Kenya: JKIA Takeover – Govt Considers Options If KQ Proposal Fails


The government appears to be bowing to public pressure and backtracking on the proposal by Kenya Airways to take over the Jomo Kenyatta International Airport in a bid to turn around its dwindling fortunes.

Transport Cabinet Secretary James Macharia on Tuesday told a parliamentary committee that they would look into other options if the Privately Initiated Investments Proposal (PIIP) by Kenya Airways did not work.

But he noted the need to urgently revive the aviation sector for Kenya to continue competing fairly with other nations with established airlines.

“Following concerns raised by the public, we are now exploring other opinions of delivering the objectives of the government to consolidate our aviation assets. Once an agreed option has been identified, we shall submit the same to the Cabinet for approval,” Mr Macharia told the National Assembly Transport, Public Works and Housing committee.

“We are sensitive to public opinion and have to address all of them. Maybe the final document might not be PIIP but something else that will be accommodative to all the concerns raised.”

Following Cabinet’s policy decision on the proposal, the CS also said, a legal framework for achieving the intended restructuring had to be found, hence the identification of Public Private Partnership (PPP) Act, 2013.

He told the lawmakers that the takeover proposal was under consideration by the PPP unit domiciled at the Treasury ministry and that the government would act only on its direction.

NATIONALISATION

The CS faced a barrage of questions over the impending takeover by Kenya Airways that is not doing well financially and is also privately owned.

The MPs also wanted to know the fate of employees at airports and airstrips across the country should the deal go through.

Committee chairman David Pkosing (Pokot South) said, “Why can’t we first nationalise Kenya Airways before thinking of how to rescue it?”

Mr Pkosing also told Mr Macharia that the government should consider offsetting what the airline owes several banks before making it a public company.

Buuri MP Murwithania Rindikiri said, “This is just a way of rescuing KQ … nothing else. Why didn’t you come up with this plan 10 years ago, why now?”

BIGGER PICTURE

The CS told the MPs to look at the bigger picture and see KQ as a national entity that flies the country’s flag abroad.

“If you view Kenya Airways as just another corporate you lose the point. This is a body that carries our national flag. KQ is our country … it goes beyond the balance sheet which most people look at,” he said.

Mr Macharia further told the committee that the global aviation landscape has undergone rapid evolution yet Kenya lags behind.

“The Kenyan aviation sector is facing challenges characterised by turbulence experienced by the national carrier as well as loss of business by the JKIA. The market situation has created the need for comprehensive restructuring covering not only Kenya Airways but the whole aviation sector,” he said.

He added that the current operation model does not facilitate the growth of the airline and airports hence the need for a solution that will change the mandate and prospects of KQ, allowing it to become one of the biggest African carriers and JKIA a leading international aviation hub in East Africa.

In the PIIP, Kenya Airways has proposed to form a special purpose vehicle (SPV) specifically dedicated to operating, managing and developing the JKIA for 30 years.

KQ will invest in private jets and VIP terminals to satisfy market needs and enlarge the functionalities of the JKIA if its takeover bid is successful.

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Publish date : 2019-04-10 08:31:19

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