Kenya Airways and Tanzania’s Precision Air Services are seeking to be exempted from the competition rules through a review of terms for their joint venture.
In a move aimed at boosting the airlines’ revenue, the national carrier and its Tanzanian partner have written to the Competition Authority of Kenya asking to be allowed to make some changes to their deal on shared routes.
In the joint venture agreement, the carriers want to modify terms on routes, schedules, capacity, designation and pricing of ticket fares.
The two intend to set up joint-revenue-management and joint-revenue-analysis systems. They also intend to carry out joint marketing and sales activities, with reciprocal code sharing on joint venture routes.
“It is notified for general information that the Kenya Airways Limited and Precision Air Services PLC have made an application under section 25 (1) of the Competition Act, 2010, for exemption of their joint venture agreement from the provisions of section A of Part III of the Act,” the gazette notice by CAK director general Wang’ombe Kariuki, dated February 17 reads in part.
Precision Air partnered with Kenya Airways in 2003, and KQ acquired a 49 per cent stake in Precision Air at Sh207 million, after a bid for Air Tanzania failed.
The key joint route between the two remains the Dar es Salaam-Nairobi. Precision also serves Arusha, Bukoba, Moroni (Comoros), Kigoma, Moshi, Mtwara, Mwanza, Nairobi and Pemba, connecting to other regional and international airports with support from KQ.
“We sought exemption from the Competition Authority to allow us agree on pricing on our JV (joint venture) routes. They in turn must gazette it as per the law,” KQ communications manager Wanjiku Mugo told the Star yesterday.
The national carrier, which is implementing a turnaround strategy, posted a strong performance in the third quarter of 2016, recording a 4.8 per cent growth on passenger numbers boosted by a strong presence in the African market.
Passenger numbers in Africa between October and December, excluding Kenya, grew 5.2 per cent to close at 530,842.
Total passengers uplifted in the quarter stood at 1.12 million, achieving a cabin factor of 72 per cent compared to 68 per cent during the same period in 2015, the airline’s operating results ended 31 December shows.
Categories of exempted conduct, under the Competition Authority Act, are exemptions for maintaining or promoting exports, and for agreements, that improve or prevent the decline of production or promote technical or economic progress.