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Provide incentives to all carriers

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Provide incentives to all carriers

Package holidays involving chartered flights, once an important plank of international tourism, are on the decline. However, suggests Bobby Kamani, a fresh incentives approach could work wonders for Kenya’s tourism.

In 2016, the Kenyan government unveiled a Ksh1.2bn ($12m) Charter Incentive Programme (CIP), which aimed at subsidising the cost of tourists arriving in the country on chartered flights.

The main purpose of the CIP was to stimulate demand for destinations in Kenya by introducing new charters, while encouraging existing charter airlines to increase their route frequencies. It further served as a reward for charter airlines that made long-term growth commitments to bring in tourists to experience Kenya’s beach product.

Under the CIP, all charter airlines bringing in tourists terminating at Moi International Airport, Mombasa, and Malindi Airport, were to be charged no landing fees for a period of two and a half years, as well as receive a passenger subsidy of $30 per seat for carrying international passengers terminating or disembarking in Kenya over the same time period.  In order to benefit from the CIP, charter airlines were required to ensure that a minimum of 80% of the passengers brought in must be terminating in Kenya and they had to commit to operating the Kenya route for at least two years. 

The focus was placed on holiday destinations and seats were usually booked through tour operators as part of a package. In 2014, the coastal region suffered a major blow, with the withdrawal of UK charter flights following a travel advisory imposed by the British government. Several other continental European charters followed suit.

A charter airline that operated once a week would bring in an average 300 passengers, thereby contributing approximately Ksh1.65bn ($16.5m) in tourist spend. From the launch of the CIP in January 2016, until its untimely demise at the end of 2017, a dismal number of only five charter airlines qualified for the advertised incentives. 

Reinvent incentive system

Trends thus reveal that the tourist charter flight model is rapidly on the decline. In 2007, the segment’s share of all flights was 6%. Ten years later, this share had dropped to about 3%. The scheduled airlines and low-cost airlines segments have absorbed a substantial part of the charter market in recent years as more people are planning their holidays through online booking channels rather than relying on conventional travel agencies. In response, many former charter operators have started selling individual seats as part of their transition to operating as low-cost and scheduled flights.

The National Treasury, the State Department for Planning, and the Ministry of Transport and Infrastructure should reinvent the CIP as a ‘Carrier Incentive Programme’. making it carrier-centric rather than charter-centric.

This would include prevalent national and local carriers as well as any prospective scheduled and low-cost flights. Every Kenyan carrier (irrespective of whether it is national or local) should be eligible to benefit from such a programme, if they meet the requirements, which can be set by the relevant ministries.

This new and improved programme would further strengthen the destination’s brand visibility as a whole if it were to be broadened to also incorporate destination marketing support in conjunction with the Kenya Tourism Board (KTB). This would benefit the country and tourism far more than having only the waiver and the pay-back model.

This expansion of the Kenyan skies would result in the national carrier bringing in international travellers (both for business and pleasure), who then have the flexibility of choosing from various other local airline operators to explore the country.

There would be follow-on benefits in various areas from the implementation of such a programme, be it in the form of an increase in the revenue for airports and airstrips, or creating much needed healthy competition between local airline operators and the national carrier, or helping to increase employment.

Whichever way you look at it, such an inclusive programme would only result in economic growth, which would go a long way in helping us attain Kenya’s Vision 2030 – moving the country towards being “a globally competitive and prosperous nation”. NA

Bobby Kamani is Managing Director, Diani Reef Beach Resort & Spa, Mombasa, Kenya.

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