Kenya Airways will end its strategic partnership with Air France-KLM from next September. The airlines had already suspended their alliance for 2020 following the closure of flights and ongoing crisis. The end of the partnership comes as Kenya Airways is in talks of potential nationalization.
Cutting ties
This week, Kenya Airways and Air France-KLM announced that they are mutually ending their long-standing joint-venture agreement. The agreement had already been suspended in 2020 due to the ongoing crisis, and both airlines have now decided to end it from September 1st, 2021, according to a press release seen by WorldStage.
While joint-venture might be coming to an end, traditional codeshare agreements (through SkyTeam) will remain in place. As the airline looks towards a recovery next year, doing so alone could prove beneficial with its strong European network. In the press release, Kenya Airways CEO Allan Kilavuka said,
“This development allows Kenya Airways to offer additional options and convenience to our customers connecting through our European gateways in line with our goal of supporting the recovery of international tourism in Kenya.”
Long partnership
The partnership originally began in 1995, when KLM and Kenya Airways signed their first route agreements. The agreement continued to expand over the years, adding more routes between their hubs. KLM also took a stake in Kenya Airways during its privatization in the late 1990s, holding over 26% at its peak. Its shareholding has reduced since, with the airline only owning 7.8% as of today.
Following the merger of Air France and KLM, the former also joined the alliance in 2018. This allowed for further connectivity between the hubs of Paris, Amsterdam, and Nairobi. All the airlines are also members of the SkyTeam Alliance, of which Kenya Airways is the only African carrier present.
Before the crisis, Kenya Airways operated daily flights to Amsterdam and Paris Charles De Gaulle and a service to London Heathrow. Air France operated three weekly flights from Paris CDG to Nairobi, while KLM flew a daily service from Amsterdam. With thousands of daily passengers, the joint-venture was quite lucrative for both airlines.
Nationalization talks continue
As mentioned earlier, the Kenyan government is currently in talks to nationalize Kenya Airways following tough losses this year. The decision to nationalize comes just 25 years after the airline first opened up to the private markets. Currently, the government owns just under half of the airline (48.9%), while 37.8% belongs to a consortium of banks, and 7.8% with Air France-KLM (the rest is listed on the market).
The nationalization will see Air France-KLM’s stake bought out by the government, and the end of the joint-venture could be a precursor for this move. 2020 has undoubtedly been a tough year for both airlines, and their futures could look very different.
What do you think about the decision to dissolve the partnership? Let us know in the comments below
