#6

Allan Kilavuka

MD/CEO KENYA AIRWAYS PLC

On the 2nd of January 2020, his first day at Kenya Airways (KQ) as acting CEO, Allan Kilavuka took a tour of a few offices at the headquarters. Here, Allan got his first glimpse of the airline and hope for the future.

‘The many highly talented individuals worked tirelessly to ensure that the Airline’s future is sustainable and in good hands. This signalled hope. I also came across world-class facilities developed to meet the emerging market requirements and advancements in technology. These are to build business resilience and ensure that the Airline remains one of the most competitive in the region. I re-affirmed that KQ is one of the few long-standing African carriers that has pioneered key achievements in the African aviation industry,’ Allan says, remembering his first day at KQ, away from his previous seat as CEO of Jambojet.

Allan adds, ‘It was not lost on me that KQ’s financial performance and the brand had undergone some challenging times in recent years. One of the most notable concerns was that our previously enviable customer handling and retention skills, had deteriorated. As a result, numerous customer complaints were pouring in. This could only mean two things; one, our customers cared enough to tell us where we needed to improve. Secondly, we needed to ensure that we considered all their complaints, and ensure that their flying experiences are seamless, memorable and enjoyable’. 

‘Customer centricity stands prominently as one of our fundamental values, but we were not living up to it. We were not delivering a consistently ‘delightful experience with a caring African touch.’  

According to Allan, there was the concern about strengthening KQ’s efficiency and optimising the operating costs to ultimately move to a breakeven point.

‘We started our reform agenda in earnest with a lot of optimism and made significant strides. Then in February 2020, nine countries in our Africa network and the UAE and India announced travel restrictions following the continued spread of the SARs CoV 2 virus that was causing Covid-19 disease. In effect, these travel restrictions suddenly reduced our network by 65%. From thereon, the situation was deteriorating by the hour, and our passenger numbers were dropping and dwindling by the minute,’ he adds.

‘Eventually, the inevitable happened; for the first time in our history, we paused our international flights in April and parked 32 out of our 34-passenger aircraft fleet. This action is equivalent to stopping the sale of your top brand for a year. Our ‘top brand’ being flights during our peak season, ours runs from June to August. It is during this period that most airlines turn a profit.  Consequently, the next 4 months were challenging for us because our engines were cold and quiet, eventually leading us to the difficult but necessary road of survival. The impact of this lull was a 90% hole in our revenue,’ Allan narrates.

‘We made every effort to conserve cash and ensure the Airline’s survival. This entailed instituting pay cuts, scaling down on any cash negative operations and negotiating discounts on aircraft loans and lease rentals. We looked for every opportunity to raise revenue, signed up the few charter flight opportunities we could find, and vigorously pursued opportunities in Cargo,’ the story continues.

Allan says that on the flip side, the pause in activities gave management time to reflect on the future of Kenya Airways and how to emerge even stronger, better, and more focused on the other side of the crisis. 

In August 2020, international passenger flights resumed and KQ could breathe a collective sigh of relief. As anticipated, KQ’s return to the skies was bound to be gradual despite an early surge of pent-up demand. As such, KQ was operating at a reduced scale with an extremely lean network. This reality led to the rightsizing of the airline’s operations, a painful but necessary action.

According to Allan, the Covid-19 virus global outbreak in 2020 was beyond anyone’s prediction. Its impact on the aviation industry is expected to continue affecting air travel demand for the next 2 to 3 years. Approximately 70 per cent of total passengers carried in 2020 were flown during the first three months of the year, demonstrating the drop in demand as the global crisis deepened during the year. In 2019, KQ had celebrated the highest ever passenger haul that had now dropped by over 60% to 2.4 million. Like all airlines in the world, KQ reported record losses in 2020, a record forced on it by the raging effects of the Covid-19 pandemic.

‘Of necessity, things will never be the same again. There is no silver bullet, other than to focus on a few essential actions that we believe will put the Airline on the long road to recovery. We will continue to focus on our customers by ensuring that we understand them and align our products and services to suit their needs and address the end-to-end experience through the customer journey. To achieve this, we are revamping our digital platforms and re-training our employees. For instance, we have relaunched our Contact Centre and renamed it the Customer Excellence Centre,’ adds Allan.

‘We are diversifying our business to ensure that we build a resilient business that can stand the test of time. Over 85% of our business is in the passenger segment. If 2020 is anything to go by, this poses a significant business risk to the Airline. Top on the diversification strategy is the growth of our cargo business. We want to grow and ensure that it contributes to 20% of the overall business. In December of 2020, we launched the world’s first B787 Preighter, which increased dedicated cargo capacity by 126 tonnes per week. We will also expand our maintenance offering to third parties and have so far signed 7 new customers. We will also get into the unmanned aircraft space (drones) by leveraging our heritage, legacy, and experience of over 44 years in manned aviation,’’ opines Allan on KQ’s recovery trajectory.

‘When we were grappling with how to survive and move forward, we challenged employees during an ideation process and got back no less than 700 ideas which we are working to implement. We are now working to entrench this culture of innovation by launching the Fahari Innovation Hub, a business innovation and incubation centre that allows for accelerated transformation of ideas into sustainable business opportunities. KQ is the only Airline that has developed such an aviation hub in Africa’ .

Allan Kilavuka

‘Our initial predictions were that the Covid-19 pandemic would have eased by the end of 2020. Unfortunately, this is not the case. As we stepped into 2021, the realisation that customer service excellence and a diversified product portfolio would be the most critical factors for our survival informed our Financial Year (FY) 2021 themes. These themes will drive all our initiatives and activities under our 5 strategic objectives, which are vital to building a cost-efficient and resilient airline business.

Financial Stability is critical – improving our revenue, containing costs, and conserving cash. We are also working towards securing funding to bridge the current shortfall. 

With all that is going on, we must focus on our people. We are improving employee safety and wellbeing and aligning the post-Covid-19 pandemic network with the requisite human resources and skills.   ‘At the moment, we acknowledge that there are many moving parts, and the situation is constantly evolving. Our aim is to keep the main thing the main thing. I remain cautiously optimistic about a brighter future. But first, we need to get over this hump.’ concludes Allan Kilavuka, who was confirmed as the Group CEO of Kenya Airways Plc on April 1, 2020.