On Tuesday, July 23, Kenya’s parliament voted in favour of nationalising the country’s flag-carrying airline in a bid to help it overcome problems with mounting debts. With a failed expansion program behind it and a slump in air travel which forced the carrier to restructure US$2 billion of debt in 2017, rather than allow Kenya Airways to take over the profitable running of Nairobi’s main airport, the country’s lawmakers proposed an alternative solution.
Currently the carrier is 48.9% government-owned and with Air France-KLM holding a 7.8% stake. The Kenyan transport committee has proposed nationalisation that would see the struggling carrier operate more along the lines of profitable Ethiopian Airlines, which is state owned. The Ethiopian government runs air transport assets including airports and fuelling operations under a single company, using funds from the more profitable parts to support other elements, including its airline.
The transport committee’s report has proposed that Kenya set up an aviation holding company with four subsidiaries, one of which would run Kenya Airways, while another would operate Nairobi’s main international airport. The committee’s report also recommended the holding company be given tax concessions for a period to be determined and that it be exempted from paying excise duty on all goods, including jet fuel.
Commenting on the proposal, Kenya Airways Chairman Michael Joseph told Reuters the vote was “great news”. Esther Koimett, the principal secretary at the ministry of transport stated that: “The government is keen to take a consolidated view of aviation assets of the country in order to make sure they work in a coherent and efficient way to support the (Nairobi aviation) hub,” dismissing concerns that nationalisation could lead to further mismanagement as Kenya’s state-owned enterprises sector is riddled with problems allegedly caused by theft and poor management.