End­ing con­tract with KLM could have saved KQ Sh26bn

The IATA vice pres­i­dent for Africa says man­age­ment failed to eval­u­ate fi­nan­cial ben­e­fits from the part­ner­ship so it could not make an ap­pro­pri­ate de­ci­sion

The Star (Kenya) - - Politics - SA­MUEL KISIKA @KisikaSam

Kenya Air­ways man­age­ment could have ended the KLM part­ner­ship ear­lier to save the air­line from last year’s Sh26 billion losses, the Na­tional As­sem­bly Trans­port Com­mit­tee was told yes­ter­day.

The In­ter­na­tional Air Trans­port As­so­ci­a­tion told leg­is­la­tors KQ man­age­ment failed to eval­u­ate fi­nan­cial ben­e­fit from the KLM part­ner­ship so it could not make an ap­pro­pri­ate de­ci­sion.

IATA vice pres­i­dent for Africa Raphael Ku­uchi said most African air­lines record huge losses an­nu­ally due to high fuel costs and gov­ern­ment taxes.

“No sin­gle air­line can op­er­ate on its own. They should form al­liances. How­ever, there is need to look at the ben­e­fits from a part­ner­ship,” he said.

KQ signed part­ner­ship with the Europe-based KLM air­line in Novem­ber 2013 so they could ex­pand their com­mer­cial syn­er­gies and op­ti­mise net­works and flight sched­ules.

The joint ven­ture in­creased their new routes to six for London– Nairobi, Am­s­ter­dam–En­tebbe-Ki­gali, Am­s­ter­dam–Lusaka-Harare and Am­s­ter­dam-Kil­i­man­jaro-Dar- es­Salam.

The com­mit­tee ques­tioned why KQ is “sink­ing” yet KLM is “grow­ing stronger”, de­spite their part­ner­ship.

“KQ ought to have left the part­ner­ship a long time ago. This is com­mon knowl­edge that if you are mak­ing a loss and the other party is get­ting more than you, then ei­ther you rene­go­ti­ate the part­ner­ship or pull out,” com­mit­tee chair­man Maina Ka­manda said.

Ku­uchi said African air­lines recorded about a Sh70 billion loss last year, mark­ing a Sh600 loss per pas­sen­ger, de­spite costly tick­ets. Their Euro­pean coun­ter­parts made Sh2,500 prof­its per pas­sen­ger. He ex­pressed fears they may make a loss of Sh50 billion this year.

/HEZRON NJOROGE

Kenya Air­ways CEO Mbuvi Ngunze at Par­lia­ment Build­ings af­ter ap­pear­ing be­fore the Sen­ate com­mit­tee in­quir­ing into the af­fairs of the air­line on July 20 last year

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