OBG talks to Mbuvi Ngunze, CEO, Kenya Airways

Interview: Mbuvi Ngunze

What are the biggest regulatory challenges in connecting Africa’s aviation markets?

MBUVI NGUNZE: I think the biggest regulatory challenge we have is the assortment of charges that are incurred by using the airspace and using state-owned infrastructure such as airports.

There are no economic regulators in Africa that operate in a commercial sense, so you tend to have a cost plus aspect of being charged, meaning I pass on any charges to you without any real implications for me. The costs are placed on airlines and naturally they pass these costs on to consumers, which all affects the issue of opening up the airline industry to everyone. It becomes very restrictive, however, I still think there is a lot of opportunity. Look at the population of Africa in comparison to China and India. Relatively speaking they are very similar, but if you look at the number of air passengers in China and India, we still have a long way to go in Africa.

How has the introduction of low-cost carriers into East Africa affected the market?

NGUNZE: This started in Tanzania, which traditionally has not had a very strong airline, so there was room for one to open. Tanzania is also a very big country, with considerably more developed infrastructure for smaller aircraft, so it is possible to have additional destinations.

Looking at Kenya, we are limited in this respect. We can only go to Mombasa, Kisumu and Eldoret. There is room, but that room is dependent on how the government has created the infrastructure. Different countries have priorities apart from the airline industry, which include putting in place infrastructure for hospitals, water and roads, among other things.

What must African airlines do to stay competitive in the face of expanding international carriers?

NGUNZE: I do not believe that the advent of Middle Eastern carriers, for instance, means the end of the airline industry in Africa. The thing that we must concentrate on first is safety. This is paramount. The day we miss out on safety, then the positive perception of African airlines will disappear. Second, we must build a service culture within our own staff, comprised of locals. Ironically, a large number of these locals are working for these Middle Eastern carriers known precisely for their service. This can be done within our own airlines. Third, governments must realise that their own airlines require priority as far as infrastructure is concerned. We cannot be second-class citizens in our own country, or our own continent.

If any airline gets those three things right, the rest is simply competition. We should also expect a level playing field with these carriers.

To what extent can Kenya’s aviation infrastructure meet current passenger capacity?

NGUNZE: By the end of 2014 we will be increasing the daily influx of passengers by 50% into Jomo Kenyatta International Airport (JKIA). This will be a significant challenge for the airport to meet. We need to have a new terminal, which is happening, but not at the speed that we want. We also need to be sure the infrastructure that supports the airport is adequate, which includes enhancing immigration and Customs services, among other things.

While in terms of costs JKIA is competitive for the region, compared to other airports globally these costs are high and the airport is not competitive. The lack of an economic regulator in the market creates monopolisation and operators are allowed to do whatever they want. In fact, it is not just the rates being charged. Airlines are paying a rate that is supposed to pay for everything, but when looking at things like security, they do not feel confident with what the airports provide, so they pay for their own on top of what they are already paying. There are also additional costs for inadequate infrastructure. All in all, a number of different things push up costs.