Air fares in and out of Rwanda routes are likely to drop following the recent move by global airlines to launch direct flights to Kigali.

Industry analysts say Rwanda is the focus of new competition because it has been under-served, even though it has the potential for further growth in comparison with other destinations in the region.

Late last year, Qatar Airways, Turkish Airlines and South African Airways launched direct flights to Kigali, just a year after Amsterdam’s KLM had done so, heightening competition for an airspace previously dominated by SN Brussels and Ethiopian Airlines.

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Now East African airlines that serve Kigali, namely Kenya Airways, Air Uganda and the national carrier RwandAir, have revamped their operations in anticipation of increased competition.

For example, RwandAir has not only ventured into new routes but also slashed ticket prices for most of its destinations.

Currently, a return flight between Entebbe and Kigali costs approximately $167 on Air Uganda while RwandAir charges $194, whereas a few months ago the price was above $200.

RwandAir has also launched daily flights to South Africa competing with national carrier, South African Airways, which operates three weekly flights to Kigali. While RwandAir charges $542 for a Kigali -Johannesburg flight, South African Airways charges $465.  

“There is a lot of pressure worldwide and ticket prices have been dropping,” said John Mirenge, the CEO of RwandAir, adding that despite the entry of global airlines, the firm’s biggest rivals are regional airlines with established routes.

Last year, for example, Air Uganda and RwandAir locked horns over the Entebbe-Kigali route after the latter launched a morning flight, effectively shredding the two airlines’ code-share partnership.

Air Uganda then increased its frequency on the route to seven days a week, up from three.

Unfair competition

Now RwandAir complains of unfair competition while its rivals accuse it of slashing fares in order to gain an edge.

But RwandAir dismissed the allegations, arguing that it is re-positioning its operations to be more competitive.

“Some of those complaining were our partners but we realised they were undercutting us,” Mr Mirenge said.

A source within the industry who spoke on condition of anonymity said RwandAir’s current focus is not profit but to make Kigali a regional hub, which allows it to slash fares.

“While ticket fares are plunging, taxes and fuel costs are rising, hence affecting operating costs,” said the source. “For regional airlines to survive amid cutthroat competition, they will have to form alliances with established airlines.”

RwandAir, which has its eyes on transit passengers across the continent, said airlines from outside the routes the carrier covers are not a threat.

“For a young operator like us that is still trying to find its footing, such airlines are important as they bring passengers from areas we do not serve …This is different when competition is from destinations we serve such as Johannesburg, Nairobi, Entebbe and Burundi,” said Mr Mirenge.

Last year, RwandAir transported approximately 270,000 passengers compared with just 4,000 in 2011.

In the same year, the airline not only introduced new routes across the region including West Africa but also took delivery of its second Boeing 737-800 and disposed of its two CRJ 200 aircraft in the hope of acquiring two larger regional jets.

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Data from Rwanda Civil Aviation Authority shows that passenger traffic through Kigali International Airport grew by 30 per cent to 488,903 last year compared with 3,77,327 in 2011.

The airline is now eyeing the expected rise in passenger volumes on African routes over the next two years.

A June 2012 report on African airlines by financial behemoth Citigroup showed that major aeroplane manufacturers like Airbus, Boeing and Embraer were projecting the continent’s air passenger volumes to grow by 5.4 per cent annually, compared with the global average of 5.0 per cent.

Intra-African passenger traffic, Citigroup said, would grow by between 5.1 per cent and 6.4 per cent annually.

Tourism sector

Tour and travel agents in the country say a rise in direct flights will boost Rwanda’s tourism and hospitality sector.

To cater for the growing numbers, Rwanda expects to have a new airport by 2015, as the current one, which is undergoing renovation, is congested.

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Whereas it was built to handle 20,000 passengers daily, the entry of new airlines increased the numbers to 488,903 by 2012.

But the introduction of the Kigali route by Gulf carrier Qatar Airways and Turkish Airlines which operate daily and three flights a week pose another threat in the fight for passengers.

The Qatar and Turkish airlines are seeking to stimulate traffic to their respective hubs: One on the southern edge of central Europe, the other in the Middle East.

“Competition benefits customers because airlines are forced to improve service delivery in order to stay afloat. These days, most flights depart on time and there are fewer cancellations,” said a travel agent at Satguru Travel and Tours Agency in Kigali.

He said aggressive competition has forced airlines to be innovative by offering better packages such as excess baggage.

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Regional airlines are also using flight schedules to stay abreast, with departures from Kigali separated by less than two hours on certain days on the same route.

“But the biggest challenge is the price wars,” said Muhamud Wayiga, sales and marketing manager, global sales at South African Airways.

Mr Wayiga said despite rising operating costs, Rwanda’s virgin market makes it an attractive destination.

“The Rwandan economy offers many opportunities but also serves as a hub that serves markets such as DRC,” said Mr Wayiga.