In order to save money amid severe financial pressures arisen due to weaker local currency and high fuel prices, Kenya’s first low-cost airline Jambojet has decided to lease used aircraft, according to its chief executive.
According to CEO Karanja Ndegwa, the no-frills airline, which is owned by Kenya Airways, would likely receive its ninth DeHavilland Dash 8-400 aircraft in the first quarter of 2019. It will get its eighth DeHavilland Dash 8-400 plane in July.
In an interview, he said, “We used to get the new ones just also as we build our maintenance capabilities but over time, the ones that we are getting now, they are not new.” According to Ndegwa, Jambojet is leasing aircraft that have been in operation for at least two years and have shorter lease durations than new aircraft.
According to him, the company anticipates 1.2 million passengers this year, up by a fifth, largely due to business visitors’ increased demand for local routes. He said, “We are on our way there,” and added that the air carrier was also profiting from an improvement phase in the tourism industry after the COVID-19 pandemic.
The air carrier served 719,000 passengers in 2019 after which the COVID-19 pandemic hit it severely. It carried 1 million passengers in 2022.
However, the company is experiencing pressure from a sharp decline in the value of the East African shilling relative to the dollar, much like other companies in the region.
“About 90% of our sales are in shillings yet 78% of our payments are in dollars,” Ndegwa added, alluding to debts like plane leases, which are often settled in dollars.
In Kenya, higher taxes have contributed to rising fuel prices that are also affecting Jambojet.
In order to increase income, it is reacting by adding more flights on routes with high demand, according to Ndegwa, and it may also transfer part of the increased operating expenses onto customers.
However, the CEO stated that any increase in the price of a ticket will be measured to maintain the airline’s low cost model. As a low-cost carrier, you don’t want to raise your costs so much that your clients can no longer afford them, he added.
