Kenya Gifts Ethiopian Airlines With Cargo Deal At The Expense Of Cash Strapped KQ

The Kenyan government has inked a deal with Ethiopian Airlines to operate passenger planes grounded due to the coronavirus (Covid-19) for shipment of cargo between the Jomo Kenyatta International Airport ( JKIA) to Europe and Asia.

The deal was signed on April 3, allowing Ethiopian Airlines to fly cargo using six of its passenger planes from Mombasa to Nairobi and Asia and Europe, posing a threat to the Kenya Airways (KQ) cargo business.

“Reference is made to your letter… this is to advise you that approval is granted to Ethiopian Airlines to operate as cargo flights from April 3 to October 25,” says a letter signed by Director of Air Services, Nicholas Bodo to Ethiopian Airlines.

Read: KQ Fortunes Continue To Dwindle As Airline Issues Profit Warning

Kenya is KQ’s main market for both passenger and cargo business, and according to the CEO Allan Kivaluka  the airliner was not consulted before the deal was signed.

“Anytime you have a carrier wanting to come to your domain, you need to be consulted so that you are not disadvantaged at your main market,” Kivaluka told Business Daily.

Mr Kilavuka says that he has protested to the government for allowing the deal, at a time the cargo business in the world is fetching highly due to the Covid-19 pandemic.

“We have objected the move to have Ethiopian Airlines use their passenger flights for cargo business in Kenya because we were not consulted on the impact that this would have on our business,” added Mr Kilavuka.

Read: Kenya Airways Confirms Allan Kivaluka As CEO

Since the government suspended international passenger flights on March 22, KQ has been depending on cargo business to remain afloat.

However, the entry of Ethiopian Airlines could see the carrier sink deeper into losses, which could see it collapse in the near future due to lack of funds.

KQ has been making losses since 2014 after a failed expansion drive, among other factors. Its earnings for the year ending 2019 are expected to go down by 25 per cent or more compared to earnings reported in 2018.

Fuel, personnel and cost of aircraft contribute to about two-thirds of the airline’s operating costs.

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