Kenya Airways (KQ) and its South African counterpart SAA are fast-tracking the launch of an African airline alliance to support their recovery from deep losses and the effects of the Covid-19 pandemic.
The two cash-strapped and loss-making carriers this week advanced a cooperation agreement they entered into two months ago into a strategic partnership framework to jointly launch a pan African airline group by 2023.
Signed under the gaze of Presidents Uhuru Kenyatta and Cyril Ramaphosa during a three-day State visit to South Africa by the Kenyan leader, the new partnership is expected help both airlines improve their financial viability by leveraging their strategic strengths through deeper coordination of passenger and cargo operations and pricing.
“The signing of the strategic partnership framework by the two African airlines will see both airlines work together to increase passenger traffic, cargo opportunities and general trade by taking advantage of strengths in South Africa, Kenya and Africa,” the airlines said in a joint statement.
Board chair Michael Joseph signed for KQ while SAA Chairman John Lamola signed for South African Airways.
The partnership builds on the idea of an African airline alliance, first mooted in 2018 between Air Mauritius, SAA, KQ and Rwanda Air. Such an alliance would allow member carriers to optimise operations rather than aggressively compete for business opportunities on the continent.
The plan was thrown into disarray last year as the onset of the Covid-19 pandemic disrupted global air travel.
Both SAA and Air Mauritius were put under administrative care last year over mounting debt.
“This cooperation will increase connectivity through passenger traffic, cargo opportunities, while enhancing the implementation of the Africa Continental Free Trade Area Agreement (AfCFTA). The geo location of the two countries will make the Pan-African Airline Group attractive by creating the most formidable airline group that is expected to take advantage of strengths in South Africa, Kenya and Africa,” Mr Joseph said.
Weighed down by decades of old debt and Covid-19 disruptions, SAA suspended services last September as administrators sought funding for a $621 million rescue package.
Equally, Kenya Airways has pared down its fleet and route network as it works its way out of deep losses since 2015. As it resumes services, SAA has also reduced the number of owned aircraft and opted for cooperation rather than operating own aircraft on some routes.
“The strategic partnership framework will improve the financial viability of both airlines by creating the most formidable air transport connection in Africa by benefiting from at least two attractive hubs of Johannesburg and Nairobi. It will ignite the Kenya and South Africa tourism circuits, which account for significant portions of the respective country’s GDP,” said Mr Lamola.
In September the two airlines committed to exchange knowledge, expertise, innovation, digital technologies and best practices.