23 September 2017

Kenya: KQ Seeks State Protection to Ward Off Rivals

Photo: Capital FM

Kenya Airways is seeking government protection to ward off competition from African and Middle East air carriers flying into Nairobi.

In a press conference on Thursday, Kenya Airways chief executive Sebastian Mikosz said the state subsidies extended to carriers such as Ethiopian, RwandAir, and Gulf airlines like Etihad meant that they were not competing on an even field.

"Everybody wants an airline, the question is; are we all playing the same rules?" asked Mr Mikosz.

Kenya Airways chairman Michael Joseph said they had been in discussions with the government and the Kenya Airports Authority (KAA) on the matter prior to the elections and that the negotiations were expected to continue after this political season.

"We need to have a bit more aggressive strategies from the government in protecting our airline and our airport," said Mr Joseph.

He said that all of Kenya Airways' "serious competitors" in Africa, all of them state-owned, are merely "marketing arms of their countries".

This implies that the carriers do not have to operate on the same survival logic as KQ as they are guaranteed state support.

He added that some of the airlines could and would undercut Kenya's national carrier because "they don't care".

KQ, however, did not provide specific details about the kind of protection it would want from the state.

Regional carriers

Within East Africa, Tanzania and Uganda have moved towards reviving their own aviation industries.

Uganda recently licensed Vule Airways Limited to operate within East Africa and London. Tanzanian president John Magufuli last year commissioned Air Tanzania Company Limited.

KQ's dominance in East Africa is partly attributable to the absence of national carriers for most of the countries in the region.

Kenya Airways is undergoing a restructuring plan that will lead to a massive dilution of shareholders while boosting the government to become the largest shareholder in the carrier.

The restructuring is part of a turnaround plan that is supposed to bring the ailing airline back to profitability.

On Thursday, Mr Mikosz said that he would keep to the revival plan, dubbed Operation Pride, although he does plan to narrow its focus on a few key projects.

Mr Mikosz has also hired a team of Polish nationals to help him turnaround the company. The new employees were his colleagues when he pulled Polish LOT Airlines, his previous employer, from the red.

The new hires have signed three month contracts, effective September 1, but there are indications that these contracts may be extended.

The Central Organisation of Trade Unions (COTU) has opposed this recruitment decision.

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