Kenya Airways agents face stiffer fines in new policy
A Kenya Airways plane in flight.
National carrier Kenya Airways has introduced stiffer penalties for external parties in a bid to seal revenue leakages amid a loss-making streak.
Last month, KQ announced a new agency debit memo (ADM) policy introducing harsh penalties for ticketing booking violations by travel agents, who face financial penalties of a cumulative Sh619,000 for various ticketing violations that have seen the troubled airline haemorrhage, the policy shows.
An ADM is a notice that an airline sends to a travel agency informing them of a misdeed and asking for a certain amount of money.
KQ says its new policy will ensure comprehensive detection, billing and collection of all identified violations.
A cancellation of more than 75 per cent of the bookings for flights departing within the month will, for instance, attract a fee of $1 (Sh116.9) per passenger segment while bookings created with fictitious names and ticket numbers will attract $20 (Sh233) per booking.
Undercharging
Airlines bill agents for various booking, ticketing, sales and refund violations, including speculative bookings, overbooking and undercharging.
Agents may temporarily block airline seats for possible future bookings. However, when they are not taken, the agency simply lets go of spaces they couldn’t sell leaving the airline shouldering the loss.
Meanwhile, the blockage would have hindered valid uptake, meaning, a carrier would have lost potential passengers.
An airline risks losing cash when a ticket is cancelled with no one to buy the vacant seat.
IATA—an international accreditation organisation that also provides billing settlement—sends debit memos to agencies on behalf of the airline carriers.
Kenya Airways books revenue from ticket sales whether customers fly or leave them to expire.
Seal revenue leakages
Like its peers worldwide, KQ has been battling to seal revenue leakages amid a turnaround. The carrier more than halved net losses in 2021 to Sh15.88 billion compared to a record Sh36.57 billion in 2020, helped by increased flights on key routes on the back of the easing of travel restrictions.
A profit in 2012
The airline flew 2.2 million passengers on its planes last year, a 25 per cent growth over the previous year, while the cargo business posted a 29 per cent growth to 63,726 tonnes.
The 2021 loss meant KQ hasn’t made a profit in nine straight years, extending its accumulated losses to Sh144.64 billion.
The airline last made a profit in 2012 when it closed with net earnings of Sh1.66 billion.
