Development
An Airline CEO’s Strategy for Making African Aviation Sustainable By Quartz Africa
AFRICA’S AVIATION INDUSTRY is highly fragmented. The continent has hundreds of independent airlines, many of which are unprofitable and on the brink of collapse as they struggle to compete effectively with big global carriers. Further, the aviation business has been hit hard by the covid-19 pandemic. But airlines are trying to innovate and looking to consolidate to make the businesses sustainable. In September, Kenya Airways and South African Airways, two flag carrier airlines, entered an agreement to create a pan-African airline group. And earlier this year, Kenya Airways launched Fahari Aviation, a division to enhance innovation research, and development of unmanned aviation systems (UAS), including drones. Quartz spoke with Allan Kilavuka, the CEO of Kenya Airways, on innovation, consolidation of African airlines, the African Continental Free Trade Area, and the effects of the pandemic on the airline. Kilavuka, a former General Electric executive, has headed the airline since Jan. 2020. The conversation has been edited for clarity. How has the covid-19 pandemic helped or hurt business? The effects of the pandemic started in earnest around March of 2020. We rely primarily on air traffic, and air traffic came down substantially. Currently about 80% of our businesses is passenger business, and in April 2020 most places—in fact possibly the whole world shut down—for a period of depending on each country between four to six months. If you don’t fly for a single day, you lose close to a million dollars. Now in aviation if you don’t fly—I mean in our case for example—if you don’t fly for a single day,
36
November-December 2021
you lose close to a million do dollars. You d llllars Y ou can iimagine magine i six months it’s quite substantial. We were really hard hit. Then we had to start building up again after reopening towards the end of last year. We first had to convince the passengers it’s safe to fly or safer to fly. Secondly the economic situation and the resources of people who needed to fly had been significantly depleted. We had a situation where corporations had cut budgets. We had our premium customers who were the business customers not flying, and we still had restrictions. Even up to now we still have restrictions in some countries. It’s been a long and painful recovery process. We’re not there yet, it’s going to take some time. But every day is better than the previous day, because more and more people feel more confident to fly. Now the flip side to this is cargo business, which was about 10% of our business. For that one it was the opposite, where there was cargo needed for emergency support for PPEs to support the pandemic, vaccines – just goods and services. Right now there’s a problem because we have a backlog on the supply chain of goods and services particularly to and from Asia. You have heard of shortages of goods particularly electronic goods. There’s no capacity to move enough goods across the world. This is kind of a good problem for us because the problem is capacity. Then we have the effect on employees – we reduced payouts and employees’ salaries have not been so good. What we try to do is to limit the number of exits from our staff so as to keep as many people as possible employed. And for the people we had temporality let go we have to make sure they are in our radar, so that if and when we need them we call recall them. DAWN
www.africabusinessassociation.org
