Jambojet CEO on how Covid saw airlines derisk business

How the Covid-19 pandemic caught the airline business unawares in 2020 is something Mr Karanja Ndegwa cannot explain.

He says they could not foresee the pandemic, which grounded business for almost two years until towards the end of 2021. “To be very honest, I never expected that,” he tells Financial Standard.

“Like any other business every year, we look at the risks that we face, like this year, we have elections; but this (Covid-19) was nowhere on our radar,” he says.

Mr Ndegwa took over as chief executive of the low-cost carrier Jambojet in September 2021, after acting since April 2020, just when the pandemic was unfolding.

The pandemic then became one of those ‘clear turbulence’ situations that he had no choice but to brace and fly through. It was not all in vain as the carrier now has a new line of business, cargo, launched in February this year.

“Yes and no,” he answers when asked if Covid-19 was the reason Jambojet took up cargo business, considering it was the only lifeline for airlines when the government imposed movement restrictions.

Offer lessons

He admits that the pandemic did offer some lessons. “One of them is not to rely on one specific line of business.”

This, the CEO says, informed his strategy to find ways of derisking the business by avoiding overdependence on passenger scheduled flights.

“One of them is definitely cargo. It is one of the benefits that Covid brought our way. We ought to have started it way before but here we are. We have no regrets.”

He says the cargo business did not need additional assets. “We do about 140 flights and each flight will have some space that will carry 1.2 tonnes. Cargo was a business to start without investing in any additional assets.”

He is, however, cautious on the new line, saying the plan is not to invest in bigger capacity aircraft that can carry eight or 10 tonnes but rather utilise the current capacity ferrying 500kg, and such amounts of cargo in every other flight.

He says this is a highly regulated business as well and a lot of training had to be done.

“I can’t wait to see the full scale because within another year, once we have utilised the capacity that we have, definitely we will have to make some decisions in terms of ‘do we go and get a full freighter?' But that is something for later,” says Mr Ndegwa.

The cargo business is paying off - from the data he shares - listing pharmaceutical products and fresh produce among the goods being ferried to Goma, Democratic Republic of Congo from Nairobi, which is a new route for the airline launched in September 2021.

This route also takes care of transit cargo. He says it is the most demanding route. In a week, Jambojet ferries two tonnes.

Within the borders, the airline ferries tropical fish and other courier goods. “We are engaging different agents and a number of airlines that want their cargo brought into Nairobi. We are in that process of signing one or two contracts with a number of airlines,” Mr Ndegwa says.

The CEO is also weighing the resumption of the Entebbe and Kigali routes in future but says there is not much demand at the moment considering the Covid-19 restrictions that still exist across the borders.

He says the two destinations are already being served by their respective national carriers - Kenya Airways, RwandAir and Uganda Airlines. “That capacity is sufficient.”

Whereas domestic air travel has resumed to pre-Covid levels, Mr Ndegwa says business is yet to return to normal internationally.

Jambojet flies to Mombasa, Malindi, Diani, Lamu, Kisumu, Eldoret and Goma, in DRC from its Nairobi hub. From the secondary hub in Mombasa, the airline flies to Lamu, Kisumu and Eldoret.

“We are very organic,” Mr Ndegwa says. “We are finalising one of our regional routes but in two or three months we should be done and we will share as will launch it.”

Grow business

Even as he seeks to grow the cargo business to reduce dependence on passengers, he is optimistic that numbers will continue growing and by 2023, Jambojet will hit a million travellers.

The airline celebrated the five-million passenger milestone in May this year. Mr Ndegwa believes this target could have been achieved eight months earlier were it not for the pandemic.

In 2014 when the airline started, the number of passengers was 369,000. This year the target is 917,000. The challenge this year, which he did foresee, is the fuel crisis; he says costs were seen going up from December 2021.

He observes that they try to keep the costs as low as possible. “Unfortunately, when you look at our prices from December last year, we have had to up them slightly. We are talking about eight per cent,” he says. “It is a bit painful, let me be honest. You feel it but we had to do that.”

Mr Ndegwa is optimistic that the company will still grow due to how it has endeared itself to customers, which he says narrows down to simple repetitive acts of being safe, reliable and on time.

“Sometimes it is all about who you are that draws people to you; how you treat them that will keep them coming.”