Friday, September 26, 2008

Missing the Kenya Airways Party

I did not attend this year’s Kenya Airways AGM – which is a shame because that was the inspiration for starting this blog. I heard there were the usual questions about buying or leasing planes, goodies for shareholders, loss of shares to Nyaga stockbrokers, perennial candidate making another run for board seats etc... I don’t know why the company shifted from the Bomas of Kenya to Kasarani for meetings but that to me is a step back as Bomas was a perfect setting for the company

anyone who was there is free to add/write in a report - and I hope to attend next year

Trivia from reading the annual report
- Company is very sensitive to changes in the price of world oil – however their fuel costs are hedged 45% to December 2008 and another 25% to March 09
- Now a sky team member with revenue last year of Kshs. 60 billion (almost $1 billion) and carried 2.7 million passengers
- Regional spread – Kenya contributes 9% of revenue (and 11% of profit), Africa 42% (49%), middle east/Asia 20% (19%) and Europe 29% (21%)
- their maintenance facility can change a 777 engine in 3 days and can do all but two checks in-house that mandatorily have to be outsourced
- Capacity/Construction work at JKIA has brought challenges – so the airlines has bought buses to ferry passenger to remote parking have not noticed, and passengers have complained about a shortage of check in counters and departure gates (which may explain some delays)
- Have 330 pilots (61 in training) and will be recruiting more management trainees this year
- Website passed $1m ticket sales mark in December 2007
- Has 74,551 shareholders, but only 29,761 have immobilized their shares


3N said...

Banks, looking at their books which are ok why are KQ shares at such a low price and the P/E at 5.35?

Will investor confidence ever be restored in KQ?

Maishinski said...

First and foremost - JKIA is an eyesore and a major letdown for KQ and Kenya as a nation.

Addis, one of the poorest countries in Africa, has one of the biggest and most modern airports in Africa. Apparently KAA was fast asleep when it was being built.

KAA management should visit Addis and feel thoroughly ashamed of themselves for sleeping on the job.

Service in KQ has taken a hit due to staff poaching. Clearly they need to improve HR relations and develop programs to "re-poach" their former employees.

Many of the poached employees have gained international experience by working abroad. I also know of a good number who also upgraded their Academic qualifications with internationally recognized institutions.

KQ can choose to make their former employees an offer they can't refuse.. examples:

- Offer them responsible positions where they can make a difference without political interference.

- Offer reasonable packages to kenyans in Diaspora that at least match standards of living and attract them back (they do it with foreign expatriates - usually paying much more - so why not for Kenyans?)

- Have incentives for former loyal employees (who served for more than 3 years) e.g. offering to include the former employees' initial length of service when calculating overall length of service - e.g. for rebate purposes and other benefits based on length of service. Look at it as if the former employees were on study leave or "further training" - which is really the case here!

- Adopting a less authoritative management style and empowering their employees to create a sense of worth, loyalty and belonging! It's hard to leave a company you love.

- Adopting, publishing policies against office bullies and on-the-job harrassment. Many people left KQ because of bullying and psychological harrassment by incompetent bosses.

- Developing an organization culture founded on core values (learn from Toyota's success in human relations!) and orientation programmes to ensure new joinees are aware, believe in, and practice these core values (e.g. Safety Awareness, Genuine Service, Commitment to Quality, Continuous Improvement etc).

- Other issues include flexitime for management; flexi-time for those studying; cooperating with universities to develop on-the-job learning leading to degree awards.. etc

- Finally, KQ management should be genuinely open to new ideas (irrespective of where it comes from). Bright staff should not be perceived as a threat. Recognize and encourage them!

My former boss used to say: "Madness is doing what you have always been doing, and expecting to see different results"...

Wake up KQ - its time for radical change!

coldtusker said...

Maishiniki: Without the improvements at JKIA (muhohohoho the jester need to be fired) not much else matters.

Many of the staffing problems derive from a pathetic airport:

- lost luggage coz of theft by KAA employees
- poor coordination of luggage movement (your luggage is never on the carousel indicated on the screen)
- poor & dirty facilities (no power outlets work, few seats, hot & humid waiting areas)
- no apron buses (KQ will buy their own while its KAA's responsibility!)

By the time passengers get on the plane they are already upset!

Maishinski said...

I see your point ColdTusker and generally agree with the issues you have raised.

However in life, we have to play with the cards we are dealt with - else we lose the game.

KAA has dealt KQ a mud-hut card. KQ has no option but to play the card as best as it can - while simultaneously trying to improve its odds.

In any case, most westen foreigners (majority of tourists so far) expect an African airport to be old/backward etc. This lets KAA of the hook somewhat and could be the reason they slept on the job (shame on them!).

However, for some strange reason western visitors always seem to expect SERVICE that generally exceeds what they get in their country.

KQ can't change JKIA - but it can change its service offering and collaborate with partners to influence the end-to-end customer experience and perceived value.

Example of influencing tools to use would be a Free "Meet and Greet" service for all first class passengers and high-mileage Frequent Flyers. A small team of specially trained employees (say approx 30 working 24hrs in shifts) can make a big difference.

Challenge to KQ: How can you influence the customer's PERCEPTION OF VALUE from check-in at point of Origin to the time they reach their hotel room or destination in Kenya?

Tourists dont buys aircraft seating space when they travel to Africa. They buy an experience. Who says you cant tastefully "africanize" the design of your aircraft interior (lesson from Virgin)?

What's KQ's unique value proposition? What makes flying KQ different from other carriers? Can it be easily copied by others? e.g. are there positive aspects of Kenyan culture and tradition that KQ can use to give customers a perception of UNIQUENESS?

Now, combine a unique, memorable service with active frequent flyer recruitment and BaMM! But this means Customer service staff must be highly-trained salespeople too!

Blaming KAA (shame of on them!) is an easy (lazy?) way out.

I think KQ management have a lot of options - but only if they open themselves to fresh ideas and go back to basics!

Bottom line: It's a game of shaping perceptions. Politicians know it thats why the corrupt ones get re-elected all over the world.

Maishinski said...

Case in point:

Ethiopian Airlines has older aircraft - but they were rated much higher than KQ by global travellers in recent Aviation awards.

Dispite the old equipment, Ethiopian has an impeccable safety and service record. KQ should ask - why? What do they do differently?

I think passengers don't complain about the old ET aircraft - because they get a unique experience both inside and (to a lesser extent) outside the aircraft!

At least one or two of the cabin crew ladies (usually the senior ones - i think) dresses in traditional ethiopian garments and greets the passengers as they board.

It doesn't matter where in the world you are - the "ethiopian" experience starts when you board the aircraft. Nice touch - really.

Whats interesting is that ultimately Ethiopians in general get more respect from the west for their blend of african and western culture than they would have if they constantly tried to blindly imitate everything from the west (resulting in judgement based on western cultural expectations - so called "western standards").

KQ - are you reading this?

kenyanobserver said...

Nice valuable conversation. If KQ does read this, I want to add add a piece of advice to them as well; get an account on Twitter and blogpulse and get an employee dedicated to monitoring these services and responding to issues raised.

A lot of smart companies are doing it and it's having an impact on perception. In the United States, Comcast cable has to be in the top 5 for classic horrible customer service.

There's a famous video on YouTube of a Comcast technician falling asleep while on hold with his company.

The company took such a beating and has embarked on an aggressive damage control including subscribing to the services I mentioned above.

ke said...


You still believe these annual retorts (excuse me) - reports that companies put out?

Haven't you learned your lesson yet after safaricom just happened to "forget" to disclose that huge debt they were carrying or after you've seen what's happening to all the bank collapses on wall street?

Yup. They all had annual reports where they told everyone that everything was just dandy. Until of course, they collapsed.

Pass the kool aid and sweeten up with artificial sugar.

bankelele said...

3N: P/E’s getting more realistic now with the market shedding this year. I think investor confidence is resorted at KQ

Maishinski: very good points and I hope KQ take notes.
- About being more authentic to Kenya, it’s tough for an airline to carve a Kenyan identity when we as a nation can’t agree on out positive cultures (anyway, we can use the Maasai symbols)
- Also we have no business offering anything backward to visitors i.e. to be an ‘authentic’ African experience.

Coldtusker: KAA have tried to improve image wise and operational, but the Artur Bros were negated all that

Kenyanobserver: Boeing and several airlines have embraced corporate blogs and interactive sites for customer service and feedback, hope KQ takes the cue

KE: yes I do believe in annual reports that companies put out. What do you believe in as an investor? Even about own Uchumi had a true picture of the company at their last AGM before they went bust - the auditors got blamed, when directors and managers should have been the ones

coldtusker said...

maishiniki: great ideas... but it's a tough slog for KQ against these odds.

banks: KAA is playing PR with expensive ads but nothing under the hood... Recently, the unhelp desk at gate 6 had NO-ONE for 30 mins & when she showed up she was rude & unhelpful!

The flight screen was not up to-date and didn't even show my flight!

muhohoho is a political appointee coz he is related to crooked wa ngengi's family.

ke: oh... puhleeze... u need to know how to sift the wheat from the chaff like my buddy Warren Buffet who warned of 'inflated' profits & balance sheets. No wonder he is the world's richest chap unlike that guy (can't even recall his name) you used to rave about...

spear said...

You need to buy a book on "summaries made easy"
Too much clutter!!

denise said...

The rot @ KQ starts @recruitment of employees.Its kind of kujuana thing. If you dont know anybody influential @ the top, forget about getting a job there. Thence what do you expect of those employed through patronage? People who dont deserve to be there are @ the wrong positions.As maishinski rightly points out, these guys end up bullying their juniors coz they see them as a threat or some who have egos bigger than their brains ask what will be done to them yet they are the sons, cousins, uncles or gilfriends of the bosses. Can you ask yourself what is on the minds of the guys who prepare the flight schedule, when they schedule for a pilot to fly the damn flights schedule after schedule without rest.Do they really care about the safety of the passengers? Anyway i will never fly KQ.There is something fundamentally wrong with how they run this sensitive aviation business.

Andrea Bohnstedt said...

KQ has been lousy for the past year or so. I used to make a point of supporting them and flying KQ, but am about to give up. I am sick and tired of the endless delays and cancellations - waiting around for two to four hours is a regular occurrence.

Customer service is weak - I recently did an online check in only to be sent back to the check in by gate lady who refused to accept my home-printed boarding pass. Why offer online check in facilities and then neglect to train ground staff?

Another baffling thing: I am a frequent flyer, so the Flying Blue system has my contact details. Yet everytime I book a ticket, my details are entered again (and the KQ sales guy goes charmingly 'ah yes, I have seen you here before!). Isn't that basic data bank management? Most frequent flyers will have submitted their phone numbers - so why do people have to go e.g. all the way out to Heathrow with a business class ticket only to be sent back home because the flight has been cancelled?

And, by the by, the uniforms look like a slaughtered zebra. Not, in my opinion, a good look.


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