Today, Travel Daily chats with Mbuvi Ngunze, Chief Operating Officer of Kenya Airways about China, Dreamliners and Africa’s ‘peace dividend’…
Q) Kenya is currently expanding in Asia; to what extent is China driving this growth?
If you’re doing business in the Asian region and not pushing hard into China, especially as an African carrier, it would be a mistake. Today China is Africa’s biggest trading partner so inevitably China is a big market for us. Until recently we were doing four flights per week into Guangzhou. We’ve extended that to daily, via Bangkok.
Q) So who is flying on Kenya Airways’ flights to and from China?
I would say we have three or four categories of people travelling on our flights. Remember, the traffic is not only Kenya-bound but it is though traffic, because we have an extensive network across Africa. Firstly there is business traffic, which is driven by China’s investment into Africa. Secondly there is trader traffic: traders from Africa going to buy goods in China and then importing them back into Africa. Thirdly there is labour traffic; because of the investments being made into Africa today, we are seeing migrant labour traffic coming into Africa, not only from China but other countries like Vietnam and the Philippines. And fourthly is leisure traffic, which is an area we would like to see grow.
Q) Is Kenya actively pursuing Chinese leisure travellers?
Absolutely. Kenya’s tourism has been driven largely by the European markets in the past – mainly the UK and Germany, but also France and the Nordic countries. But as economies grow in Asia, and especially China, it’s important to focus on them. There are a lot of people on this side of the world, and with disposable incomes rising the economic impact is going to be huge. It’s a big, big focus for us.
Q) As a member of SkyTeam, are you looking to expand your codesharing partnerships with, say, China Southern Airlines and China Eastern Airlines?
Yes certainly. The strategy of SkyTeam is to work very closely with your partners. Today we codeshare on a limited basis with China Eastern and we are currently in discussions about rebalancing our codeshare relationship with China Southern. In the next few months we should be announcing some revision of these arrangements. But there’s no way you can grow on your own in China. Without a domestic partner we’d only be touching the edges.
And of course Chinese carriers are beginning to realise the impact of the level of African travel into China, so they should be keen to codeshare on our extensive African network.
Q) You expect to receive new long-range aircraft in the next few years. Will Kenya Airways use these as a means of pushing east into Asia?
Yes, as part of our expansion plan we want to put our own metal into Asia. As we receive new aircraft, such as our Boeing 787s and 777-300, the main focus areas for us will be India, China and southern Asia. Europe is a mature market and already well covered; we see the growth coming from Asia. We would like to fly to more points in Asia direct from Nairobi, as the new aircraft will give us greater flying time and more direct flight capability.
We have a 10-year expansion plan and all major Asian cities are being targeted, such as Manila, Kuala Lumpur, Beijing, plus additional points in China and India.
Q) And the Boeing 787 would give you the option of going direct to Australia…
Australia is also on the radar, but only in the mid-term. We have to work out what makes sense; to do it by ourselves or through a partner. So we have to consider these factors as and when the time comes. We are in a codeshare partnership with Etihad, which has a strong links into Australia so we’ll have to see what evolves.
Q) And are the Dreamliner deliveries on track?
According to Boeing the current indications are that we are still on track to receive our first 787 in Q1 2014. We will have five deliveries next year and four the following year, and we have no reason to think this won’t go ahead. We also have one 777-300ER due for delivery in October this year and two due for delivery late next year. We’ll be announcing the deployment of the first 777 shortly, but I can’t reveal anything at the moment.
Q) And how will you be configuring the new aircraft?
Our Boeing 787s will seat 264 in two classes – business and economy. Really they will be a replacement for the 767s, so the new aircraft will give us extra capacity. Once the 787s deliveries are complete we’ll retire the 767s. We feel that the 787’s range and capacity will work well for us, allowing us to launch more direct routes.
Q) Overall, which markets hold the strongest growth potential for Kenya Airways?
I would say both India and China. India has very strong historical ties with East Africa, so we have very good traffic into India. We’ve been flying to Mumbai for quite a while and added an additional night flight last year, as well as adding three weekly flights to Delhi last June, and the market has responded well. We are certainly bullish about the opportunities in India.
China is also showing strong potential, and right now we are only in the south. Beijing and its environs probably have the biggest market out of China, so need to find a way to play in that market in future.
My sense is also that we are seeing a significant ‘peace dividend’ in Africa. Economic growth is exceeding the global average and despite some upheaval here or there, the upward trajectory is positive. China is investing significantly in Africa so I expect China will be an increasingly important part of our business.
Of course London-Nairobi is still a key route for us, but it has taken a bit of a hit in the last year and a half. We still do daily frequencies into London and I’m cautiously optimistic there will be some turnaround. The overall market between the UK and East Africa has shrunk, but it won’t always remain that way. We need to manage our capacity and be ready for the upturn. London is a route that’s been quite strong for us so we remain hopeful.