Kenya Airways (KQ) and South African Airways (SAA) have signed a partnership deal to create a pan-African airline, seeking to shore up their troubled revenues.
Kenya Airways CEO Allan Kilavuka says the memorandum of co-operation will enhance customer benefits by availing a larger combined passenger and Cargo network, fostering the exchange of expertise, innovation, best practice, and adopting home-grown organic solutions to technical and operational challenges.
SAA’s interim Chief Executive Thomas Kgokolo also says the cooperation between the two airlines, which includes demand recovery and other cost containment strategies, will aid recovery of both carriers in an increasingly competitive African airline environment. He argues that it will further enhance related Kenya and South Africa tourism circuits, which sectors account for significant portions of respective country growth domestic product (GDP), benefiting from at least two attractive hubs in Johannesburg, Nairobi and possibly Cape Town
The agreement, however, does not limit either of the airlines from pursuing commercial cooperation with other carriers within the current route network strategy.
This is a revisit of a similar plan eight years ago that sought to bring together Kenya Airways, SAA and Ethiopian Airways during the 44th annual meeting of the African Airlines Association (AFRAA) in South Africa.
Even after a state bailout of more than $500 million and a restructuring of its debt, SAA only emerged from bankruptcy after slashing hundreds of jobs.
According to AFRAA, Kenya’s national carrier, Ethiopian, and SAA currently offer about 650,000 weekly seats. This would make it roughly the 30th largest airline group in the world, slightly behind Avianca-TACA.
Even if Kenya Airways, Ethiopian and SAA were to combine, they would account for just 37% of Emirates’ revenue and about half the number of passengers.
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