By Fred Maingi
Kenya Airways expects the completion of Jomo Kenyatta International Airport’s Terminal Four to significantly improve its operation efficiency and ease the congestion that the airline has been facing at its Nairobi hub.
This will increase efficiency and create more room to accommodate a larger fleet that will allow the airline to compete more aggressively and profitably as the African airline industry continues to attract more regional and global competitors.
“By the fourth quarter of the next financial year, an additional capacity to handle up to two and a half million more passengers, would be added at the airport, but this is not enough” Mr Naikuni told shareholders at the 36th annual general meeting.
He added: “In addition to this, more parking for vehicles and aircrafts would be available.”
Mr Naikuni also outlined a number of initiatives the management has embarked on to manage costs as the airline continues its expansion programme which will increase the number of aircrafts in the fleet from 34 in 2012 to 115 in the next nine years.
In the last financial year high operating costs eroded the effect of a 24 per cent growth in revenue by national carrier. Among the costs that shot up during the year was labour and fuel that went up by 19.6 per cent and 64 per cent respectively, as well as landing fees that grew by 35 per cent.
“We see light at the end of the tunnel. We believe that the more we control our costs, the more will continue being profitable,” Mr Naikuni said, “Kenya Airway’s case is not isolated since a similar trend is occurring among other leading airlines globally.”
Some of initiatives to bring down the airline’s costs include investing in aircraft that consumes 20 per cent less fuel. The airline is also hiring local staff for some of its destinations to cut down the cost of putting up the crews in expensive hotels. In other areas, the airline intends to use technology and outsource its services to firms that can provide the same service at a lower cost.
“We invested in IT to be efficient and meet global standards. We are a global airline and must be able to compete globally,” Mr Naikuni said, “The structuring meant to create efficiency in our processes and the criteria used was performance of individuals and assessment of the ability of the skills to compete effectively in the future,” he added.
During the AGM Chairman Evanson Mwaniki and Dr Cyrus Njiru, the Permanent Secretary to the Ministry of Transport were re-elected to the Board of Directors. PwC was retained as company auditors and directors remuneration was approved.