Move on air routes provokes big row - Daily Nation

Move on air routes provokes big row

Monday May 25 1998

By MUTEGI NJAU
Investigative Editor

A major row is simmering in the aviation industry following the Government's abrogation of some of the commitments it made to shareholders during the privatisation of the national carrier Kenya Airways in 1996.

The State then said that among the most important assets of an international airline were the route licenses and inter-governmental agreements that give the national airline the right to fly between various points.

The Government therefore confirmed the following:

  • That Kenya Airways would remain the designated national airline and flag carrier.
  • That it would maintain Kenya Airways' single-carrier status under existing and future bilateral agreements for a period of at least five years.
  • That it would not withdraw Kenya Airways' existing route licenses.
  • That it would continue its policy of not permitting charter flights to and from Jomo Kenyatta International Airport for at least five years.

The commitments were subsequently included in the shareholders' agreement.

Hardly two years after the privatisation, shareholders are surprised to learn that the Government has double-designated at least five routes that are exclusively used by Kenya Airways.

The Government has also designated two other local airlines - East Africa Safari Air Limited (formerly CHS Aviation) and Africa Airlines International - as national carriers to operate on routes formerly exclusively reserved for Kenya Airways.

East Africa Safari Air Ltd is owned by Mr Andrew Kegode, an associate of Mr Gideon Moi, while Africa Airlines International is owned by Captain Musa Burhani, a veteran pilot at Wilson Airport, Nairobi.

On January 23, Mr Kegode wrote to the Minister for Transport and Communications seeking to be designated on existing bilateral agreements to operate scheduled flights between Nairobi and such European cities as Rome, Zurich, Paris, Frankfurt, and Stockholm, among others.

"We are also aware that the current designated carrier, Kenya Airways, has abandoned the same routes we now apply for, for reasons best know to them," Mr Kegode said.

But Kenya Airways management argues that the fact that they no longer operate scheduled flights to some European cities did not mean they had "abandoned" those routes or that the national carrier had no commercial interest in them.

On May 8, for instance, Kenya Airways signed a code-sharing agreement with Alitalia to start two weekly flights on the Nairobi- Rome route although Kenya Airways had closed its Rome office.

No sooner was the KA-Alitalia agreement signed than lawyers for East Africa Safari Air Ltd wrote to the KA managing director threatening to sue the airline for making such a deal because "our client has been formally designated by the Government of Kenya as a national carrier to Italy in place of Kenya Airways".

Kenya Airways' response was that they were unaware of any other airline designated as the national flag carrier apart from themselves.

But the furore over double-designation was detonated on January 13, 1997, when Mr J.B. Okara, the chief executive and secretary to the Civil Aviation Board, wrote to his counterpart in Tanzania, Ambassador Job Lusinde, regarding the two countries' bilateral air services agreements.

Mr Okara told Mr Lusinde that Kenya was designating Africa Airlines International as a national carrier to fly the Nairobi-Dar-es-Salaam-Zanzibar-Nairobi route.

On July 16, 1997, a bilateral air services agreement was signed between Kenya and the United Kingdom in which it was agreed that each party may designate one or more airlines.

Mr G.M. Njagi signed on behalf of the Kenya Government, while Mr Nicholas Denton signed for the British Government.

On learning of the double-designation between Kenya and Tanzania, and Kenya and the UK, the Kenya Airways management protested to the then Minister for Transport and Communications, Mr Ndolo Ayah, reminding him of the Government's pledges to shareholders during the privatisation.

Policy

Mr Ayah responded in September stating that the Government's policy was that there would no double-designation on Kenya Airways' routes.

It would appear that the Minister was saying one thing while officers in his ministry were acting to the contrary.

As late as April 29, 1998, the Ministry of Transport and Telecommunications was writing to Mr Kegode informing him that the German Civil Aviation Authority had accepted the Government's proposal to allow East African Safari Air Ltd to start air operations from Nairobi to Germany "on a temporary basis".

Asked to comment, the Permanent Secretary for Transport and Communications, Mr Stanley Murage, said there was no conflict in double-designation of air routes and airlines.

He said the designation of other local airlines was considered on the premise that the interests of Kenya Airways were not compromised.

"Kenya Airways must first agree that they have suspended their services on the routes before another airline is designed to use it," he said.

But the management of Kenya Airways argues that all efforts to obtain confirmation from the Government that any other airline had been designated were fruitless.

Mr Murage said on Thursday that he was this week writing to all parties concerned to clarify the Government's position.

Informed sources said some shareholders were contemplating taking legal action against the Government to protect Kenya Airways share prices from falling further.

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