Economic Update

Published 11 Dec 2018

Kenya is set to review its incentive programme for charter flight operators, with a view to expand the scope of the scheme by adding to the list of countries covered by the policy and increasing the number of domestic destinations where the programme operates.

Ahead of the planned review, the Charter Incentive Programme (CIP) has been extended. The scheme, which was introduced in 2016 to boost international visitor numbers, was originally expected to run until June 2018. However, owing to the success of the programme, Najib Balala, cabinet secretary for tourism, announced in November that the scheme would run until at least 2020.

Indeed, since its introduction, 55,000 passengers have been brought to Kenya under the CIP scheme, generating KSh3.7bn ($35.9m), an estimated 18 times the government outlay.

In its current form the CIP waives landing fees for approved carriers flying into Mombasa’s Moi International Airport (MIA) and offers a $30 subsidy per seat filled by international passengers who terminate their journey or disembark in Kenya.

For an airline to qualify for the incentives, it has to guarantee that 80% of the passengers carried will finish their journey in Kenya, and the carrier must commit to the Kenyan route for a minimum of two years.

In an effort to increase Kenya’s appeal as a family destination, the CIP also removes visa charges for children under the age of 16 who are accompanied by their parents.

Furthermore, Joe Okudo, principal secretary of the State Department for Tourism, announced in a November statement that the CIP would also be expanded to include low-cost carriers and scheduled flights, although he did not specify when these changes would take effect.

Okudo stated that the expansion of the incentives programme would broaden the base of the industry and raise the country’s international profile as a holiday destination.

“This move would not only strengthen our destination’s brand visibility as a whole in the source markets but increase visitor numbers. It will allow us to venture into joint marketing initiatives with the airline operator and travel agents’ consortia,” Okudo said.

According to local media sources, plans are also under way to further improve connectivity by allowing international airlines landing in Malindi Airport and Ukunda Airport to benefit from similar incentives.

New charter flights support rising passenger numbers

Alongside the increase in charter flights, overall passenger traffic at MIA reached 84,300 international arrivals during the first eight months of 2018, a 46% year-on-year increase. 

In a move that further improves Kenyan connectivity, the Germany-based carrier TUI Group resumed flights from Brussels and Warsaw to MIA at the end of October. This followed a five-year hiatus following the withdrawal of services in 2013, over security concerns.

The new connection brings the number of international charter airlines flying to MIA to 10, a figure that could grow further given plans for other TUI Group subsidiaries to commence operations in 2019. This includes Tui Fly UK, which is expected to open a connection between London and Mombasa in November 2019.

The expansion of the CIP scheme coincides with an overall increase in air traffic in and out of Kenya. According to a July report by PwC, foreign arrivals are forecast to rise by 8.8% in 2018, with a compound annual growth rate of 6.9% through to 2022.

Increased flight activity boosting tourism industry in Kenya

Consequentially, the country is experiencing a notable rise in other segments of its tourist sector. According to PwC around 1800 new hotel rooms are planned to open over the next two years, building on the 19,000 already available as of late 2017.

Rising inbound traffic is having a particularly positive impact along the country’s coast. Occupancy rates in both northern and southern coastal hotels rose to 70% in early November, according to the Kenya Association of Hotelkeepers and Caterers.

Other segments of the tourist sector have also benefitted from the increase in charter flight activity. Speaking alongside Balala, Mohamed Hersi, chairman of the Kenya Tourism Federation, stated that domestic tour and safari operators in particular have seen increased activity this year and are expecting an even more positive outlook for 2019.