MPs push for merger of KQ, KAA, and JKIA to revamp Kenya's aviation sector

Members of the National Assembly are pushing for the creation of an Aviation Holding Company (AHC) to oversee a major restructuring of Kenya's aviation sector.

The proposed company would manage key entities, including Kenya Airways, the Kenya Airports Authority (KAA), Jomo Kenyatta International Airport (JKIA), and an Aviation Services College.

In a forthcoming report to be presented in the house, the National Assembly Transport, Public Works and Housing Committee concluded that the current Project Implemented Investment Plan (PIIP) is inadequate for revitalising the aviation industry.

The committee is also advocating for the nationalisation of Kenya Airways (KQ) as part of efforts to reposition Nairobi as a leading aviation hub in Africa and to safeguard the nation's aviation assets.

Committee chair David Pkosing, the MP for Pokot South, highlighted the troubling financial state of KQ, which carries a debt of Sh75 billion, backed by government guarantees.

"The Committee noted that taking into account KQ's current financial status and the current lack of competitiveness of Kenya's aviation industry, the Government and the people of Kenya stand to lose the most in the event the trend is left to continue," Pkosing stated in the report.

Subsidiaries

The proposed AHC would comprise four subsidiaries: JKIA Company, which would manage the international airport, including ground handling and catering services; KAA, responsible for overseeing all airports and airstrips; KQ, serving as the national flag carrier; and the Aviation Services College, centralising aviation training.

"Under its new mandate, KAA shall maintain at least one serviceable airstrip in each county for purposes of security, health, and other emergencies," the committee recommended.

To enhance operational efficiency and reduce bureaucracy, the committee emphasised that the nationalisation of KQ should be accompanied by amendments to key laws, including the Public Finance Management Act and the Public Procurement and Asset Disposal Act.

These changes would grant the new AHC and its subsidiaries greater financial autonomy and flexibility.

Additionally, the committee recommended tax concessions and exemptions for the AHC, such as zero-rating supplies, customs duty exemptions for aircraft parts, and waivers on excise duties for aviation fuel.

These incentives aim to improve the financial sustainability of the AHC and KQ, enabling them to compete more effectively within the region.

The report also proposed a review of KQ's aircraft leasing agreements to negotiate better terms.

"Upon nationalisation of KQ, the government reviews the aircraft leasing agreements entered into by KQ to renegotiate better terms on account of the consolidated balance sheet of the Aviation Holding Company," it stated.

Future, aircraft leasing arrangements must prioritise cost-effectiveness.

Lastly, the MPs suggested rationalising KQ's staff and reviewing collective bargaining agreements to align employment conditions across the new aviation structure.

"Upon nationalisation of KQ, the state undertakes a staff rationalisation program with a view of retaining existing staff and harmonising the terms of service and remuneration under the Aviation Holding Company," the report noted.