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This year, Kenya Airways (KQ) will launch a low cost carrier, at least according to media leaks. The launch is seen largely as a counter to low cost carriers (LCC’s) presence in the eastern African region. The launch, though secretly kept away from all and sundry, is supposed to take the local and regional market by storm. Several regional or budget operators are currently registered in Kenya, including Jet Link, Fly540 and Air Kenya, and operate from either Jomo Kenyatta International or Nairobi Wilson Airport. KQ commonly refers to them as “mosquitoes” because they “are always there, they are small but they sting,” according to COO Bram Steller. In August 10, 2011 Kenya Airways went full throttle to announce plans to forge a low cost carrier as a subsidiary that will handle local and regional flights. Going by the name Jambo Jet, the carrier is meant to take on several smaller airlines that have become popular with passengers on domestic routes and to neighbouring countries.
The arrival of the Boeing at Jomo Kenyatta Airport after landing in Ethiopia has overshadowed this significant news in the market. Indeed the arrival plans of Kenya Airways launching the Jambo Budget of airline did not receive much publicity than acquiring the big liner. Yet in the air space industry the low cost carriers are pushing big airlines out of business and are becoming a constant irritant to big airlines, which have managed to grow in capacity and muscles over the years. No wonder some of them have toppled giant airlines in Asia, Europe and America.
The question that arises is whether Kenya Airways is reacting in the market or it is a step by step calculation in the industry. Apparently that might determine the success in the market or failure of its Jambo jet low cost carriers.
In 2009 Nation Media Group softly buried the Daily Metro, which bore its funeral announcement on its last edition. The demise of a paper conceived as a knee jerk reaction to the initiation of Nairobi Star in to the main stream media was largely expected. The Nation media house posed its adroit skills in flanking its major edition, with Daily Metro. The notion was that the onslaught would tame the Nairobi Star which at that time was going through its labour pains. However, the Nation management team viewed the Nairobi star as a tabloid, and, with its financial muscle and talent the reaction was to launch a paper that would fight Nairobi star. This was to be a mistake that every day the management of various companies make in board rooms, choosing to react rather than to initiate calculated steps that eliminate the challenge of the day (mindset of acting versus reacting).
This is how fighter brands are born; they are a reaction to fight an onslaught from a competitor that might paint the very competitor in good books of the customer thereby endearing itself to the market. The same script was played by Coca Cola when soft drink Alvaro was launched in the Kenyan market. San Diego, through East African Breweries, ran a market testing of Alvaro in the Kenyan market, and results told them it was time they went full throttle to commercialise the product. The market test had proved perfect for a successful product launch. Instinctively Coca Cola reacted by bringing Novida into the market. Note that the name suggested the presence of South American brands in African continent.
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Most of the success stories of market leaders maintaining clout in the market are through brand flanking which is a strategy of protecting the main brand by supporting it with relevant brands where the main brand does not serve. This is well calculated move in which anticipation of both the market and the strategic move of the competitor is taken care of before the need arises.
Daily Nation newspaper was the flagship of its corporate vision but over the years, it has been flanked with Business Daily, Taifa Leo and The East African which serve the thirst the Nation Newspaper creates. Citizen Radio started as Mwananchi brand but its growth and the flanking of local tongues has surprised many after having a commanding lead in its broadcasting service audience.
Whether by flanking or through a fighter brand, strategy must be properly executed to ensure that the new product is not just providing an alternative but is fighting competition as well. In the airlines business and of late the so called no starters in the meadow are coming up with models that are creating cut throat competition .They are fast, furious and quickly executing the final blow somehow fatal to the big boys in the market. Such are low cost airlines with skills that surprise many and paralyse the big players in the market.
With the growing middle class in Kenya and higher tourist arrivals the demand is set to increase air services in the coming years with favourite destination being the holiday destinations at the coast or Kisumu. But with the opening up of the counties then this will open up new venture of low cost carriers. Indeed, with the opening up of Juba, Kampala, Bujumbura, Kigali, Dar-el Salaam and even Addis Ababa more is set to come because of the integration prospects.
On the world scale one successfull story of the Low Cost Carrrier is the great South West Airline, which came up with the low cost concept and managed to stay profitable against the tide from fuel prices, economic crunch, and terrorism. Malaysian Airways apparently learnt the lesson albeit too late. If East African Carriers waits for this cue, chickens may at that time be coming home to roost. It was the joke of the century when Tony Fernandes, a Malay who worked as an accountant with Richard Branson approached the Malaysian Government to start a low cost carrier, to boost tourism in the aftermath of September 11. He paid US Dollar 27 cents for a bankrupt government company Air Asia with two ageing Boeing Jets and with US $11 million in debt. The rest is history and predominantly his story. Within two years the organisation was profitable with the hymn that “now everyone can fly.” With fares as low as 2.50 dollars one way Air Asia is a comedy flight experience. Customers literally run for their seats, with lunch boxes.
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Air Asia has perfected the art of managing costs, such that essentially, all that the customer does is just to sit and wait to land at the destination with without the niceties that traditional airplanes offer to pamper the customer. They avoid big airports, have short excursions and a very high rate of plane utilisation.
A highly effective, motivated and empowered workforce is the pillar of success for these flights and the open space office of Air Asia would express the work culture to give or receive help when accorded. For the planes, Air Asia, for example, concentrates on Boeing 737-300 and airbus 3290, which enables the technical team to stay focussed and become experts in operations and maintenance.
To stay close to the bosom of their customers Air Asia has introduced GO holiday, an online programme that enables guests to book holiday packages, hotel rooms, car rental and even have appointments with doctors. For a strategic reason Air Asia has also made it a point to sponsor the English Premier League team, Manchester United to appeal to different tourism segments in Europe. To triumph with the locals in different countries, the company brands itself as a local brand while in Malaysia it is known as Malaysia Air Asia; in Thailand it is known as Thai Air Asia and Indonesia, Indonesian Air Asia. This is aimed to speak the native language of the people.
The end is sweet: it is diversifying into hotels and now serves the long haulage flights as far as China, Thailand, Macau, England and even Australia, robbing Malaysian Airways (MAS) some markets. And the MAS reaction? You guessed it right, to come up with a fighter brand Fire Fly, albeit too late!
Back in Kenya, KQ remains tight-lipped on Jambo’s potential fleet but word has it that it operates two E-190s and five E-170s in a two-class configuration. The airline is using the E-jets on thin routes and new routes in Africa. In 2011 KQ reported 27.6 percent year-over-year growth in passengers carried to 850,908 for the June quarter. Domestic enplanements rose 62.5 percent to 184,845, owing to additional daily frequencies on the Nairobi-Mombasa route using E-jets and the introduction of Malindi flights. Boardings on its extensive African network, excluding Kenya, jumped 18.1 percent year-over-year to 432,366.
The LCC is a reality that is eminent and real, hardened by the economic scourge, fluctuation of oil prices, withering tourism numbers and political uncertainty that Kenya faces. Kenya Airways might capture this untapped market and dominate the airspace before it too late to cough in the dark and get noticed. Creating such a diversified company that is a totally separate and distinct to cater to the group that may want to fly but waiting for the organisation that will not provide the rosy environment but a bumpy turbulent flight so long as they reach their destination.
Opati is a lecturer and marketing consultant he can be reached throughcheap viagra in uk
By ZEPHANIA OPATI
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