Nationalisation: There’s more to KQ than its aircraft

Nationalisation: There's more to KQ than its aircraft

Passengers arrive at Jomo Kenyatta International Airport in Nairobi following the resumption of International flights at the airport yesterday The proposed nationalisation of Kenya Airways, better known as KQ, is an economic hot potato. Beyond the term nationalisation – which echoes communism – there are other issues that need soberness and return to reason. KQ is not about planes, it’s about real people, jobs, national pride and a reaction to geo-health issues arising from Covid-19 and hyper competition. Let’s start from the ground before we fly. Many Kenyans can’t understand how KQ can’t be making money. If a ticket from Nairobi to Mombasa goes for Sh15,000 and a bus Sh4,000, how can the airline not make money? Costs are high and the industry is highly regulated. Safety standards must be maintained from the ground to the sky where there are no ‘pit stops’. A margin of five per cent is a call for celebration. Any economist would easily oppose the nationalisation and argue that the invisible hand of the market should be left to work. The visible hand of the Government has not been that good, if we go by Uchumi and Kenya Meat Commission, to name a few. It is this history that is leaving our heads spinning. To be fair, other governments have intervened in the market to rescue private businesses in the past. Chrysler, General Motors and other well-known firms got US government money; they are still running. The decisions to rescue them were hinged on patriotism and national interests. But the best reason would be the systemic risk to the economy. Industries depend on each other and a break in the chain would have a ripple effect throughout the economy. Think of all KQ stakeholders and how they would be affected the airline was allowed to fail. Airport workers, travel websites, aircraft manufacturers and other related industries. Our national image would be dented, affecting the market for our goods and services. Think of offices KQ has in other countries, our exports, humanitarian flights and alliances with other airlines. It may send an impression that we are not a serious nation. In turning KQ around, we are using wrong benchmarks such as Ethiopian Airlines, which has always been in government hands. The socio-political system in Ethiopia is way different from Kenya or Rwanda. How did Ethiopian continue flying during Covid-19? We are assuming, I guess wrongly, […]

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