Kenya's first budget carrier Jambojet targets bus travellers - CNBC Africa

Kenya's first budget carrier Jambojet targets bus travellers

East Africa

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Jambojet, wholly owned by Kenya Airways, faced red tape, poor infrastructure and protectionist policies. PHOTO: Getty Images

According to the airline this will be done by offering cheap fares on a continent where air travel is among the world's most expensive, its chief executive said on Tuesday.

Willem Hondius told Reuters that Jambojet, wholly owned by Kenya Airways, faced red tape, poor infrastructure and protectionist policies, but still promised fares low enough to attract bus travellers into the air for the first time.

(WATCH VIDEO: Kenya Airways swings to profit in its first half)

The no-frills airline, which will begin by using three Boeing 737s, was scheduled to start flights on April 1, said Hondius, declining to comment on how many tickets had been sold since becoming available late in February.

The Dutch national, previously a manager with Dutch airline KLM, said his aim was to win a portion of the estimated 26 million to 35 million overland journeys made each year between Nairobi and Mombasa, Kisumu and Eldoret - Jambojet's first three domestic destinations.

"If I only get a little piece of that then I am in business," Hondius said at his sparsely furnished headquarters on the edge of Nairobi international airport.

The airline will start on domestic routes only, but could fly regionally after a year, on routes where Kenya Airways, one of Africa's largest airlines, has a solid presence.

(READ MORE: Kenya airport refurbishments underway)

Hondius expects two fifths of the 600,000 passengers forecast to fly with Jambojet in the first year will not have boarded a plane before, indicating growth potential on a continent of 1 billion people where the middle class is swelling fast.

Successful low-cost carriers already operate in South Africa, Africa's largest economy. However, budget airline Fastjet, backed by the UK's easyJet, has had a bumpy ride, with delays to the launch of flights to Johannesburg from its Tanzanian base and the exit of its largest investor.

Hondius said a 70 per cent load factor - the percentage of seats filled - would mark "a good result for the first year". In four years' time, Jambojet anticipates connecting up to 2 million passengers a year to regional capitals, using 10 jets. 

Plane makers such as Boeing, Airbus and Brazil's Embraer SA are eying Africa as a growth market.

Jambojet's lowest single fare to the Indian Ocean port city of Mombasa will start at 2,850 Shillings including taxes, only 800 shillings more than a luxury bus ride and half the quoted Kenya Airways fare when booked two months in advance.

(READ MORE: Kenya Airways to receive Boeing 777-300er)

The 50-minute flight would beat an eight-hour white-knuckle ride by bus on a highway beset by fatal accidents and tail-backs.

The fare will buy you a seat and hand-luggage. Following the low-cost model that has revolutionised air travel in Europe, check-in luggage, preferred seating and drinks cost extra.

"If you load all those things (into the price), the fare will be too high," Hondius said.

HEADWINDS

Jambojet - "Jambo" means "Hello" - represents a test for the growth strategy of Kenya Airways, which is expected to return to a full-year profit this financial year ending March as it expands its fleet and opens new routes in Africa and Asia.

Hondius acknowledged that the no-frills carrier would steal some passengers from its owner, which 26.73 per cent is owned by Air France-KLM, but said there was room for both.

"The market is ready for these services, so if Kenya Airways is not doing this then someone else will," said Hondius, KLM's former East Africa manager. "Kenya Airways was not capable of covering this kind of market."

Flights within Africa are among the world's most expensive, with airline trade association IATA saying last year that fuel costs in Africa were 21 per cent above the world average.

Firms seeking to bring cheaper travel to the continent also face tortuous bureaucracy, few secondary airports that offer cheaper fees and tight state controls.

"There's no open skies (policy) in Africa," Hondius said. "There is too much protectionism still. I would say open up those borders. But they still somehow find it difficult to take that hurdle."

Traditional carriers are still likely to dominate major routes that are largely determined by bilateral government deals until African aviation is liberalised, industry analysts say.

To keep costs down, Jambojet will lease its aircraft from Kenya Airways, and pay the flag carrier for maintenance and ground handling, keeping income within the group. Other services, including cabin crew, will be outsourced.

There is one other challenge: convincing Kenyans to book early, which is vital to the low-cost model.

"Kenyans buy today to travel tomorrow," said Hondius. "You need to have strong nerves to wait and see it happen. But the signs are positive."

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