Kenya Airways plane at the Jomo Kenyatta International Airport. FILE PHOTO | NMG Never in the history of African aviation had an airline been privatised until when the Kenya Airways was inadvertently made a specimen. This is how Kenya, a regional powerhouse, became a country regarded highly as a strategic nation but which does not fully own a national airline.
KQ was wholly owned by the State until April 1996 when the government made a conscious choice to float shares to the public having noted that the real problem behind its dismal performance was the State ownership structure.
As a result, for five consecutive years, the airline experienced a gradual deterioration in financial and operating performance while neither paying taxes nor dividends as a national airline. It had accumulated losses to the tune of Sh3 billion.
However, profitability of the airline improved after privatisation, with gross profit being recorded for the first five years. These ever-rising profits must have clouded the whole nation for far too long under the ‘Pride of Africa’ tag as regional policies were being introduced at a time when competitors were quietly licking wounds as they preyed and bayed for KQ’s blood.
Fortunately for competitors, in 2002, half a decade after privatisation of Kenya Airways, the open skies for Africa treaty (Yamoussoukro Decision) was signed into law, granting airlines a set of commercial aviation rights that allowed them to enter and land in other nations’ airspaces. The underlying implication from this new development was that the African aviation sector had been redesigned to give advantage to state owned African airlines while subtly maligning the privately owned like Kenya Airways.
This window of opportunity was enough for Ethiopia and Rwandan governments to propel their then wannabe airlines. Since then Ethiopian Airlines (ET), which was half the size of KQ in 2010, has outpaced KQ three-fold.
Rather than privatising KQ, stakeholders ought to have ensured that the airline was professionally run and managed. The advent of the open skies treaty would have made it a monopoly in the African aviation sector.
It took more than a decade for African states to adapt the open skies treaty but when it rolled out, it became extremely difficult for private airlines on the continent to succeed due to the now fashionable practice by governments to shield state owned airlines from both foreign and private competition through restrictive regulations and high taxes.
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