<html><head><style type="text/css"><!-- DIV {margin:0px;} --></style></head><body><div style="font-family:bookman old style,new york,times,serif;font-size:10pt;color:#0000ff;">Now it is NOT the smaller guy going after the big ones.<br><br>Are we going to stop this?<br><br>BTW: how about the other side of the price war? Don't do we today have more people affording to call than was the case before prices came down? What would be the cumulative economic benefit of all these people that have access that they didn't? <br><br>-----------------<br><br><!--[if gte mso 9]><xml>
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<p class="MsoNormal" style="margin-bottom: 16.2pt; line-height: 12.75pt;"><b><span style="font-family: "Trebuchet MS";">> Price wars hit the airline industry with Fly540
undercutting Kenya
Airways' fares.</span></b><span style="font-family: "Trebuchet MS";"> Fly540 has slashed its fares
on the Nairobi-Mombasa route by 30%, setting the stage for renewed price wars
as airlines seek to defend their market share. Mombasa is one of the busiest routes in the
domestic market because of tourists and business travelers. Its new fare for
the route is KES 6,540 from KES 9,540 for a return ticket; the cheapest airline
on the route. Kenya Airways (KQ) charges KES 7,999.</span><span style="font-family: "Times New Roman";"></span></p>
<span style="font-size: 10pt; font-family: "Trebuchet MS";">Airlines cashed in on
the route during the December high season. However, with the sector recording
low travel numbers in January, airlines will have to rethink their strategies
to grow revenue. Fly540's move is set to trigger a renewed pricing war in the
airline sector similar to that of the mobile telephony firms: Bharti Airtel and
Safaricom. In December, KQ increased its daily flights on the route to 14 from
10, which helped grow its passenger numbers by 35% in December and KQ is
planning to introduce bigger planes such as Boeing 737-300 and Embraer 170s on
the route. The ongoing price battle will dent earnings of airlines, especially
those that fly in fewer regions; hence KQ is unlikely to feel the effect as the
domestic market accounts for only 4% of its revenue. KQ rivals (who in recent
months have been diversifying to the eastern Africa region) generate a
significant share of their revenues from the Nairobi—Mombasa route. Fly540,
for instance, has been busy on the expansion trail as it seeks to reduce its
reliance on the Mombasa route and now covers
more than 12 destinations in Kenya
and has moved to Bujumbura, Entebbe
and Dar es Salaam.
Kenya is targeting KES 100bn (USD 1.25bn) from tourism this year after
surpassing the peak 2007 season in the eight months to August—raising the
business outlook for airlines flying to tourist destinations like Maasai Mara,
Mombasa and Malindi. (Sources: Daily Nation; African Alliance Research)</span><br>----------------------------------------------------------------------------------------------<br><span style="font-weight: bold;">Matunda Nyanchama, mnyanchama@aganoconsulting.com</span><br style="font-weight: bold;"><span style="font-weight: bold;">Agano Consulting Inc.; </span><a style="font-weight: bold;" href="http://www.aganoconsulting.com">www.aganoconsulting.com</a><br>----------------------------------------------------------------------------------------------<span style="font-style: italic;"></span><span lang="EN-CA"></span><meta name="Generator" content="Microsoft Word 11"><meta name="Originator" content="Microsoft Word 11"><!--[if gte mso 9]><xml> <w:WordDocument> <w:View>Normal</w:View> <w:Zoom>0</w:Zoom> <w:PunctuationKerning/> <w:ValidateAgainstSchemas/> <w:SaveIfXMLInvalid>false</w:SaveIfXMLInvalid>
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mso-bidi-language:#0400;} </style> <![endif]--><i style=""><span style="font-size: 10pt; font-family: "Book Antiqua";"><br>“If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.”</span></i><span style="font-size: 10pt; font-family: "Book Antiqua";"> - George Bernard Shaw</span> <br>-----------------------------------------------------------------------------------------------<br><font size="1">This e-mail, including attachments, may be privileged and may contain confidential or proprietary information intended only for the addressee(s). Any other distribution, copying, use, or disclosure is unauthorized and strictly prohibited. If you have received this message in error, please notify the sender immediately by reply e-mail and permanently delete the message,
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