Category Archives: london

KQ Operation Pride

What is Operation Pride? Kenya Airways (KQ) has just released its financial results for 2016. It’s been another loss making year, and it’s clear that major changes will have to be made. Internally at KQ, they have Operation Pride, launched in October last year but, which started in March this year, and which KQ CEO,  Mbuvi Ngunze,  said aims to:

  1. Close the profit gap (and get the airline to a 5% after tax return).
  2. Revising their business model to focus on Africa
  3. Achieving Financial stability.

Item 3 is really about the shareholders (which includes the Government of Kenya – as a shareholder and regulator, and KLM) making balance sheet, debt and equity decisions. KQ has already secured $200 million from through an on lending agreement with the Kenya government, and got the first $100 million in September 2015, and the rest of it this month – in July 2016.

And while the move to layoff some pilots and other staff (once other discussions with court and the unions are resolved) , Operation Pride is not about jobs. It also more than cutting on costs without compromising quality and waste without reducing service.

Operation Pride started out as 460 initiatives that mainly came from suggestions from staff, consultants and stakeholders to improve the business.  KQ staff will champion these as they are implemented over the next 18 months, and expected to generate about $200 million. About 40% of the impact will be from cutting costs and about 60% will be from growing revenue at the airline.

KQ CEO deck

KQ CEO deck

After the 2016 results announcement this week, the Kenya Airways team showed their guests some examples of the 134 ongoing processes that they have started on. Most are intended to generate recurring savings, but some of the are one-time initiatives have already borne fruit, according to management, including:

  • Removal of 7 large aircraft  will this will reduce KQ fleet costs by about $8 million per month. They were largely idle, and some have been sold, and others leased (3 777-300’s to Turkish) and (2 787’s to Oman). KQ is still able to serve all their existing routes (with about 60 weekly flights outside Africa) with the smaller fleet of 36 active aircraft.
  • The Heathrow deal in which they combined and sold two different time slots in conjunction with Air France raised a record amount. They had previously served London with night flights, but which meant a plane sat idle the whole day in London. Now they only need one aircraft and lease a slot from KLM , which  means an (almost) immediate turnaround.

On the Revenue side:

  • Improved incentives to agents,  who still generate 70-80% of the ticket sales.
  • Targeting corporate customers.
  • Adjusting flight times: E.g between Lusaka and Dubai, they can fly passengers at an attractive price and the total journey is just now over one hour longer, even with a stop-over in Nairobi, than the direct Emirates flight.
  • New routes in Africa, the Middle East, and China  through new code-sharing partnerships (category one status for JKIA will also mean that they will be able book tickets to the US for flights on partner airlines). This is essentially a redesign of Project Mawingu a decade ago  in which KQ set out to fly many new routes by themselves.
  • (A system that can?) React to try to match different over 1,000 ticket prices combinations every day.

On the Expense side:

  • The 787’s bring  lower operating costs, than the released 777’s and lower maintenance costs
    Demo of food leftover after a typical KQ flight

    Demo of food leftover after a typical KQ flight

    than the retired 767’s

  • Use new hotels in Nairobi that offer good services and buying packaged deals from overseas hotels.
  • Re-negotiating handling contracts as a result of smaller aircraft.
  • Revising inflight meal service – serving lighter meals to reduce waste, and removing beverages that were not popular.
  • Controlling and reducing staff travel.

 

Shirt Shopping in London

I recently made a trip to London for a business event.  Before I left Nairobi, I was also assigned a mission to go buy some shirts at a famous London address. These are real cotton shirts made of good strong fabric that will last for many years and washing cycles.

I was told to look for Jermyn Street, which is a small street that in near Piccadilly Circus Train Station. What I found was a narrow street full of shops that specialize in men’s clothing – suits, ties, and shirts and to lesser extent shoes and other accessories like belts and cuff links.

The stores have old family names, many starting with the letter H – Hilditch & Keys, Hawes & Curtis, TM Lewin, with the year the company started e.g. 1866 to convey their long history of designing and producing fine clothing.

Shopping for shirts was a lesson in professionalism and efficiency. You’d walk into a shop and be faced with racks of shirts neatly folded and arranged in tall shelves by neck side ‘14.5 inches’ followed by ‘15 inches’ next to  ‘15.5 inches’, and on to the largest.  Shoppers would step up and pick out the colour of shirt they wanted, and look at other shirt features like the fit (normal or narrow) and shape of collar.

The shops all had assistants, smartly dressed young men and women, who were ready to help. They are able to look at a customer and accurately assess their size with just with a momentary glance and what shirt, trouser or suit will fit their body type. They only reach for a tape measure if you challenge them or to confirm their assessment – and are rarely wrong.

Another unique feature about the shops was their understanding of who their customers were. In many America cities or even Nairobi, if a black or shabbily dressed person walks into an ‘expensive’ shop they may be followed around by a shop assistant who will gauge their insecurity potential and who may not be very friendly in the belief that this particular customer can’t afford to buy anything in the shop.

But not on Jermyn Street, which has a surprisingly large amount of West African customers. Among Africans, our brothers and sisters, from the Western side of the continent are known for their investment in fine clothing with cost not being an issue – and the shopkeepers on this street will attest that they are good customers with fine tastes. So despite being casually dressed, I was able to walk up and downs several shops, pick and choose shirts, ask and receive advice and tips, and generally shop without being hassled.

The shops also understand the power of the sale, which appeals to casual and spontaneous shoppers like myself – and on this summer day, most of them had ‘sale’ and ‘discounts’ advertised in their shop windows. The shirts I got were priced at about  £70 (Kshs 8,400) per shirt, but I paid between £30 and £50 for them and the assistants carefully packed them for me to take to Nairobi.

Article first published in 2010.