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Global airlines regulator sues Henry Rotich over ticket sales dispute

By Kamau Muthoni | Oct 24th 2014 | 2 min read
By Kamau Muthoni | October 24th 2014

Nairobi; Kenya: The International Air Transport Association (IATA) has moved to court to compel Treasury Cabinet Secretary Henry Rotich to appoint a chairperson for the Competition Tribunal.

The airline industry regulator, in a certificate of urgency filed before High Court Judge George Odunga, wants Mr Rotich compelled to constitute the tribunal to challenge a decision by the Competition Authority of Kenya (CAK) that barred IATA from insuring airlines against ticket sale losses.

In the case filed by IATA’s lawyer Michi Kirimi, the court heard that CAK had barred IATA from signing a deal with Saham Assurance in which the insurer was to provide airlines with the Default Insurance Plan (DIP). This plan is intended to help mitigate risk of losses if travel agents fail to remit money from air ticket sales.

Without a chairperson, “The applicant [IATA] cannot properly exercise the right of appeal or seek any interim measures of protection... and faces a real threat of having the airline business in Kenya disrupted by the action of the first respondent [CAK],” said Mr Kirimi in the court papers. He also wants the CS compelled to lift CAK’s orders.

According to IATA African Region Vice President Raphael Kuuchi, several insurance companies had shied away from providing DIP cover as the market segment was small, but it had turned out to be a lucrative line of business.

He said this had seen two other insurance companies express their desire to provide the plan — ICEA-Lion and Explico. The court heard that the two have, however, not yet fully supplied the information required by IATA.

Mr Kuuchi said he got a letter from CAK on September 22 after IATA expressed its intentions to renew the DIP agreement with Saham on an exclusive basis.

“The first respondent ordered that IATA should stop and desist from renewing the agreement with Saham and the same order was to remain until investigations were concluded.”

Kuuchi said he wrote to the authority informing it of the repercussions of failing to renew the agreement with Saham, previously known as Mercantile Assurance Company. The court heard that this company is the only DIP provider in the country.

“There were several exchanges between IATA and the authority, but no resolution was reached to ensure the airline business continues without any uncertainty if there is no DIP cover and in the absence of bank guarantees,” he added.

The court heard that IATA cannot seek mediation as mandated by the Dispute Resolution Act as the Competition Tribunal lacks quorum.

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