Under a proposal endorsed by the Kenyan parliament, Kenya Airways is to be nationalised and folded with its hub Nairobi Jomo Kenyatta Airport into an aviation holding company.
In a vote on July 23, a majority of the parliament's lower house, the National Assembly, accepted a report by the parliamentary transport committee on nationalising the loss-making airline that had been debated on June 18. The first flag carrier in Africa to be privatised in 1995, Kenya Airways is currently 48.9% owned by the government and 7.8% by Air France-KLM.
A failed push for expansion and a slump in demand for air travel forced it to restructure USD2 billion of debt in 2017, while a later proposal to take over Nairobi's main airport to boost its revenue was rejected by the transport committee.
Kenya Airways Chairman Michael Joseph told Reuters that the vote was "great news", adding: “Nationalisation is what is necessary to compete on a level playing field. It is not what we want, but what we need.” He pointed to competitors such as Ethiopian Airlines (ET, Addis Ababa International) that are both state-run and profitable.
An implementation plan will now be devised by the government based on the recommendations of the parliament, Esther Koimett, principal secretary at the ministry of transport, told Reuters, adding: “The government is keen to take a consolidated view of aviation assets of the country in order to make sure they work in a coherent and efficient way to support the [Nairobi] hub.”
The transport committee report suggests that the new holding company would have four subsidiaries, one of which would operate Kenya Airways, and another running Jomo Kenyatta International. It also recommends a period of tax concessions for the holding company including an exemption from paying excise duty on aviation fuel.
