Aviation: Cargo is the gold that will drive profit for Kenya Airways and other African Airlines
In April this year, Kenya Airways (KQ) opened a state-of-the-art cargo express centre at Jomo Kenyatta International Airport. The centre is aimed at improving KQ’s cargo revenue as part of its turnaround strategy “Operation Pride” while catering to the needs of premium cargo clients who require express services. In an interview to Twinkle Sahita, Peter Musola, General Manager, Kenya Airways Cargo, talks about the new facility and how it will be a one-stop solution for airlines and freight forwarders to enhance efficiency in e-commerce logistics. Musola shares the carrier’s focus on pharmaceuticals and highlights other strategic moves to maintain competitiveness with other carriers in Africa as well as across the globe.
How has Q1 2017 been for Kenya Airways Cargo?
We are seeing a remarkable growth in our total traffic. Year on year, we have seen a growth of about 5.1 percent which is very positive. Secondly, we have also invested heavily in infrastructure. In April, we launched a state-of-the-art express centre in Africa, which will position our airline perfectly well for the expansion of the express product as well to tap e-commerce opportunities. We are also looking at enhancing our warehouse quality. We have engaged special pharmaceutical consultants who are going to help us to obtain CEIV and GDP certifications. We believe that these strategic moves will really entrench Kenya Airways as a formidable carrier for the future.
What is the timeline you are looking at to achieve CEIV certification for handling of pharmaceuticals?
We’ve set a tentative timeline of April 2018. But, we remain open to the feedback from our consultant since it’s the speed of implementation that determines how quickly you get certified. From a business point we’re committed to investing and closing all the gaps.
What commodities are handled in major volume by Kenya Airways Cargo?
Flowers, perishables, fresh and frozen fish are handled in major volume by the carrier. We are now doing lot of special products like live tropical fish, crabs from Madagascar and Mozambique. Our product mix is improving. We have focused a lot on valuable cargo. The major thrust remains on pharma.
As a leading African carrier, what are your thoughts on the competition from the Middle Eastern carriers?
It’s a real threat especially in terms of value. If you look at the global growth of footprint, Africa is the continent that is recording formidable GDP growth rate. Ideally knowing that, air freight follows growth. This means that the extra capacity that the Middle Eastern carriers have invested in will naturally be deployed in Africa. What we are seeing is that it is leading to dilution of value. Cargo yields have really been on the downward spiral, especially considering that segments like oil and gas, which were extremely high in terms of volume, are no longer very active. The African governments need to open cautiously to capacity because dilution at the end of the day is not a win-win for the national carriers. The other fact is that these Middle Eastern carriers do have a heavy capital mass which most African airlines do not have. If you look at other airlines – South African Airways is undergoing structural issues; Kenya Airways is also on a turnover programme; while for Egypt Air, there are no major massive expansion plans in place. Only Ethiopian Airlines is really standing out as the airline that’s growing but we have also seen their numbers go down.
What are your key takeaways from the Second ICAO Meeting on Air Cargo Development in Africa?
There needs to be alignment. The good thing is that various stakeholders are talking and conversing across different topics. But there needs to be alignment in terms of timelines, that is, in terms of execution of timelines. In terms of e-freight, you can see that airlines are way ahead, whereas the customs authorities are moving but moving at a slower pace. So, if we want to obtain full benefits, we need to have alignments in terms of implementation. There needs to be analysis on the Lome Declaration and the major items that are not implemented as yet. I believe an action goal should be put in place to see how they can address these topics because we should not be moving into two conventions. The focus is right and we can see some good resolves. But there remains room for a lot of improvement.