Stand still in the airline industry and you will get left behind very quickly. Extreme levels of competition, emergent markets and low barriers to entry – as your competitors streak ahead of you it’s easy to ask yourself “what happened there”.
One airline that must be asking that question on an almost daily basis is Kenya Airways who in their “battle” for dominance with their near neighbour Ethiopian Airlines have been left at the starting post since the turn of the century.
African aviation has always been challenging, no continent has seen as much airline churn, new airlines, collapses and political interference in the last twenty years. Some airline CEOs consider success in Africa as maintaining continuous operations from one year to the next, surviving despite the challenges of restrictive air service agreements and political desires for wide-bodied flagship aircraft that operate half empty. These challenges frequently combine geo-political ambition with the harsh realities of commerce.
The low-cost airline revolution, experienced elsewhere in the world, has barely touched African aviation and where it has had an impact it is typically inbound overseas airlines are the benefactors. High levels of taxation and the continued perception that aviation is more of a luxury rather than a catalyst for economic growth compound the daily battles fought by airlines. Additionally, the turnover of management teams' turnaround is more frequent than a B737, adding another layer of complexity to the industry. It’s tough to be an airline at the best of times and when you compare the fortunes of two legacy airlines in Africa, Ethiopian Airlines and Kenya Airways, you can see just how different things can turn out over time.
East Africa’s Battle For Supremacy
Africa is frequently seen as four distinct geographic markets, East, North, South and West; each having at least one or two very large national markets, some degree of connectivity outside of the continent, and their own unique operating characteristics.
In East Africa, two countries dominate - Ethiopia and Kenya - and at the turn of the century the two markets and their national airlines were both regarded as ambitious, well-run operations with potential for further development. Twenty-five years later and their competitive rivalry is a thing of the past as the chart below highlights. In 2000, there was a 26% differential in capacity between the two airlines, in 2024 that differential has increased to a 423% advantage to Ethiopian Airlines. And since 2012 capacity at Ethiopian Airlines has stretched significantly ahead of Kenya Airways. Ethiopian with an AAGR of 12.8% over the time series, double that of Kenya Airways’ 5.8%, it’s clear that in capacity terms they have sprinted away from their direct competitor leaving them trailing behind on nearly all metrics.
From a network's perspective, the two airlines offer comparatively similar ranges of schedules as the two pie-charts below illustrate. For both airlines at least 60% of their scheduled capacity remains within the East African region, but beyond that network similarity Ethiopian have a much larger share of their capacity allocated to medium/long-haul markets such as Central Africa and Europe which both account for 10% of capacity production. For Kenya Airways, Southern and Central Africa are the two largest regional markets contributing to a near 90% reliance on purely African markets. The dependence on this market, coupled with its continuous fragility, may have hindered its development, especially when compared to Ethiopian Airlines, which has a 76% reliance on the same market.
Consistent Strategic Thinking
Every airline has a strategy (or at least should have) but following that strategy is frequently the harder part of the story, especially when senior management changes continually occur. At Ethiopian Airlines there has been a clear strategy for decades, create an effective high in Addis Ababa, create effective connecting banks of traffic, and connect Africa to the rest of the world using the latest technologically advanced aircraft with high levels of service. Simple to say, harder to execute. But central to that strategy success has been consistency of leadership, the former CEO, Tewolde Gebre Mariam held the role for eleven years until 2022 when his resignation led to a smooth transition to the new CEO, Mesfin Tasew who has worked at the airline since 1984 and clearly knows the long-term strategy.
Compare that with Kenya Airways where strategies have changed on a regular basis as Government interest have on many occasions impacted both short-term changes and long-term results. A badly misguided expansion plan, Project Mawingu, in which services were planned to destinations in South America and Australia resulted in such heavy losses that the airline has never fully recovered, especially as the expansion plan coincided with a major capacity push from their close rivals Ethiopian Airways. With the airline at the centre of many investigations around financial results and irregularities in reporting, the lack of a consistent strategy has left Kenya Airways fighting for relevance as a comparison of their fleet positions with Ethiopian Airlines highlights.
Different Paths of Fleet Delivery
It’s obvious but to grow an airline business, increase revenues and add new destinations then you need to constantly grow your fleet of aircraft and have confirmed aircraft orders and deliveries planned for the next few years.
The chart below, illustrates the consistent fleet development of Ethiopian Airlines over the last twenty years with the carrier now operating 128 aircraft with orders for approx. 70 aircraft including both A350s and B737-800s expected in the next few years.
Source: ch-aviation / OAG
By means of comparison, the same data for Kenya Airways below perfectly supports the struggles that the airline has experienced in recent years with the number of active aircraft now standing at 32 with no confirmed orders in place. Given the current global shortage of available aircraft and completely full manufacturer order books, this suggests that any further growth is going to be very hard to achieve.
Source: ch-aviation / OAG
Different Futures for East Africa’s Major Airlines
For many years Ethiopian Airlines and Kenya Airways were considered as two of the most successful airlines in Africa, both were growing, were full members of global alliances and had clear opportunities for future growth through their respective hubs. Perhaps a combination of over expansion and a misguided network project between 2012 – 2016 resulted in the change of fortunes for Kenya Airways, and certainly political interference played a role. For Ethiopian Airlines, a very clear long-term strategy that has been unchanged for over twenty years with a steady management team and minimal government interference has created an airline that is now the envy of the rest of Africa. Everyone is intrigued to learn from the success of Ethiopian.
Ethiopian Airlines with an established track record of success are now more than just an airline located in Addis Ababa, the airline has minority and in some cases majority shares in several other regional airlines in Africa that allow them to extend their influence into other markets. Engineering support facilities are also provided to many airlines across the continent as their technical and operational experience is recognised as best in class for Africa. Meanwhile for Kenya Airways breaking out from their current market position will require investment and very careful long-term planning; quite where that investment will come from is a key question, strategic investment from an overseas carrier is unlikely given that only a minority share will be on offer, whilst funding from Central Government will involve a level of control that may not be beneficial.
For one of these two airlines the outlook is nothing but positive, for the other the future remains uncertain and as we noted earlier, standing still in the airline industry is a recipe for losing relevance and that would be a real shame for Kenya Airways which was once a powerful airline in Africa.
