Wednesday July 17 2013

Ethiopia, Malawi Air deal puts new pressure on Kenya Airways

By Wangui Maina (Monitor correspondent)

Nairobi - Kenya Airways is set to face stiff competition in southern Africa following the return of Malawi’s national carrier with Ethiopian Airlines as a major shareholder.

Ethiopian Airlines, which is KQ’s top rival in the region, will own 49 per cent of Malawian Air, marking a return of a government-controlled airline in Lilongwe, the capital, following the collapse of Air Malawi.

The airline collapsed due to cash flow problems early this year and the government opted to start a new carrier rather than rescue it.

Its collapse opened the window for Kenya Airways to get new rights to connect passengers between Lusaka and Lilongwe, which had been withdrawn in October by the Malawi’s Department of Civil Aviation due to a disagreement with Air Malawi.

KQ also got rights to fly to Blantyre, Malawi’s second largest city and commercial hub, and started operations last month with three weekly flights over its 10 weekly flights to Lilongwe.

The Ethiopian partnership allows the airline to set up a base in Southern Africa, its third, a move that will see it compete with Kenya Airways for passengers and revenues.

“Through this strategic partnership with Malawian Air, Lilongwe will become Ethiopian Airlines third hub on the continent after its main hub in Addis Ababa and Lome, Togo,” said the airline’s CEO, Tewolde Gebremariam, in a statement.

The government of Malawi and other private investors will control the remaining 51 per cent stake in Malawian Air. It is not clear how this will affect KQ’s rights to Lusaka from Malawi and Blantyre route.

But the presence of Ethiopian Airlines — which is bigger and so far one of the most successful carriers on the continent — will certainly put pressure on KQ and trigger a price war.