Kenya Airways To Emulate Emirates and Ethiopian Airlines In Nationalisation Proposal

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The Parliamentary transport committee has proposed creating a government owned holding company under which Jomo Kenyatta International Airport (JKIA) and Kenya Airways Plc will operate under. The company is expected to involve four subsidiaries; Kenya Airports Authority, JKIA, Kenya Airways and an aviation college in a bid to save one of East Africa’s largest airline from further debt.

Corruption and embezzlement of funds have been key roots of losses made by the airline that has since lost market share to RwandaAir and Ethiopian Airlines. KQ posted a Sh7.55 billion loss in the year to December 2018, prompting a further push for nationalisation of the loss making airline by legislators.

The latest global ranking of airlines by Skytrax World Airline Awards places Kenya Airways at position 90, down five places from 2018’s 85th position worldwide. This comes even after receiving permits to fly direct from Nairobi to New York.

Kenya Airways is 48.9% owned by the government, 7.8% by France’s KLM and 38.1% is owned by 11 lenders collectively. In a quest to save itself from the red, the airline had proposed to participate in operating the airport which was declined by parliamentarians who saw the airline unfit to invest in the airport and keep part of the income from the facility as is the requirement.

The move by the government to nationalise Kenya Airways Plc is similar to Emirates and Ethiopian Airlines which operate as units of state-owned holding companies.

Part of the report by the transport committee that reads “The proposal to nationalize the entity which comes with a raft of tax exemptions will boost the airline’s competitiveness in a region where it has ceded market share to state-owned rivals” is yet to be adopted in parliament. According to Transport Cabinet Secretary James Macharia, the proposal is part of the overall plan with regards to the airline.

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Melissa Daniels
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