that the licensing agreement will give the Ethiopian Airline an undue advantage over it in a period when the business largely depends on exportation for sustainability as passenger travel has been grounded in the country.
In a statement, Allan Kilavuka, the Kenyan Airways Chief Executive (CEO) said: “We have objected to the move to have Ethiopian Airlines use their passenger flights for cargo business in Kenya because we were not consulted on the impact that this would have on our business.”
According to Kilakuva, the national carrier was not consulted on the impact that the Ethiopian Airlines deal would have on its business. He added that the carrier depends largely on the cargo business as it generates some Sh11 billion annually, to pay salaries and utilities like security, water and electricity.
On March 22, the Kenyan government paused all international travels and shut down movement in its major counties. This has had a significant impact on the flow of income for its national carrier, leaving the cargo business as its core means of sustenance while it seeks government bailouts.
Recently, KQ applied for a multi-billion shilling government bailout to avoid collapse as the pandemic mounts hard pressure on its existence. The carrier had sent an emergency notice for additional funds to both the Treasury and the Ministry of Transportation requesting for funding to aid the maintenance of grounded planes, settlement of staff salaries and utility bills.
KQ’s financial distress may have motivated Kenya to grant a licence to the foreign airline. As opposed to worrying about how to fund the operations of Ethiopian Airlines, the government would derive revenue from it. However, this new agreement would hurt the distressed national career by causing a reduction in its market share.