KQ lacks capacity for direct cargo to US

Kenya Airways lacks capacity to fly cargo directly to the US, it has emerged, dampening the high trade expectations after the recent air freight deal between the two countries. On February 6, the countries revised their bilateral air services agreement, facilitating the expansion of air freight services. The new deal, which revised the initial agreement signed in Washington on June 18, 2008, was signed by Transport CS James Macharia and US assistant Secretary of State for Economic and Business Affairs Manisha Singh.

“The revised bilateral air services agreement between Kenya and the USA will facilitate the expansion of air freight services, by allowing airlines from both countries to set up and operate air cargo hubs in either country,” CS Macharia noted. While it was hoped that the national carrier would immediately benefit from the deal, KQ as it is know by its international code cannot sustain direct cargo flights, meaning it could lose out to carriers with bigger freight fleets. The airline operates two-Boeing 737-300 aircrafts for cargo haulage which mainly serves the African market and some part of Europe, which according to aviation experts, are too small for long-haul flights between Nairobi and the US.

“The cargo aircrafts are too small for that kind of operation,” a KQ technician who spoke on anonymity told the Star. The 737-300s are narrow-body airliners which can either be used for passenger or converted to freighters by containerizing them. “There is no way KQ is doing direct freight to the US with this type of aircrafts,” a pilots within the airline noted.

This means the deal is likely to be more advantageous to other carriers which have larger freighters. This, as the rights in the amendment allows U.S all-cargo airlines to fly between Kenya and a third nation without needing to stop in the United States, an important right if operating a cargo hub. ” Kenyan all-cargo carriers have reciprocal rights to serve the United States,” the US government said.

The government, through the Kenya Investment Authority, has been hopeful the freight deal will open up more trade and investment as the US remains among the top three sources for the country’s Foreign Direct Investments. “Our trade relations is increasing and with expanded air freight services, it will enhance more investments,” KenInvest managing director Moses Ikiara told the Star. Lack of capacity could however hinder the much anticipated business boom, though KQ management remains determined to capitalize on the new agreement signed on the sidelines of President Uhuru Kenyatta’s recent visit to the US.

“The airline is in the process of evaluating ways to take advantage of this(freight services agreement ) in the medium term,” management told the Star. Currently, KQ hauls cargo using its 787-8 Dreamliners which it flies on the JKIA and JF Kennedy International Airport in 2018 route, having commenced direct flights in October 2018. The planes offer a cargo capacity of up to 16 tonn

Freight services offers an opportunity for expansion of Kenya-US trade which according to the Kenya National Bureau of Statistics data, Kenya imported goods worth Sh55.1 billion from the US in the year 2019 to November. Exports during the period totaled Sh46.4 billion. Imports from the US in 2018 were value at Sh53.2 billion, down from Sh57.4 billion a year earlier.

Kenyans export earnings however slightly increased to Sh47.3 billion up from Sh47.2 billion in 2017, the Economic Survey 2019 shows, mainly on apparel and clothing accessories. So far, a two-way goods trade between the United States and Kenya stands at £1.1 billion (Sh110.5billion) in 2019, up 4.9  per cent from 2018. Top imports from US in 2019 were aircraft parts which totaled £59 million ( Sh5.9billion), plastics £58 million (Sh5.8 billion), machinery £41 million (Sh4.1billion) and cereals (wheat) £27 million(Sh2.7 billion).

Key exports from Kenya to the US were apparel at £454 million(Sh45billion), edible fruit and nuts (mostly nuts) at £55 million(Sh5.5billiob), titanium ores and concentrates at Sh5.2 billion( about £52 million), and coffee Sh3.4b (£34 million).

Kenya remains among biggest beneficiaries of the African Growth and Opportunity Act, or AGOA, which gives access to over 70 percent of her exports into the expansive American market.

US foreign direct investment (stock) in Kenya stood at £405 million, about Sh40.6billion in 2017.

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