Flights between Kenya and Tanzania are grappling with falling demand especially from local travellers due to increased costs from the surge in fuel prices and taxes introduced on airfares by the Tanzanian government.
Safarilink Aviation, one of only three Kenyan airlines that has been operating scheduled flights to Tanzania airports from Nairobi and Mombasa, and now just one of two after Jambojet bowed out. In this interview with Business Daily , Safarilink CEO Alex Avedi discusses how the carrier has managed to continue operating flights to Tanzania, even as some airlines opt out.
Safarilink started a new route to Arusha, just as Tanzania introduced a new tax on arriving passengers. What informed starting the route and how is it performing so far?
We launched Arusha around December 15 or 16, after it became a designated international entry and exit point. We now operate three scheduled flights a day, in the morning, at 1pm and around 5pm, connecting business travellers and tourists arriving through Jomo Kenyatta International Airport.
The idea is to grow the market to three flights daily throughout the year, although during the low season we may reduce frequencies to two flights or even one daily service.
We are also targeting business travellers because there is considerable trade between Kenya and Tanzania. Arusha hosts East African Community headquarters and generates traffic from non-governmental organisations.
The taxes are extremely high, particularly on the Tanzanian side. They amount to almost $140 (Sh18,188) each way, meaning a one-way journey can cost about $250 (Sh32,480) and a return trip $400–$500 (Sh51,968 – Sh64,960).
For frequent travellers, that is prohibitive. There are numerous shuttles between Nairobi and Arusha every morning, charging around $30 (Sh3,897) to $50 (Sh6,496). The journey by air takes only 40 to 45 minutes, but the taxes make flying expensive. If the charges were reduced, we could offer fares of around $70 one way. If a shuttle costs $50 and a flight costs $70 or $80, many more people would be willing to fly.
For many international tourists, a safari is a once-in-a-lifetime experience. Even if you charge them $140 in taxes, they may still pay because it is a bucket-list trip. For frequent regional travellers, the cost becomes a major consideration because they have alternatives, including road transport.
Our business follows the international tourism calendar. June to October is generally busy, while November marks the beginning of the low season. January to March is quieter, with April and May particularly slow before demand recovers in June.
What about the Zanzibar route? Taxes are even higher than Arusha. How is the route performing for Kenyan airlines?
Zanzibar is highly seasonal and depends heavily on international tourists, particularly from Europe and the United States. From November, passenger numbers can fall to about half the levels recorded during the peak season.
There are strong cultural links between the East African coast, particularly Mombasa and Zanzibar. However, that market is very price-sensitive. A fare of $200 one way is expensive for many travellers, so some travel by road from Mombasa to Tanga before taking an internal flight.
The number of Kenyans we carry to Zanzibar has fallen drastically over the past two or three years. On some flights, 90 percent or more of passengers are Europeans and Americans.
The issue is taxation and value for money. When a family of four considers flights, taxes and mandatory insurance, the total becomes substantial. A return trip can cost around $500 per person, or $2,000 for a family of four.
People then ask themselves why they should go to Zanzibar when they could spend a similar amount travelling to Cape Town, Johannesburg or Dubai. Increasingly, Kenyans are choosing domestic destinations such as Diani and Lamu.
Locally, there was a return of import duties on airplane parts. How has this, together with the surge in fuel prices, impacted domestic aviation?
We are reviewing our entire network because margins have shrunk considerably, particularly on domestic routes. We may need to reduce capacity on some routes rather than operate six flights a day where three or four would be sufficient.
The problem is not necessarily a lack of demand. People want to fly, but they are accustomed to fares of $60, $70 or $80. When prices rise to $150 or $200, they start looking for alternatives. Some who previously flew every weekend may travel once a month instead, while others return to driving or using shuttles.
Governments also lose potential tax revenue when airlines carry fewer passengers and employ fewer people. If airlines withdraw from the market, consumers are left with fewer choices and fares could rise further. Competition is healthy for passengers.
Our operations are not struggling. It is important to distinguish between our safari business and domestic routes connecting Nairobi with Kisumu, Mombasa, Diani, Lamu and Malindi.
International tourists often buy packages well in advance, and the margins tend to be better. They also have greater spending power, allowing us to pass on fuel surcharges more easily. We currently have a $20 surcharge, which international tourists are generally able to absorb. On domestic routes, adding $20 or $30 can cause demand to fall.
We are fortunate to have more demand than supply in our safari business during peak season. Sometimes we turn down bookings because our aircraft are full, occasionally a month in advance. The additional aircraft will help us serve that demand.
The only additional regional route we are considering is Kigali. We want to offer an East African circuit for tourists travelling between Kenya, Tanzania, Uganda and Rwanda.
However, we must review the timing in light of current conditions and fuel costs. When the situation improves and fuel prices return to more manageable levels, routes that are not viable today could become viable again. We are not making speculative applications while reviewing our capacity.
