5 March 2016

Kenya: Take Bold Measures to Save Kenya Airways

Photo: Nation
(file photo)

The recent report that Kenya Airways has sold its landing slot at London Heathrow Airport, a prime asset, to generate funds to offset part of its debilitating debt is unsettling and raises fundamental questions about the company's turnaround strategy.

London remains a prime destination for any airline because of its place in the international geo-economic and political order. Kenya, in particular, has a deep connection with London, dating back to the pre-independence days.

Due to the sale, the airline has craftily rescheduled its flight to London in a deceptively marketed change, but which is a consequence of losing out on the landing slot. Even more damning is the secrecy with which the deal was executed without public pronouncements, yet the company is a national treasure and is quoted on the securities market.

As we report elsewhere in this edition, this is not an isolated case of a poorly conceived and executed strategy. Among others, the airline has purposed to sell some of its planes to reduce its operational costs and generate funds to meet its financial deficits. But experts argue that some of the planes it seeks to sell are long-distance haulers and losing them will constrict the company from operating long-distance flights.

Yet this is the time the government is actively pursuing opportunities for direct flights to America, among other destinations. Without the capacity, having rights to those lucrative destinations would not make sense. Further, the airline has a poorly-thought-out pricing model.

It over-charges on all its routes and that turns away customers. Often times, KQ has been urged to reconsider its ticket costs but the management has never taken heed.

It is worrying that radical measures have not been taken to redeem the airline. Last year, a Senate committee investigated the goings on at KQ and, among others, recommended an overhaul of the management. Similarly, it was recommended that the partnership with KLM be reviewed because it was one-sided and was bleeding the company. However, no action has been taken on any of these.

All agree that KQ must not be allowed to collapse and, therefore, must be rescued as it remains a national pride. Thus, everything must be done to stop the huge losses. It is now necessary to take bold and painful decisions.

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