Why airlines are keen on direct flights in push for market share  26th Mar 2018

Ethiopian Airlines last week announced that it has started flying five times a week to Buenos Aires, Argentina as African air passenger growth rose by 7.5 per cent in 2017 leading to airlines competing in offering consumers convenient flights to their destinations.

According to data released last month by The International Air Transport Association, African air travel capacity rose at less than half the rate of demand (3.6 per cent), and load factor increased 2.5 per cent to 70.3 per cent compared to 2017.

In this, Ethiopian Airlines is at the moment executing a 15-year strategic plan called Vision 2025.

Therefore, it is positioning itself as the carrier of choice for passengers plying the Americas.

“We are glad to add Buenos Aires, our sixth gateway to the Americas, to our extensive global network. Our new flight to Buenos Aires will provide efficient connections to our network in Asia, the Middle East, and Africa, including Beijing, Shanghai, Seoul, Tokyo, Mumbai, Delhi, Dubai, Beirut, Nairobi, and Cairo,” said Mr Tewolde GebreMariam, Group CEO in a statement on its website.

It intends to have seven business centres which will include regional services, an aviation academy, in-flight catering, ground, international, and maintenance as well as cargo services to cater to the needs of their clients.

Currently, it flies directly to Chicago, Washington, New York, and Los Angeles in the United States and Toronto, Canada.

For airlines, launching direct flights saves them on fuel costs which in turn they are able to either reduce their ticket prices or price them competitively in order to attract customers.

Fuel accounts for about 36 per cent of an airline’s operational costs, thus airlines place an extra charge in their tickets in a bid to reimburse for the fuel prices putting off customers, according to research conducted by the African Airlines Association (AFRAA) on the taxes and charges in African aviation.

“Airlines will frequently put fuel surcharge on tickets to compensate for increasing fuel prices. It is estimated that most airlines would recover about 40 per cent to 70 per cent of their additional fuel costs through surcharges.

This, unfortunately, puts ticket prices way beyond the means of the majority of passengers.

“Additionally, fuel prices at some stations in Africa are over twice the world average and have a very adverse impact on the competitiveness of African airlines,” reported AFRAA.

In the case of Kenya Airways, for instance, it is set to launch direct flights to New York, US in October this year.

Travelling from Nairobi to the US is 6,381 nautical miles on a direct flight while on a connecting flight, at the moment connect via Europe, (Nairobi to Europe is 3,693 nautical miles) and Europe to the US is 3,443 nautical miles, therefore, the distance adds up to 7,136 nautical miles.

This will reduce the miles travelled to the US, therefore saving on and reducing air tickets.

“For KQ, its fares will be cheaper because they do not have to deal with the heavy navigational charges of the European Union. On an impact basis, this will open up the freight market between Africa and the USA, which is far cheaper than Europe. It will also bring tourism to this side of Africa. Although the main impact will be in terms of freight since the far west will give Europe a run for their money,” said Francis Muyodi, airline cargo consultant.

Indeed, connecting via the UK for instance, freight is charged per kilogramme at a tax rate of £0.01.

Transfer of freight from one aircraft to another is also charged, therefore, the impact could be significant on total trade flows, with one cargo aircraft from Kenya to the US capable of transporting 90,000 to 100,000 tonnes daily.

- African Laughter

Source: https://www.businessdailyafrica.com/corporate/marketplace/Why-airlines-are-keen-on-direct-flights-in-push-for-market-share/4003114-4356960-oiqh88/index.html

 

 Back to news articles

Latest News

KATA Members Tipped on Going Online and Staying Relevant
16th Nov 2018
Read more

Adverts

Corporate Partners