The renationalisation of Kenya Airways (KQ, Nairobi Jomo Kenyatta) has been put on ice to allow for a fresh round of public debate.

Kenya’s parliament has delayed the country’s National Aviation Management bill, 2020, the law that is to return the loss-making national airline to state ownership. Further public discussion is to take place after Members of Parliament objected the public had been given insufficient time to provide input after the bill was tabled in July 2020. Kenyan media reported parliament had also received petitions against the bill from the Law Society of Kenya (LSK).

Kenya Airways was privatised 24 years ago but sank into debt in 2014 after a failed expansion drive, dubbed Project Mawingo, the costly purchase of aircraft, and a slump in travellers after a major terror attack. In August, it saw its first-half loss nearly double from a year earlier to KES14.36 billion Kenyan shillings (USD132 million) following months of suspended air travel due to COVID-19. The airline is 48.9% state-owned, 7.8% is held by Air France-KLM, and 38% by local lenders.

Under the bill, Kenya Airways will become one of three subsidiaries in a holding company called the Kenya Aviation Corporation (KAC). The other subsidiaries will be the Kenya Airports Authority (KAA), which will operate all of the country’s airports, including Nairobi Jomo Kenyatta, under an investment arm called the Aviation Investment Corporation.

The president would appoint the chair of the board, that would include the Attorney General, Cabinet Secretaries for Treasury and Transport, the corporation’s Chief Executive Officer, Managing Directors of Kenya Airways, the Kenya Airports Authority (KAA) and four independent non-executive appointees of the transport department.

Air France-KLM, which had the option of selling its stake to the government and staying on as a technical partner for the airline, has opted to exit.

According to local media reports, critics in the Kenyan parliament are concerned that the new holding company’s board would have too much power and be able to act without public scrutiny in the management of aviation assets. They fear this could comprise Kenya Airways, the Kenya Airports Authority (KAA) and the Aviation Investment Corporation.

The government had a target of completing the deal by the end of October, hoping to emulate the success of state-owned Ethiopian Airlines (ET, Addis Ababa), sub-Saharan Africa’s biggest airline. Countries like Tanzania, Uganda, and Rwanda are also investing heavily in their national carriers, threatening Kenya Airways’ market share.