Budget Airline JamboJet, the subsidiary of multibillion loss-making national flag-carrier Kenya Airways (KQ), has posted a $1.26 million profit in its second year of operation underlining increased use of domestic air travel.

JamboJet had recorded a $2.87 million loss last year during its first full year of operation but has quickly turned around.

The airline carried 572,010 passengers in the year ended March up from 480,092 in 2015, listed carrier KQ that fully owns JamboJet has revealed in its annual report. This represented almost a fifth more than the traffic of the previous period.

“JamboJet carried 572,010 passengers during the period,” said the KQ report.

The carrier, which increased its fleet with two additional planes during the year, operates flights between Mombasa, Eldoret, Nairobi and Mombasa.

The airline increased its staff complement to 35 from 29 at a time its parent company is downsizing as it grapples with multibillion-shilling financial hemorrhage that has triggered a restructuring plan.

JamboJet debts stood at $11 million as captured under current liabilities, which was a drop from $12 million.

KQ management disclosed it had applied for extension of use of JamboJet tax losses incurred in the period 2009-2010 to offset future taxable profits.

JamboJet tax losses were said to be $8.56 million. The airline has, however, been operational for two years in which it booked accumulated losses of $4.05 million.

In 2014 it wrote a loss of $1.18 million associated with setup costs which was followed by a $2.87 million loss last year.

JamboJet was yet to respond to queries on the tax losses at the time of publishing.

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The low-cost brand of KQ has previously noted that debts amounting to $8.81 million, were carried forward from defunct Flamingo Airline.

Flamingo was a low-cost carrier that had been operated by KQ for four years before it was absorbed into the group in 2004, having not recorded a profit.

JamboJet surpassed management expectations—it had in last year’s report indicated they did not hope to recover the tax losses.

“The deferred tax asset for the year ended 31 March 2015 for Kenya Airways Ltd and for the years ended March 31, 2014 and 2015 for JamboJet Limited has not been recognised in the financial statements since the Directors are of the view that it is not probable that future taxable profits will be available in the foreseeable future against which the temporary differences can be utilised,” KQ had said last year.

The quick turnaround to profit underlines the country’s growing spend ability with a rising middle class paying air tickets for domestic travel.

The budget airline, which has a fleet of four planes — two 142 seats B737-300 and two 78 seats Bombardier Q400, operates on a strategy of charging low fares by offering little luxury.

Passengers pay for extras like food, baggage and seat choices.