Saturday, October 22, 2011

Local travellers to start paying Kenya Airways in US dollars

Kenyans will start paying for domestic flights in US dollars from next week, as Kenya Airways moves to protect its revenues from the volatile shilling.
The airline, which has been charging domestic flights in Kenya shillings, now says passengers will from October 24, be required to pay for tickets in dollars.
This means that passengers travelling on domestic routes, which include Mombasa, Malindi and Kisumu, will be affected, as majority of payments for these routes have relied on the Kenya shilling as opposed to international flights, whose prices are pegged on the US dollar.
Mobile money payment platforms that are currently operated in Kenya shillings could also be disrupted.
The move makes Kenya Airways the latest local firm to have lost patience with the shilling’s fluctuations.
“We always charge in dollars for international flights and this change is meant to protect the company from a fluctuating shilling,” the airline’s communications manager, Mr Chris Karanja, told Nation by phone.
However, its main domestic rival, Fly540, has chosen to stick with the shilling.
Last week, our sister publication the Business Daily reported that motor vehicle dealers, importers of heavy machinery and retailers of computers and other information technology hardware, had also started quoting prices of consumer goods in dollars, underscoring growing jitters over the weakening shilling and exposing the local unit to further erosion.
The Kenya shilling has been one of the worst performing currencies this year, after it fell to trade at Sh107 against the dollar, early this month.
However, it has turned around this week, gaining by over 8 per cent to close yesterday’s trading at Sh100.20/100.40 against the dollar but weaker than Tuesday’s close of 99.20/40.
Kenya Airways profits have been on the rise with last year’s results showing a 73.9 per cent increase in net profits to Sh3.5 billion, up from Sh2 billion earned in 2010.