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Jetlink and Kenya Airways lower rates

Kenya airfare war escalates yet more

Dr. Wolfgang Thome , eTN  Jan 25, 2011

UGANDA (eTN) - Overnight news was received from Nairobi that Kenya Airways (KQ) has done a "double" on Fly 540 and other airlines like Jetlink, when it once again used its seemingly deep pockets and lowered fares on the domestic routes to both Mombasa and Kisumu.

In one fell swoop, KQ, now operating 10 daily flights between Nairobi and Mombasa – during the peak season it was as many as 14 a day AND using larger aircraft – lowered its bookable fare by a whopping 22 percent. This translates to a return ticket cost of Kenya Shillings 6,200 inclusive of taxes, and is now 250 KShs cheaper than the Fly 540 fares launched just a few days ago.

However, while Fly 540 offers its 6,450 KShs return fare for ALL its flights, Kenya Airways is making its lowest fare only available on a few off-peak flights, and all the in demand departure times remain at the higher fare of KShs 7,999. In addition, Kenya Airways has a standby fare of 3,000 KShs one way, all inclusive for those with a hang for gambling.

The other domestic route now heavily competed over is Kisumu, and here Kenya Airways, operating up to 4 flights a day, is now charging the lowest off-peak fare, too.

Aviation analysts this correspondent spoke with this morning were expressing their concern over this latest escalation of the fare war in Kenya, with one saying it was now just a matter of time before "one of them blinks" and either reduces capacity on the respective routes, once again matches the lowest fares, or else falls to the wayside as East African Safari Air Express did a few weeks ago, albeit with the eventual safety net of a takeover by Fly 540.

Said another regular contributor: "Kenya Airways can sustain their new fares better than anyone else in the market. The speciality airlines flying to Lamu, Ukunda, and other secondary aerodromes in Kenya are not that much affected, because they have a market wanting to get to their final destination and are ready to pay more. But Jetlink, Fly 540, and Kenya Airways - they are now battling it out over the main domestic routes from Nairobi to Mombasa and Kisumu, and who knows, Malindi and Eldoret might follow.

"KQ’s domestic flights are a very small percentage in overall revenue and passengers-carried terms, compared with their regional network, Africa network, and their flights to Europe, the Mid East, and Far East. Therefore, for them, lower fares on the domestic market is almost like a permanent promotion of their inter-Africa services and international long-haul flights. In other words, low fares do not hurt them as much as it does to Jetlink and Fly 540; both of them rely quite substantially on their domestic revenues and a further fall-in fares may have them rethink their strategy vis-a-vis the dominant carrier. These two others simply must make money out of their domestic flights to survive, while KQ can rely on their generous income from, in particular, their African network where yields are much higher.

"I think for that reason, the other two have pressed ahead and opened up regional routes to Eritrea, Somaliland, Tanzania, Burundi where the earnings are better so as to cushion what has become a cutthroat market within Kenya. Fly 540 is also flying within Kenya to places where KQ cannot go, as only smaller turboprops can land there, and that, too, is probably for their financial benefit, as long as they can sustain the load factors needed to such destinations."

Adds this correspondent - at no time in the past have the main routes given travelers such wide choices of airlines and departures nor have the fares been so hotly contested. But then, what is good for the travelers may not be good for the airlines.

Kenya airfare war escalates yet more

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