Africa remains the biggest revenue driver of three of the continent’s prominent carriers, Ethiopian Airlines, Kenya Airways, and South African Airways. Their revenues highlight the important role that various countries play in keeping the carriers afloat. Industry data indicates that Kenya Airways earned Sh38 billion in revenue from its operations in Africa last year, which was a significant rise from the Sh27 billion that was realized in 2020. African routes drive revenues of the continent’s Big Three.
Ethiopian Airlines achieved a record operating profit of ETB 1.38 billion and a net profit of ETB 1.63 billion last year, which is higher than the results of the previous year, thereby surpassing all established projections for the period in review.
For the period in review, Ethiopian recorded appreciable growth in almost all performance parameters. It generated annual revenues of ETB 16.8 billion, 38 percent higher than that of the previous year. Capacity also grew: available seat kilometers (ASK) increased by eleven percent, and available tonne kilometers (ATK) by seventeen percent. The carrier has been outperforming other airlines for some months.
Investment in other airlines
As well as growing its hub traffic in Addis Ababa, Ethiopian Airways has added connectivity elsewhere in the region. With political and financial restrictions, one of the best ways to do this is through investment in other airlines. In 2013, it took a 49 percent stake in Malawi Airlines. In 2018, it started working with the Zambian government to relaunch Zambia Airways (in which it took a 45 percent stake). It also has stakes in ASKY Airlines and Ethiopian Mozambique Airlines.
Ethiopian Airlines earned the most money on its network to Abidjan, Abuja, Accra, Addis Ababa, Bamako, Bahir Dar, Blantyre, Brazzaville, Bujumbura, Cairo, Cape Town, Dakar, Durban, Cottonou, Dar-Es-Salaam, Dire Dawa, Djibouti, Douala, Entebbe and Enugu.
The carrier aside dominating Africa also makes its major revenue from other destinations like, Gaborone, Goma, Harare, Hargeisa, Johannesburg, Juba, Khartoum, Kano, Kigali, Kilimanjaro, Kinshasa, Lagos, Libreville, Lilongwe, Lome, Luanda, Lubumbashi, Lusaka, Malabo, Maputo, Mekele, Mombasa, N’Djamena, Nairobi, Ndola, Niamey, Ouagadougou, Pointe-Noire, Seychelles, Yaounde and Zanzibar. Ethiopian Airlines operates in Lagos, Abuja, Kano, and Enugu, four key destinations that cover the entire zones of the country.
SAA plagued by crises
South African Airways (SAA) was a major competitor at a time, also developing global connections but incessant crises associated with many African national airlines have plagued it for more than three years despite enormous bailout funds from the South African government.
The carrier resumed services late last year after an almost three-year hiatus and has yet to make a profit. It has, however, relaunched flights to Nigeria where the yield is very high and one that it hopes to leverage on, just as it has equally resumed flights to some other African routes.
Africa accounts for half of Kenya’s revenues
For Kenya Airways, the earnings from Africa accounted for more than half of the total revenue that the national carrier earned from the six continents where it operates. The carrier earned Sh70 billion from all the routes where it flies in the review period, which was higher than the Sh52 billion that was realized a year earlier.
India was the worst-performing route for the carrier last year, bringing in Sh1.7 billion, down from Sh2.3 billion that was realized in 2020. Europe was the second-highest revenue earner for Kenya Airways with Sh11.3 billion, followed by the Middle East at Sh7.7 billion, and Sh4.5 billion on the American route. Revenue on the American route doubled from the previous year’s earnings of Sh2.3 billion. KQ has been weighing options on the viability of the American route after the destination took along to turn into profitability.
Kenya Airways told Parliament that it would know whether the New York route was commercially viable at the end of last year after the carrier resumed flights on the route after it had been cut short by Covid-19. Kenya Airways started direct flights to the US in October 2018, cutting the journey to fifteen hours on the long haul route tapped as part of an effort to revive the airline’s fortunes.
The national carrier was to start flying to Rome and Milan in June but it says the plans have been put on hold due to lower demand than it had earlier projected. According to the initial schedule, KQ was to operate two weekly flights on Wednesday and Sunday using a large capacity aircraft Boeing 787 Dreamliner. The East African carrier re-introduced flights to Rome in 2019 after a seven-year hiatus, banking on increased traffic between the two continents and a new link in Geneva to boost its earnings.
Narrowed losses in 2021
The carrier narrowed its net loss for the year ended December by 56.58 percent on higher revenue as travel picked up with the easing of Covid-19 restrictions. Kenya Airways reported a net loss of Sh15.8 billion in the review period compared to a net loss of Sh36.2 billion the year before when travel restrictions hit operations hardest, including the grounding of its planes for months.
Total revenue in the review period sprang by 32.98 percent to Sh70.22 billion, partly lifted by alternative sources such as air charter services which jumped 300 percent and helped compensate for income lost because of travel restrictions on some routes. Earlier this month, Kenya Airways hit the news as it was unable to pay interest on loans.