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Kenyan Low-Cost Airliner Turns to Used Planes

FILE - JamboJet's Chief Executive Officer (CEO) Ndegwa Karanja attends a Reuters interview at their headquarters along the Airport North Rd, in Nairobi, Kenya June 29, 2023.

NAIROBI — Kenya's first low-cost airline Jambojet is leasing used planes as it seeks savings in the face of severe cost pressures from a weaker local currency and high fuel prices, its chief executive said this week.

The Kenya Airways owned no-frills carrier is set to receive its eighth DeHavilland Dash 8-400 plane next month, followed by the potential delivery of a ninth in the first quarter of next year, CEO Karanja Ndegwa told Reuters.

"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," he said in an interview.

Jambojet is leasing planes that have been in service for at least two years, which are coming with shorter lease terms compared with new ones, Ndegwa said.

The company expects passenger numbers to grow by a fifth this year to 1.2 million, he said, mainly due to demand on local routes by business travelers.

"We are on our way there," he said, adding that the airline was also benefiting from a recovery in the tourism sector following the COVID-19 pandemic.

The nine-year old airline carried 719,000 passengers in 2019, before its business was severely curtailed by the pandemic over the next two years.

In 2022, it transported 1 million passengers.

But like other businesses in the East African country, the company is feeling the pressure from a steep weakening of the shilling currency against the dollar.

"About 90% of our sales are in shillings yet 78% of our payments are in dollars," Ndegwa said, referring to obligations like plane leases, which are usually settled in dollars.

Jambojet is also being buffeted by higher fuel costs, partly due to higher taxes in Kenya.

It is responding by adding extra flights on routes with huge demand to boost revenue, Ndegwa said, and it might also pass on some of the extra costs of doing business to passengers.

But any ticket price increment will be measured to stay true to the airline's low cost model, the CEO said.

"You also don't want as a low-cost carrier to push your prices to an extent whereby customers are not able to afford," he said.