Kenya Parliament rushes to process law for nationalization of Kenya Airways

Parliament will prioritise the passage of a Bill that seeks to nationalise loss making national carrier, Kenya Airways (KQ) when lawmakers reconvene from recess tomorrow.
Kenyan government believes nationalization is just one step in rescuing Kenya Airways. Passenger numbers at Kenya Airways for the first half of 2020 were down 56% to 1.1 million. The airline thinks it will take four years for passenger traffic to recover to 2019 levels.
The National Aviation Management Bill 2020 is among the top State-backed items on the legislative calendar released by the National Assembly Clerk Michael Sialai.
Proceedings on the passage of the Bill stalled last year due to a lack of public participation.
The State’s target to complete KQ national by end of October last year flew into headwinds after a section of MPs blocked the legislation in September owing to lack of public participation.
In stopping debate on the Bill on September 9, MPs said the proposed law lacked the input of Kenyans and other stakeholders in line with the Constitution.
Kenya’s parliament in July 2019 voted to nationalise the country’s main airline Kenya Airways to save it from mounting debts.
Lawmakers voted to re-nationalise the loss-making airline, which is 48.9% state-owned, 7.8% held by Air France-KLM , and 38% owned by local lenders, hoping to emulate the success of state-owned Ethiopian Airlines, sub-Saharan Africa’s biggest airline.
A failed expansion drive and a slump in air travel forced it to restructure $2 billion of debt in 2017. The airline later proposed taking over the running of Nairobi’s main airport to boost its revenue.
Other East African states like Uganda, Tanzania, Ethiopia and Rwanda are investing heavily in their national carriers, threatening Kenya Airways’ market share.
Kenya Airways flies to 51 destinations globally, 43 of which are in Africa, according to the airline’s website.
Parliament is, under Article 118 of the Constitution, compelled to invite the public in the process of changing laws, including holding public sittings, inviting submission of memoranda and expert views.
National Assembly Speaker Justin Muturi directed the Transport committee to conduct fresh public participation, an exercise that has since been completed.
The Bill proposes that KQ becomes one of three subsidiaries in an Aviation Holding Company. The others would be Kenya Airports Authority, which will operate all the country’s airports, including Jomo Kenyatta International Airport in Nairobi, under an investment arm dubbed Aviation Investment Corporation.
President Uhuru Kenyatta on November 12 last year asked MPs to pass the Bill arguing it would bolster plans to turnaround the operations of the debt-ridden airline.
“I urge Parliament to prioritise the consideration of various seminal Bills that are pending before the legislature, such as the National Aviation Management Bill, which once enacted, will anchor the turnaround of the Pride of Africa — our national carrier, Kenya Airways,” he told a joint sitting of the National Assembly during a State of the Nation Address
The plan has lagged by five months even as regional competitors seeking to carve out market share pour cash into their national carriers.
The government hopes to emulate the success of State-owned Ethiopian Airlines, sub-Saharan Africa’s biggest airline.
Kenya Airways was privatised 24 years ago but sank into debt and losses in 2014 after a failed expansion drive, costly purchase of aircraft and a slump in travellers after a major terror attack.