Kenya Airways (KQ) customers lost Sh4.66 billion on failing to utilise their tickets within the allowed window of 13 months after purchase.
The airline’s disclosures show the revenue from expired tickets jumped 9.4 percent from Sh4.26 billion a year earlier, the highest amount in five years.
This marked the third year in a row that the expired tickets have increased amid a rise in bookings and travel.
The airline sells tickets in advance and books the amount as current liabilities.
The tickets are converted into revenue upon travel or when the travellers fail to use the bookings within 13 months.
KQ’s Head of Pricing and Revenue Management Jackson Kamande said the airline’s ticket policy matches the industry standard, where tickets are valid for one year.
The national carrier, he said, is not obligated to issue an alert ahead of the expiry of the 13-month window while ruling out relaxing the rules.
“It is the customers’ responsibility to utilise their tickets within validity [period]. The information regarding ticket validity is given at the time of purchase, and the same, especially in cases of unrestricted tickets, is contained in the Conditions of Carriage, published on Kenya Airways’ website,” said Mr Kamande.
“The airline incurs costs in cases where tickets remain unutilised and cannot therefore relax the rules. Such tickets attract costs from the distribution systems along with the missed opportunity on reserved space that was never utilised.”
At Sh4.66 billion, the figure is only dwarfed by the Sh6.99 billion that KQ booked as revenue in the year ended December 2019 before falling to Sh4 billion in 2020.
Over the past five years, KQ’s cumulative revenue from unused tickets has hit Sh20.16 billion.
KQ opened last year with Sh28.22 billion outstanding tickets and sold Sh153.06 billion during the year. However, the value of tickets utilised was Sh151.39 billion, even as tickets worth Sh4.66 billion breached the 13-month window for use of booked tickets.
KQ usually gives passengers up to 13 months to utilise their tickets, beyond which it marks the tickets as expired and books them as revenue.
“Unutilised tickets are recognised as revenue on expiry following the lapse of the estimated period where the company believes there will be no material claim from passengers. The current estimated period is 13 months,” said KQ in the latest annual report.
Information available on the airline’s website shows it allows customers who run into challenges to either reschedule flights or seek refunds for their tickets and this is processed within a minimum of 30 to 40 days.
However, the refund policy comes with strict terms and conditions.
For instance, KQ says it offers full refunds to deceased passengers, but there is no refund for family members who were going to accompany the deceased before the travel or were with a passenger when he or she died. It only waives the date change fee for such family members.
Customers who lose their tickets and go seeking refunds have to furnish the airline with “satisfactory” proof of the loss, and pay a “reasonable administration charge.”
“You have one year from the ticket’s original issue date to reschedule your travel without losing the full value of the ticket (less any applicable change fees),” states the airline.
KQ equally holds itself responsible if it cancels or reschedules a flight or fails to stop at a passenger’s destination or causes them to miss a connecting flight. In this case, it agrees with the customers to carry them at a different convenient date at no additional charge or refund the amount.
The airline posted a net profit of Sh5.4 billion for 2024, a turnaround from a Sh22.6 billion loss in 2023, in what marked its first full-year profit in 12 years.
A key driver of KQ’s improved performance in 2024 was foreign exchange gains of Sh10.55 billion, compared to a loss of Sh15.04 billion in 2023, as the local currency strengthened by more than 20 percent against the dollar last year.
The stronger shilling also helped KQ save Sh1.2 billion on its foreign currency-denominated liabilities.
The airline’s operating profit for the year rose to Sh16.62 billion from Sh10.53 billion in 2023, helped by higher revenues and lower costs.
KQ’s total revenue rose by six percent to hit Sh188.4 billion from Sh178.4 billion a year prior, while passenger numbers rose four percent during the year to 5.23 million, a historical high, from 5.04 million passengers in 2023.
Cargo volumes, meanwhile, rose faster than passenger numbers at 25 percent to 70,776 tonnes from 56,576 tonnes a year earlier.
During the year, KQ increased its cargo lift with an addition of two aircraft to its fleet, while expanding its passenger operations to three new destinations— Mogadishu, Maputo and Eldoret.
