Jomo Kenyatta International Airport. FILE PHOTO | NMG
Kenya is among five key regional markets that will continue to see job losses and diminished passenger numbers even after the resumption of local and international flight services.
The International Air Transport Association (IATA) has listed Kenya, Ethiopia, South Africa, Nigeria and Rwanda as the countries that would be adversely impacted on passenger numbers and jobs, following the slow recovery in the sector.
Kenya is estimated to have 223,600 jobs at risk by the end of this month, which is up from 207,800 that had been projected in June.
IATA Economics’ latest outlook for key national markets in Africa has worsened since the previous assessment in June. For example, passenger numbers, jobs at risk and GDP impacts for the five biggest African markets have declined across every metric,” said IATA.
The association noted that continued financial and regulatory support, particularly financial relief — that does not increase industry debt levels — through direct cash injections, credit or loans and deferrals or discounts on user charges are essential to support airlines over the restart and recovery period.
« We are grateful to the few African governments that have provided relief to aviation so far – Rwanda, Senegal, Côte d’Ivoire, Burkina Faso and recently Cape Verde. Their actions have helped save thousands of jobs and will enable some airlines to restart and support the wider economies they serve,” said the association.
“But the situation is worsening. Continued relief measures are essential to minimise job losses and ensure that connectivity can be restored. We urge African governments and the development institutions who have committed funding to provide it urgently in a structure that does not weaken already stressed airline balance sheets, before it is too late.”
Kenya is among African nations that are yet to release all the required funds for the national carrier, Kenya Airways months after the airline requested for a bailout. Private players have also sought State aid in a bid to weather the Covid-19 storms, but this is yet to be granted.
Treasury said the national carrier is seeking over Sh7 billion in bailout in order to survive in this turbulent times.
The airline, however, said they had requested for Sh9 billion as a bailout package and that they had so far received Sh5 billion in January with the balance expected to be issued in July.
Domestic air travel operators said they are yet to get Sh10 billion bailout they requested from Treasury to cushion them from reduced bookings.
The Kenya Association of Air Operators (KAAO) executive secretary Eutychus Waithaka told Shipping and Logistics in an interview that their application is still pending at the Ministry of Transport in a move which could delay the recovery of the airlines.
The association, that represents all licensed commercial air operators such as Safarilink, Jetways, and Fly 540, had requested for the funds from the state in April to settle staff salaries.
They also wanted to use the funds to settle navigation and landing charges at airports.
“Sh10 billion is the money local aviation is yet to receive from state in bailout. In our meeting with Transport Ministry three weeks ago, they said they are still looking at how they can support the industry,” he said.
Mr Waithaka said the Sh10 billion is not a grant or a loan but a “relief fund” to help cushion the sector from collapse during this difficult time. He noted that the State will decide whether the money will come in the form of tax concessions or “release from banks”.
Apart from the Sh10 billion state bailout they are yet to receive from the State, KAAO said another key challenge facing domestic air operators is the low uptake of air ticket by passengers .
Some airlines, he said are still carrying passengers at 30 percent capacity since the resumption of flights on July 15.
“We are currently at 30 percent. If passengers will be assured of their safety in our planes, we think the numbers will jump up to 50 percent. The low passenger numbers can also be attributed to depressed earnings at the moment,” he said.
The aviation sector has been one of the hardest hit industries, bearing the brunt of the economic meltdown brought by the coronavirus.
IATA noted that Kenya is expected to lose four million passengers by the end of this month, up from 3.8 million in June.
Of the five Africa countries projected to experience slow growth, South Africa will see a greater impact on passenger numbers with an estimated loss of 16 million travellers in August and 287,700 passengers by the end of month.
Ethiopia will have 564,100 jobs at risk in the month of August.
IATA said African airlines’ traffic sank 98.1 percent in June, with little change from a 98.6 percent demand drop in May. Capacity contracted 84.5 percent, and load factor dived 62.1 percentage points to just 8.9 percent of seats filled, lowest among regions.
Major international passenger airlines resumed the Nairobi route on August 1 as Kenya opened up the airspace after the country eased containment measures brought about by Covid-19 pandemic.
KQ has also resumed international flights but decried low passenger numbers as demand for flying remains low. The airline has cut flight routes by 50 percent and it will service 27 destinations when it resumes flights this August.
Some of the major routes where resumptions have been delayed include US and China, with flights expected to resume in October, according to the carrier.