NAIROBI, Kenya, Sep 22 – Kenya Airways is urging the government to facilitate a preferential environment to shield it from rival airlines that enjoy state funding and government subsidies.
KQ Managing Director Sebastian Mikosz says most of the competitor airlines are protected by their governments and don’t play on the same free market rules like in Kenya.
He says the move will be a big contributor in steering the airline back to profitability.
“Even with most African states adopting the Yamoussoukro Decision (YD), which called for an open sky air transport policy across the continent, some countries are not implementing the policy-making other airlines have a higher edge on us,” he stated.
Fifteen states are now full signatories of the YD: Benin, Botswana, Cape Verde, Egypt, Ethiopia, Gabon, Ghana, Ivory Coast, Kenya, Nigeria, Republic of Congo, Rwanda, Sierra Leone, South Africa and Zimbabwe.
He said that some African countries unprogressive fiscal policies for air transport inhibit growth for airlines. This includes requiring tickets to be bought in local currencies and limiting repatriation of revenue.
According to IATA, 18 African governments are yet to repatriate a total of $1.8 billion in blocked funds.
Nigeria alone holds $339 million, while Egypt still holds $310 million, Sudan $250 million, Angola $190 million and Algeria $125 million.
“Funds blocked by governments or other agencies in certain countries, often for ticketing and other services, are severely undermining profitability,” Mikosz said.
Kenya Airways market is 80 percent in Africa, flying to 51 cities in the continent.
The Pride of Africa’s main rivals includes Ethiopian Airlines, South African Airlines, and gulf Airlines that include Emirates, Etihad Airways as well as Qatar Airways who are all government owned.
“The Gulf airlines are state-owned and as such have total support from their governments in areas such as unlimited finance opportunities, tax exemptions and cheap fuel,” Mikosz added.
African airlines, on average, made a loss of $700 million in 2015 according to statistics from IATA, a record loss that was followed by another record loss of $800 million in 2016.
However, Ethiopian Airlines (owned by the Government of Ethiopia) reported a 10 percent increase in revenue to $2.4 billion for 2015/16, with a 70 percent rise in profits, and passenger numbers climbed 18 percent to 7.6 million.
ET is pursuing ambitious development at home, with the $345 million expansion of Addis Ababa’s Bole International Airport, and abroad, having acquired a 49 percent stake in Malawian Airlines and 40 percent of ASKY Airlines in Togo.