Tuesday, April 15, 2014

Understanding Low Cost Flights

Though FastJet and JamboJet applied at about the same time for aviation licenses to fly in Kenya, FastJet started in Tanzania in November 2012, and a year and a half later,  JamboJet, a Kenya Airways subsidiary has launched flights in Kenya. 

As low cost carriers, there are some differences which passengers here, especially current Kenya Airways customers, may not be able to understand.
  • Cost of tickets:  Going by the FastJet model, which JamboJet also has, there is the  unique pricing of tickets. While they advertise low prices of tickets e.g.Kshs 2,850 ($35) to Mombasa, Eldoret and Kisumu, not all seats on the flight cost that. The price applies to just a few and as soon as they are bought (preferably several days or weeks in advance of a flight), then the next batch of seats become available, at a higher rate. This goes on until fares bought on the day of the flight might be comparable or even more than the cost of a full fare airline. 
  • Extras: Next is that the airline makes money on many extra items - things that you take for granted on Kenya Airways, are items you pay for on JamboJet; these include luggage (only 10kg  hand luggage is free), meals (Kshs 500 for a sandwich, and Kshs 200 for a soda) and even seat selection (costs Kshs 710 to pick a specific seat that’s tinier than a Probox as per @themacharia).
  • Children: On FastJet international routes, children aged less than 12 years are not allowed to travel unaccompanied. But on JamboJet domestic, this is allowed at a fee and the child must be met by a parent/Guardian within 20 minutes after arrival or additional fees will be charged.
  • Luggage: With JamboJet, a passenger is allowed to purchase a maximum of 64 kg of checked in baggage. The only free baggage is the 10 kg hand luggage. Also, it is cheaper to pre-book and pay in advance for baggage than pay at the airport.  On FastJet, a passenger can pay for excess weight at a rate of $5 per kg up to a maximum of 32 kg.
  • Delays: If a FastJet flight is delayed by 1 - 2 hours, the airline will provide regular communication on flight status, and if the delay is 3 - 4 hours, refreshment vouchers of up to  Tsh 8,000 ($5) may be provided. If over 5 hours delay, FastJet will communicate a flight cancellation and refunds will be issued from the head office or  there will be a free transfer to (their) next available flight. So if a flight is canceled for operational, weather, or other reasons, the T&C states that FastJet will not provide flights with alternative airlines or hotel accommodation in the event of overnight delays or cancellations.
  • Changes All fares are non-refundable. On JamboJet, itinerary changes must be made 1 hour prior to departure -  and if at the time of change, the original fare is not available, the passenger will pay a higher fare 
Also, in other markets, low cost carrier operate from smaller airports which have lower landing fees or taxes. In Kenya, an equivalent would be flying from Wilson airport or Orly Air Park as opposed to JKIA.

For now, JamboJet operates on relatively short flights to Kisumu, Edloret and Mombasa so you won't notice that there’s no free meal service. JamboJet also has Kenya govt.  permission to fly to Wajir, Malindi, Lamu, Juba, Hargeisa, Kisangani, Pemba, Moroni, Entebbe, Dar es Salaam, Mwanza, Bujumbura, Kigali, Dzaoudzi, Goma, Mwanza, Antananarivo, Zanzibar, Kilimanjaro and Addis Ababa.  Over in Tanzania Fastjet flies to Mbeya, Mwanza and Kilimanjaro, and also flies to South Africa and Zambia.

Wednesday, April 09, 2014

Visit a Huduma Centre

Arguably, the President was probably wrong when he said during a TV interview on the one year anniversary of his government, that their biggest achievement was free maternal health care.

A better answer was probably their introduction of Huduma (swahili for service) Centres in the country. Huduma Centres, which are at two post offices in downtown Nairobi, are offices where citizens can access a whole range of government services that they would previously have to visit a dozen different  offices over several days to complete.

Services offered in one room include business registration, driving license renewals, national ID’s, birth certificates,  city parking permits, land rate payments, querying NSSF & NHIF, and they even act dropping points of KRA (taxpayer) forms. 

They are popular and the parking at one had several red-plate (diplomatic) cars outside as vehicle log book collection is one of the services offered.

One Huduma Centre had a few important things that made the visit to this government office pleasant including: 

  • A ticketing system and customer service person at the door to get you to the right queue quickly. 
  • In case you need more cash, there is a mobile money agent (both M-Pesa & Airtel)
  • A cyber cafe inside in case you need to print documents or make an (inevitable) photocopy.
  • Free parking for customers.

Huduma Centres are pleasant, and airy, and served by smiling staff that make you want to get more and more essential services completed when there. 

Going forward, will this good feeling last? Will departments continue stop supporting services here? Will parking remain free? Will the staff get tired of smiling as crowds grow? Will the quality of service deteriorate over time? Can it scale to other towns? 

That remains to be seen but for now Huduma Centres which enable citizens to access several individual and business services in one time-saving office is the most important government achievement to date. 

The Huduma Kenya website notes that additional centers will be opened in each of the 47 counties within the next 24 months. And as the government grapples on how to revive post offices  that it owns in prime locations around the country (in an an electronic age with fewer letters), Huduma Centres may be the answer.

Sunday, April 06, 2014

Boeing 787 Dreamliner Arrives at Kenya Airways

On April 5, Kenya Airways (KQ), received, The Great Rift Valley - their first Boeing 787-8 Dreamliner aircraft in Nairobi.  

KQ Managing Director, Titus Naikuni, said their aircraft were 3-4 years behind schedule and thanked the airline staff, passengers and sales people for putting up with older aircraft in the interim. He added that plans are still on course for KQ to get more Dreamliner planes every month between June till October 2014. 

Arrival
KQ Chairman, Evanson Mwaniki who was on-board the 16-hour non-stop flight from Paine Field, Washington to Nairobi, said they been assured at the highest levels of Boeing that the 787 program's teething problems had all been sorted. He said each Dreamliner with engines cost the airline Kshs. 11 billion (~$130 million seems low), while the new Boeing 777-300's arriving were Kshs 18 billion ($211 million)  and yet they are competing for routes with Gulf nation carriers with seemingly unlimited pockets who could order 100 aircraft when KQ orders 9.  He made three requests of the Government; to expedite bilateral air service agreements, sort out double taxation that penalize the airline and also expedite VAT refunds.

Tracking the Great Rift Valley
Transport Cabinet Secretary,Engineer Kamau said Gok and KQ had worked on new terminals (greenfield started, Terminal 4 ready in July), and new aircraft (777, 787) and invited the President to use Kenya Airways for trips and for KQ to use the President who travels a lot and get themselves on agenda for such trips. 

Also at the launch was the President of Somalia, Hassan Sheikh Mohamoud, who said terrorism was a global challenge - and that, while Shabaab was associated with Somalia where it gained a foothold in the then-lawless state, it is now losing ground in terms of financing, recruitment and training. He thanked Kenyans for their tolerance and accommodation of business  people and said Somalia was on track for a first election in 45 years in 2016 in which women would also vote. 

President Kenyatta said KQ had more of a global reach than Kenya embassies so were in essence first ambassadors for the country and that in his personal experience it had the best pilots and crew in the world. Late he noted that pilot costs are heavy, and that KQ’s labour is less productive than Ethiopian Airlines and that it was necessary for the airline to simplify operations and get better staff productivity.  He also said that Angola had agreed to open an embassy in Nairobi  - a relief to many as Kenyans applying for visas have to do so via Dar es Salaam, Tanzania. 

Engine cool-down after the extra long flight
The new aircraft is part of Project Mawingu, the airline's massive fleet and route expansion program. It will start on the Paris route in June and in between will be used for familiarization of staff, training, and be showcased to key KQ markets.  At the launch, a General Electric representative thanked the airline for having over 100 of their engines in the fleet, while a Boeing VP said KQ had designed and selected one of the best Dreamliner interiors on offer.

Thursday, April 03, 2014

NIC Bank Move to Now

Ten years after NIC pioneered a revolutionary flat fee banking model, they have now launched Move To Now a banking model that makes time consuming banking experiences more convenient for any customer who can use a computer or smart device. This is represented in faster decision making, likes asset finance loan approval decisions which NIC delivers within 12 hours of application that can also be placed at various local vehicle dealers.

At an event this week, the Group Managing Director and his team highlighted four of the features of MovetoNow  including online account opening, online banking, a mobile app and online cheque deposits  - all of which can be done without having to visit a bank branch, whether for existing or new customers. 

Notably the accounts are in two types;  one being a transactional (pay as you go) model that charges Kshs 30/= per activity done by a customer, or a flat fee of Kshs 800 ($9.41) per month for a bouquet of products. The NIC app has all the features of the online platform as well as others like traffic cameras, movie listings, and the ability to make KRA enquiries and payments.

At the launch of M-Shwari in 2012, the then Immigration Minister spoke of an online platform that banks could access to immediately confirm identities of citizen identity/registration documents and this seems to be what has enabled banks to offer account opening verification by phone.

Thursday, March 27, 2014

Financing Lake Turkana Wind

Monday this saw the signing of final agreements for the financing of the Lake Turkana Wind Power - LTWP project. This was the completion of a long, 9 year process that began with a fishing on trip on Lake Turkana, that yielded no fish, but a lot of wind on boat trip. 

The signing of finance deals worth 498 million euros (~ Kshs. 60 billion), will go towards LTWP which at Kshs. 75 billion is arguably both, the largest single wind power plant in Africa and, the largest single private investment in Kenya


The  Kenya Government has committed to raise the country’s electricity generation capacity to 5,538MW (from the current 1,533MW) by the year 2017. 630MW of that will be from wind, and they they have identified five strong wind areas in Ngong, Turkana, Kinangop, Kipeto and Isiolo - and hopes that using renewable sources of energy like wind will bring down the cost of electricity to consumers, and save on fuel import costs for the country.


The government’s KETRACO agency will build a 428 kilometer, 400 kV line, from Loyangalani to Suswa Suswa to Laisamis that they say will be ready in 24 months and which will also  link up with geothermal plants along the way. 
Image from LTWP website

The LTWP which will generate 300 MW, using 365 turbines in Laisamis (Marsabit) was registered in 2006, and brought one Aldwych International as an investment and development partner in 2009.

Financiers in LTWP include the African Development Bank (AfDB are the lead arrangers and who have provided a guarantee against some delays have also financed $1.7 billion in power generation in Africam with 39% iof that going to private sector companies) the European Investment Bank. Standard Bank (Stanbic), FMO, Nedbank, EADB, PTA, PKF, DEG, Proparco and soon OPIC (US)

Other partners in LTWP include Vestas (turbine supplier), the governments of Denmark (proving EUR 135 million including 120m in export credits), Netherlands, and Spain (who are financing the Laisamis- to Suswa transmission line).  

Next, the Kenya government wants to expand the number of last mile electricity connection while KETRACO also plan to extend the transmission lines to Northern and North Eastern Kenya - and on to Ethiopia, Tanzania and Uganda. This will serve the regional transmission purposes and also open up northern Kenya.

Joseph Njoroge,  the Energy principal secretary, said additional electricity opens up opporutunies such as enabling the pumping of crude oil, the Standard Gauge Railway is also planned to use electric trains, Iron Smelting, as well as clinker production (by Athi River and Dangote.

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