Kenya inks deal with Ethiopian Airlines to operate passenger freighters; Kenya Airways’ business under threat

April 14, 2020: 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), Nairobi to Europe and Asia.

The deal allows 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. Ethiopian Airlines is expected to ship fresh vegetables, fruits, flowers and meat which are currently scarce in Europe.

KQ flew its first-ever passenger aircraft as cargo-only flights on April 12 carrying medical supplies and essential goods from Nairobi to Johannesburg using B787-8 Dreamliner.

According to Business Daily Africa, loss-making KQ has said the new deal will give the rival carrier undue advantage in a period when Kenya has frozen international passenger travel in the wake of the coronavirus outbreak, leaving cargo as the only revenue driver.

“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,” said a letter signed by director of air services, Nicholas Bodo to Ethiopian Airlines, reports KahawaTungu.

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.

Kivaluka said the carrier was not consulted on the impact that the Ethiopian Airlines deal would have on its business.

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. Even the airline has recently sought an undisclosed sum from the government to be able to survive the next six months as it runs out of money after grounding all international flights to help contain the coronavirus.