MPs’ proposal for State to buy out KQ sparks debate

Sunday July 14 2019

KQ’s D B737 Dreamliner

One of KQ’s D B737 Dreamliners at the Jomo Kenyatta International Airport in Nairobi. PHOTO | FILE | NATION MEDIA GROUP 

OSCAR OBONYO
By OSCAR OBONYO
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The proposal by the National Assembly’s Transport Committee to hand over ownership of the ailing national carrier Kenya Airways (KQ) to the State, continues to generate interest ahead of debate and possible adoption by Parliament.

The move, which could ultimately reverse KQ’s intentions to take over the Jomo Kenyatta International Airport (JKIA) operations and management through a 30-year concession agreement, has been described as radical by some and ill-advised by others.

In an interview with Sunday Nation, the Chairman of the Departmental Committee on Transport, Public Works and Housing, Mr David Pkosing, said there were other reasons beyond economic viability that led to the proposal to nationalise KQ.

DISADVANTAGED

“We had to think beyond mere business performances of two entities — KAA and KQ. And the only way to ensure Kenya continues to enjoy the privilege of housing a UN headquarters is by boosting the capacity of our national carrier and the JKIA to enable Nairobi to retain the status of a regional hub in this part of Africa,” explains the Pokot South MP.

The Pkosing team separately noticed the national carrier was seriously disadvantaged in competing favourably with most airlines in Africa: “KQ was not fully enjoying government protection and related favours, such as taxation exemption and was even paying parking fee in its country!”

Mr Pkosing explains, his team sought to address some of these impediments with a view to free the national carrier from such bondage to enable it “compete favourably, grow and market the Kenyan society”.

The MP further belies that the move would also ensure integrity since State ownership would subject its operations to public scrutiny

The Kenya Aviation Workers Union Secretary-General Moss Ndiema supported this view.

ILL TREATMENT

“Employees in this sector have for long been subjected to ill treatment at work including job losses, owing to wrong business decisions and mismanagement of funds. So ideally we support any move that will make the national carrier accountable to the public. That is not the case now because it is a private entity,” he said.

Mr Pkosing said nationalisation was the best option out for KQ considering the turbulence in the aviation industry.

Following the parliamentary report made public last month, new concerns have emerged over the fate of Kenya Airways under a nationalised arrangement, as well as that of the national carrier’s shareholders, including individuals associated with some of Kenya’s political heavyweights.

POLITICS

In fact, when KQ submitted a Privately Initiated Investment Proposal (PIIP) to Kenya Airports Authority (KAA) in a document dated October 3, 2018, seeking to take over the JKIA, some legislators claimed it was a ploy by influential individuals to acquire a national asset through the back door.

Speaking at the airline's annual general meeting last month, KQ chairman Michael Joseph regretted that although the management strategy presented to the KAA was feasible, it was now heavily polluted with politics: ''We have officially given up on the plans to manage JKIA after the whole issue was politicised."

With the Pkosing report nationalising KQ now on the table, and KQ’s management on the other hand having withdrawn their PIIP position, the major headache, should the National Assembly approve the committee’s proposal, will be the fate of shareholders. If the report is adopted, the government will be forced to fork out about Sh11.4 billion to buy out the 51.1 per cent worth of shares owned by the other entities.