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Wednesday, March 21, 2007

Has Kenya Airways Gone To Sleep?

All is not well at one of the most successful airlines Africa has ever seen.

Keen observers are starting to see the classic tell-tale signs of complacency setting in. Delaying of flights without any word or apology, deteriorating standards here and there, little details that mean a lot and which inevitably lead to nothing but disaster in the end.

It is clearly emerging that all the stunning major victories that the pride of Africa has won in recent times may just be too much and has gone into the heads of key managers at the airline.

Unknown to most Kenyans, Kenya Airways has really turned out to be a giant killer in many instances and the fact that it is now one of the very few airlines in the world turning a profit is no accident at all.

Just to illustrate what has been happening, it is useful to examine the case of the recent battle with South African Airlines. The South Africans moved into the East African region and quickly subdued and conquered everyone and everything. As you read this, every key commercial sector in Kenya is under the firm control of our brothers from down south. Mostly they met little resistance although things got a wee bit messy in bottling and the beverage industry (remember the vicious beer wars between Castle Breweries and Kenya Breweries?), but the South Africans were victorious in the end.

They then quickly moved to take over the East African skies. SAA (South African Airways) burst into ongoing negotiations Kenya Airways were having then with the bankrupt Air Tanzania and closed a deal with lightening speed right under the noses of KQ executives.

To the credit of Kenya Airways managers, they quickly sensed what the South African were up to and moved equally quickly to recover. They purchased a 49 per cent stake in a small struggling Arusha-based airline, owned by a former East African Airways pilot of many years, called Precision Air. Their plan was simple, they were going to use the small airline to fight off the giant SAA from their turf.

This writer was able to study a confidential plan drafted in Johannesburg by SAA top management that was designed to take over the entire busy East African traffic and divert it from it's current hub of Nairobi's JKIA to the Dar-es-salaam based Mwalimu Julius Kabarage Nyerere airport. It was a very workable plan and the South Africans were going to use their financial muscle and international connections to make it work. The ultimate plan was to control tourist traffic and divert a lot of it away from Kenya and East Africa to South Africa.

A battle of gigantic proportions ensued. What KQ managers mostly did was to use smaller and more economical aircrafts and then undercut SAA on price while being careful to ensure that their product was of even better quality. That meant well-trained in-flight staff and impeccable customer service. At the end of it Kenya Airways emerged victorious and SAA executives were forced to flee back to Johannesburg with their tails between their legs. While it is true that Kenya Airways has some of the best managers in the region and probably on the entire continent, who truly know their stuff, it must be noted that there were other factors that led to the SAA failure. High on the list is the attitude of Tanzanians. While Kenyans tend to be humble and will take all sorts of punishment from a mzungu, our Tanzanian brothers are quite different.

At one point fierce fistfights broke out at the Air Tanzania offices along Ohio street in the central business district of Dar-es-salaam between white South African managers and Tanzanian middle managers who despite being in the airline business still speak halting, hesitant and sometimes broken English in this Swahili country. It became clear to the SAA executives that locals deeply despise the mere sight of a white "kaburu" (former apartheid enforcers) and they installed a figurehead Black South Africa manager at Air Tanzania while keeping the real executive power with the mostly white technical team, like the operations director.

Then there were all sorts of problems still related to the super nationalistic attitude of Tanzanians that led to poor service and conspired to ensure that the well-laid and heavily financed plans of the South Africans did not work.

This exhilarating victory over mighty SAA must have been one of the victories that had the greatest effect on KQ managers and it is now clear it is high on the list of those that have gone completely into their heads.

But now new threats have emerged on the local front that will not be so easy to deal with. There are several economy airlines operating out of Wilson airport that fly to various destinations, including Europe, we even have a new budget airline that operates scheduled flights within Kenya. And now the very latest kid on the block is mighty, giant killer Virgin Atlantic Airline, founded and managed by one Sir Richard Branson.

As from June 1st Branson's airline which is famous for its' service and efficiency, will start operating daily flights from Heathrow, London to Nairobi. Insiders in the industry know only too well that the London route is one of KQ's most lucrative cash cows at the moment.

Branson is a shrewd operator and one of the other areas he is looking at is game reserve management which will combine perfectly with his mostly tourist traffic out of Heathrow and should combine to shut out KQ from the loop.

The big question is; will this latest development wake the pride of Africa from her deep slumber?

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Recent comments posted on KQ elsewhere in this blog (here is the link; http://kumekucha.blogspot.com/2007/03/richard-branson-of-virgin-fame-is-in.html#comments);

Anonymous said...
Thank you Sir Branson, its about time someone showed KQ how to treat passengers and run an international airline.

Believe it or not, it has become quite normal for KQ to leave out passengers with confirmed tickets, delay flights for up to more than three hours and as always charge exorbitantly on local routes owing to their dominance and monopoly.

We look forward to this new breath of fresh air.

4:02 AM
Anonymous said...
I agree with anon...

i once used KQ from Lon-Nbo and was disgusted by the service: the stewards were outright rude and unkempt!!!! I swore never to use them again... i've since kept that promise... so much for the "pride of africa".

Karibu Virginatlantic!!!

4:24 PM
mulwaa said...
I flew KQ nbi-Amsterdam-London-Atlanta. I must admit it's not all that rosy. but i dont owe this to monopoly coz Qatar and emirates have for as long as I can remember kept them on their toes. And even if their service was top class we would still welcome evry other airlines with open arms coz variety is the spice of life. Wajeee. Wakujeeee.

5 comments:

  1. Chris, I have spoken to a few of my friends regarding KQ and the fact that it was just growing too fast. That a side i've always wanted a young good focused kenyan investor to be on the standby just incase things go gobbly wobbly with our pride of Africa.

    The idea was a no-frills airline or as they call it in the western world, budget airline.

    One Nixon Ooko came up with the idea and am sure he will make a difference.

    By the way once upon a time existed an all rounder airline that every prospective employee would die for. Pan Am. Then came the world's first class airline, BA. And this is where Virgin comes in because thanks to her, and of course other supermarket airlines(call them no-frills if you care), BA struggles to make a profit. And it has become the worst employer as I speak.

    Word of caution on KQ: Its too early to write it off though. Go check out how its shares are doing and you will have an idea of the tell tale signs chris is talking about.

    Unedited

    ReplyDelete
  2. "Word of caution on KQ: Its too early to write it off though."

    I cannot agree with you more. Although the entry of Virgin atlantic is a major challenge for KQ, the management might just surprise us. The rise of KQ can be directly attributed to proper strategic management. By this i mean that the airline decided that their strategy for achieving competitive advantage is differentiation.

    KQ's main strategy is to identify routes that are considered by many as out-of-route, which have enough traffic and a good number of travelers who can afford to pay higher fares which cater for convenience. This has been their main source of profitability. It is also important to note that KQ has been ranked second in the return on equity(ROE) on airlines globally.

    The onus is now upon Virgin atlantic to identify their source of competitive advantage. Globally, Virgin's strategy is mainly price i.e low fares plus premium services. If Virgin adopt a similar strategy to KQ, then the pride of Africa can expect to loose a significant part of their marketshare.

    ReplyDelete
  3. Competition is good. Hopefully other airlines will also join the africa airline party. The end result of the game is cheaper and better flights for passengers. The emergence of low cost carriers in South Africa such as Mango flights, Kulula & 1time have made travel more affordable.

    ReplyDelete
  4. If BA, Emirates or Qatar airways have not managed to push KQ off then i dont see it happening just because Virgin Atlantic is venturing into the market.

    Being negative about anything and everything in Kenya is not a very good way of solving issues. The westeners are after Kenya because of the stability and the potential they see in the Country-this may be good or bad depending on how you look at it...creation of employment on one hand or the enrichment of the wazungus.

    ReplyDelete
  5. As a fellow kenyan who has had nightmares with KQ, I very much welcome the arrival of Virgin to Kenya. KQ unfortunately seems to be forever late and customer service can sometimes be very poor.

    Hopefully the introduction of virgin and the daily swiss air flights to Nairobi will also mean cheap fares for the travellers.

    ReplyDelete

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