Aviation sector in new high as passenger numbers hit record 10 million

The number of passengers going through the country’s airports and airstrips has hit an all-time high, providing a lifeline for local airlines.

Further, an analysis of the latest air traffic data from the Kenya Airports Authority (KAA) – seen exclusively by Business Beat – indicates that domestic travellers through the Jomo Kenyatta International Airport (JKIA) last year made up 40 per cent of overall passengers. This is an increase from 32 per cent five years ago.

In its report, KAA projects that the country’s aviation industry is on an upward trajectory, with the total number of passengers last year growing by 11 per cent to hit 10 million for the first time ever.

The country’s leading airport, JKIA, accounted for more than 70 per cent of overall passenger traffic in 2016, with more than seven million passengers going through the airport, up from 6.4 million the previous year.

JKIA further received Category One status last month from the US Federal Aviation Authority, boosting the airport’s status as a regional aviation hub.

Passengers flying from the US to East Africa for tourism or business can now fly directly into Nairobi instead of through Amsterdam or Heathrow, making Kenya a key stopover for airlines from Uganda, Tanzania, Ethiopia and Rwanda.

Only six countries in Africa have attained Category One status. Kenya’s recent entry into these ranks is expected to boost the local aviation industry, as airlines can now either start direct flights to the US or negotiate code-sharing deals with North American carriers.

BOUNCE BACK

KAA data, however, showed that JKIA’s freight-handling business registered a 5 per cent drop in domestic and international freight for a second consecutive year.

But the airports authority projects that growth in overall cargo handling will bounce back by 8 per cent this year.

Domestic passenger numbers to the country’s coastal airstrips also recorded a considerable rise over the past three years. This has bolstered the region’s efforts to revive a tourism sector hit by terror attacks and travel advisories.

The Manda airstrip in Lamu recorded the largest growth year-on-year, with the total number of domestic passengers rising by 57 per cent from 42,000 passengers to the island in 2015.

International arrivals are expected to see a further improvement after the UK lifted a travel ban on Lamu, cautioning against accessing the region by road and proposing instead that visitors travel by air to the Manda airstrip.

Ukunda and Malindi airports also recorded high growth in domestic visitors (37 per cent and 25 per cent, respectively).

However, Kenya still has a long way to go to prop up airport infrastructure and aviation policy to accommodate the anticipated growth in passenger and cargo traffic.

New data from the International Air Transport Association (IATA) shows that Africa’s aviation industry currently averages 300 million passengers a year, and is set to grow by 5.1 per cent annually over the next 20 years. This would add 192 million passengers to the market.

suffer losses

Translating this growth into revenue is the hard part.

African airlines like Kenya Airways and South African Airways continue to suffer losses as they struggle to balance large operating budgets and low ticket sales.

Airlines in more lucrative aviation markets like the US report impressive earnings, with profit margins of up to 14 per cent of total revenues in 2015. Africa on the other hand, is the least profitable aviation market, with operators chalking up losses at 3 per cent of overall revenue in 2015.

IATA attributes this poor performance to a combination of factors, including currency fluctuations over the operating period, restrictive air traffic regimes, distorted fuel pricing formulas (the cost of fuel in Africa is about 21 per cent higher than the world average) and inadequate capacity.

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