Kenya Airways could be the next carrier to cancel its membership of alliance Skyteam.
China Southern ceased its Skyteam membership earlier this month. The Guangzhou-based airline favours close operation with other carriers, the latest being British Airways and Finnair.
Now industry publication ATW reports that Nairobi-based Kenya Airways is considering whether it is worth remaining with Skyteam. It might prefer its current JVs with Air France and KLM instead.
ATW quotes the airline’s Polish CEO Sebastian Mikosz as saying, “What advantage would we have to stay in Skyteam? The question for us is to stay or leave the alliance.”
“JVs are really business-driven and have a very deep economic sense. You can easily compete with another member of the same alliance while you don’t compete with your JV partner.”
Another reason is the cost of alliance membership and the fact that Kenya Airways is not exactly flush with cash.
Indeed, as Business Traveller reported in 2016, Kenya Airways had to raise much-needed cash by selling its one and only London Heathrow slot for US$75 million. That record price in 2016 has never been beaten. Kenya Air currently leases its Heathrow slot from Dutch airline KLM.
Some observers say it was an ill-judged decision by Kenya Airways to launch transatlantic service to New York last October, and then soon after to tell the US media it would like to extend services to other US gateways, namely Atlanta and Washington DC.
The transatlantic is one of the world’s most competitive markets.
Establishing a presence in North America (this was Kenya Airways’ first transatlantic foray) is both time-consuming and costly. Over the years many airlines have tried and failed with North American services.
So it was hardly a surprise that after operating Nairobi-New York for little more than a couple of weeks Kenya Airways announced it was reducing services owing to weak demand.
A Kenya Airways official told the local Daily Nation, “It is common practice to reduce frequencies, downgrade or even upgrade flights to balance costs and revenue.”
In which case, is it smart business to start a daily service knowing it couldn’t be filled in the weeks and months ahead?
Another African carrier is finding the US a tricky market. Ethiopian Airlines will be rejigging schedules and from mid-February will be cancelling its Addis Ababa-Los Angeles route. This flight had been operating via Dublin until last December, but then it was decided to route via Lome (Togo).
One wonders whether that affected the route’s profitability because Ethiopian Airlines previously had fifth-freedom rights between Dublin and Los Angeles, which meant it could carry passengers between these two cities.
Further developments are awaited.