Nationalization dominate MPs inquiry into KQ-JKIA marriage proposal

April 12, 2019
The PIIP was instigated by a Cabinet Paper prepared in May last year which had warned that Kenya Airways had less than one year to survive if the JKIA takeover flopped/FILE

, NAIROBI, Kenya, Apr 12 – Aviation workers, pilots and airport operators on Thursday expressed mixed reactions to the proposal by Kenya Airways to take over the management and operations of the Jomo Kenyatta International Airport.

First to appear before the National Assembly Transport and Public Works Committee, was the Kenya Aviation Workers Union (KAWU) official led by the Secretary-General Moses Ndiema and Treasurer Francis Lichoro who said they are opposed to the tie-up because it will lead to job redundancy.

Ndiema instead, urged the government to dump the Private Initiated Investment Proposal in favour of a nationalization bid which would mean that the government initiates the process of de-listing the national carrier from the stock exchange.

The government which holds 48.7 percent stake, will have to buyout KLM (7pc), KQ Lenders Company 2017 Ltd. (38.1pc is owned by a consortium of banks which KQ owes 5 billion shillings) and other small share holders in order for its bid to integrate the aviation sector.

“For KQ to succeed, we agree there has to be a lot of cooperation between the airline and the hub, but as it is now, the two are not compatible, by the mere fact that one is a public entity, governed under a different set of rules. The other one is a private entity that is established purely for purposes of returning investments, but the proposal as it is cannot realize what KQ is hoping to achieve,” said the KAWU official.

KAWU draws its membership from KQ (2,300), KAA (1,700), KCAA (390), Tradewinds (700), Bolloré Transport and Logistics Kenya (300), Swissport (300), and Total Touch Cargo Kenya (130) respectively.

The Kenya Airline Pilots Association (KALPA) through General-Secretary Captain Murithi Nyagah said it is not opposed to the PIIP if it is going to change the fortunes of the national carrier.

Nyagah however lamented that stakeholders are unable to make informed opinion on the proposal because the government, KQ and KAA have refused to furnish stakeholders with either the policy paper which contains how it will be implemented.

“An innocent outlook of the idea, from the bird’s eye-view, appears to suggest an avenue of improving KQ cash position without additional financial injection. This should offer a holistic approach to develop the aviation industry, where focus should be on growing JKIA, as a regional hub, while in the meantime improving the cash flow situation at KQ. The ripple effects of this will be to spur increased traffic to JKIA thus improve revenue for KAA,” KALPA Captain explained.

Kenya Association of Air Operators Chief (KAAO) Executive Col (Rtd) Karumba Waithaka shared the sentiments noting that efforts by his organization – which has in the past been accommodated by government in making policy decision in the aviation sector – have been unfruitful.

The Retired Air Force Colonel told the House team that KAA in February called off a meeting it had convened to brief stakeholders on the PIIP but did not give any justification.

“We have no idea (why the meeting was cancelled) but we thought there must have been things that have been seen that were not right,” said Waithaka.

Captain Nyagah and Col (Rtd) Waithaka stressed transparency in the development of the proposal will prevent the government and aviation sector from getting into past pitfalls.

Lichoro said this secrecy triggered them to know that the employment of their members was at risk after the given three options which amounted to KAA staff being swallowed by a proposed special purpose vehicle to be operated KQ but they would have to forego a fraction of their benefits or pension.

If the staff were not willing to be swallowed by the SPV, they would then be sent back to KAA for redeployment or declared redundant.

“The transfer process will require willing employees to confirm to the posted reductions in benefit that is enjoyed by the civil servants, in particular their pension benefits and if they don’t agree to such deduction, they will go back to KAA and KAA would make them redundant at their own cost. The PIIP proposes that KAA will make all JKIA staff redundant at onset and the SPV will then have an option of recruiting the former KAA employees under fresh contracts of employment under the SPV.”

“If you look at the options given to the JKIA staff, none of them are guaranteeing the employees their jobs under the same status as today,” Lichoro told the House team that this amounted to changing the term of employment of workers without involving the Union.

Despite terming the cabinet’s move to integrate operations in country aviation’s sector as being long overdue, the umbrella body expressed its reservations to the proposal allowing KQ to operate the country’s premier international aerodrome cautioning that the implications could further eat away JKIA’s regional dominance.

“When you allow an airline to operate aerodrome operations, you are giving it an unfair advantage, in that they will certainly not favour their competitors and that it is why the government through Parliament enacted a law to set a body to run these facilities.”

“If it is run the other way, it will be run commercially and the parking charges, landing charges will be hiked to make sure that they meet their mark up, which the government usually does not do. It is like an economic tool to attract aviation industry when it is run by the KAA,” he explained.

The PIIP was instigated by a Cabinet Paper prepared in May last year which had warned that Kenya Airways had less than one year to survive if the JKIA takeover flopped and the carrier did not get a significant capital injection.

According to the House Committee Chairman David Pkosing (Pokot South), they will be submitting its findings to the House by May 10 after Speaker Justin Muturi allowed it to conduct an inquiry into the issues of policy, human resources and legal compliance as well as general issues of concern to the public.

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