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US-Kenya trade deal boon for KQ

By Mbatau wa Ngai | February 18th 2020

The recent signing of an amendment to the US-Kenya Air Transport Agreement could increase exports to the American market.

This is, however, only if Kenya Airways and the government, which is the airline’s main shareholder, play their respective roles with diligence.

Specifically, the amendment allows American all-cargo airlines to fly between Kenya and a third nation without needing to stop in the US, an important right when operating a cargo hub.

This gives Kenyan all-cargo carriers reciprocal rights to fly into the US.

Judicious exploitation of this right could boost the fortunes of Kenya Airways’ cargo subsidiary while also enabling Jomo Kenyatta International Airport (JKIA) to play its rightful role as the regional hub it was meant to be.

The signing of the agreement also gives Kenya Airways a lifeline, which it should use to put its finances in order to return to profitability.

Financial headwinds

Admittedly, the national carrier still requires State support to weather the short-term financial headwinds it is facing due to past missteps.

Treasury should realise that a successful and profitable airline is an economic enabler for the country like no other, and allowing the collapse of the national carrier would leave the country at the mercy of other airlines—most of them supported by their governments.

But last July’s parliamentary vote to renationalise the airline might not be the way to go until the country slays the dragon of corruption that has stalked many government institutions in the past.

The financial storms that nearly brought the national airline to its knees since the collapse of the then East African Airways were driven by corruption and mismanagement.

It took a concerted government effort to bring in expertise from outside the country to turn things around.

The current problems facing the airline can be traced back to the departure of the experts, who were shielded from political interference.

The success of local talent in running banking and financial institutions to an extent that three of the country’s locally-owned and operated banks have overtaken their foreign-owned counterparts is an indication that Kenya can still find its own expert to fly Kenya Airways into profit.

Whoever is picked from the local talent pool would, however, need to be shielded from political interference.

South African Airways is a cautionary tale on how not to run an airline.  

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