KQ in a mess for its over-reliance on passenger revenue

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Kenya Airways (KQ) is in a deep mess following the travel restrictions implemented by the government to curb the spread of coronavirus and its over-reliance on passenger service as the main source of revenue. 

The airline is now compelled to widen its streams on the creation of revenue by diversifying 40% of its business to other revenue streams.

Currently, the larger portion of KQ revenue comes from passenger services holding up to 90%, while revenue from cargo only contributes up to 10%.

KQ has two B737F cargo aircraft, which can only transport cargo within the region, while actually, there are no much goods to transport within the continent.

The carrier has turned its passenger aircraft into freighters since the travel restrictions. However, the passenger planes carries very less cargo making it more of a waste.

“The cost of using a passenger aircraft is higher than a freighter because of too much-wasted space as the cargoes are placed on the seats,” said the KQ chief executive Allan Kilavuka.

However, KQ is not the only airline caught up in the mess. All major airlines in the country are using their passenger aircraft to transport cargo across the globe. But unlike KQ, these other airlines have a fleet of cargo aircrafts and are only deploying their passenger planes to supplement their business.

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About Author

Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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