Kenya Airways planes are seen parked at the Jomo Kenyatta International Airport near Nairobi, Kenya on March 6, 2019. PHOTO | THOMAS MUKOYA | REUTERS Kenya wants to emulate countries like Ethiopia, which runs air transport assets —from airports to fueling operations — under a single company, using funds from the more profitable parts to support others.
Nationalisation will exempt Kenya Airways from taxes on engines, maintenance and fuel, allowing it to sell cheaper tickets.
Kenya Airways is moving closer to nationalisation with Parliament seeking to pass the National Aviation Management Bill 2020 that will make the airline one of three subsidiaries in a soon to be formed aviation holding company.
The State-backed Bill is one of the items on the legislative calendar released by the National Assembly Clerk Michael Sialai last week. The government had targeted to complete the process end of October last year but a section of MPs blocked the legislation in September owing to lack of public participation.
Kenya wants to emulate countries like Ethiopia, which runs air transport assets —from airports to fueling operations — under a single company, using funds from the more profitable parts to support others.
In the Bill, Kenya Airways (KQ) will be one of three subsidiaries in an aviation holding company called Kenya Aviation Corporation. The others will be Kenya Airports Authority, which will operate all the country’s airports including Jomo Kenyatta International Airport (JKIA) in Nairobi, under an investment arm dubbed Aviation Investment Corporation.
Kenya Aviation Corporation will also hold the shares in the operating entities.
Nationalisation will exempt Kenya Airways from taxes on engines, maintenance and fuel, allowing it to sell cheaper tickets.
Currently, the airline charges more than competitors, forcing price-sensitive passengers to fly through hubs like Addis Ababa and Kigali.
The loss-making airline, which is 48.9 percent government-owned and 7.8 percent held by Air France-KLM, was privatised 24 years ago but sank into debt and losses since 2014.
The move by Parliament comes as the Treasury through a supplementary budget revealed Kenya Airways received $100 million in a secret bailout to avoid collapse amid the effects of Covid-19.In the supplementary budget, KQ received $800 million directly from the Treasury and $200 million from the Transport Ministry to ease the effects of Covid-19 that has obliterated global demand for travel.In the budget, it was not indicated when the funds were offered to the KQ and if they were in the form of equity or […]
