Kenya Airways plans price talks with Precision Air

Kenya Airways plans price talks with Precision Air
Kenya Airways' Dreamliner

National carrier Kenya Airways has sought to amend its joint venture agreement with Tanzanian carrier Precision Air.

In the amendments, KQ is seeking an approval from the Competition Authority of Kenya (CAK) to enter into pricing and revenue sharing arrangements with Precision Air.

The two airlines are seeking an exemption from the deal to allow them to coordinate better on shared routes.

Through the amendments, Kenya Airways and Precision Air will both agree on the pricing of joint venture routes as well as share in network management activities with respect to the deal.

The two airlines are also set-to-establish a joint revenue management system to manage all revenues attributable to their partnership.

“In the joint venture agreement, the parties intend to align and coordinate the management of any and all revenues attributable to the performance of the joint venture by either Kenya Airways or Precision Air including setting up joint management systems and joint revenue analysis systems,” CAK Director General Wang’ombe Kariuki said in a gazette notice.

Kenya Airways is the second largest shareholder in precision air with a 41.23 percent stake.

Precision currently flies to 11 destinations, but is set to rise as it aligns its operations with that of Kenya airways.

The tow airlines already sell seats on each other’s planes through a code sharing agreement.

The move to align its operations comes at a time the national carrier is restructuring its operations through ‘Operation Pride’.

This has seen some realignment in its operations as well renewed focus on optimizing processes to boost revenue generation.

Through closer cooperation, Kenya Airways will be able to leverage on its quest to be the African carrier of choice.

The amendment of the JV deal coincides with Kenya Airways’ move to engage its second largest shareholder, KLM.

While Kenya Airways Chairman Michael Joseph has maintained that the airline needs its partnership with KLM, he believes some parts of the deal can be changed to better suit KQ recovery process.

“I have heard these statements that we should get out of the joint venture with KLM but for the life of me I don’t k now why. I have not seen a real burning issue as to what is wrong with the joint venture that we should get out of it,” Mr Joseph said at a past press conference.

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Story By Mumbi Warui
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