Proposed JKIA-KQ deal is flawed

It’s my conclusion that there is a good chunk of money to be made in training corporate leaders and government technocrats ón the skill of strategic communication when a public conversation within their field comes up. The style of putting the voice of your critics down to elevate your own, only to misinform, should be left to politicians because politics is a zero-sum game.

Last week, the chairman of Kenya Airways wrote an Op-Ed in the Daily Nation and it was pleasing that the conversation surrounding the Kenya Airways - Jomo Kenyatta International Airport takeover deal is becoming an open topic of discussion. Only to read and find that it was an abrasive and condescending article berating critics of the deal with misleading information.

Such economic conversations always come up between the citizens and their government when living under a progressive democracy. When Canadian Prime Minister Justin Trudeau’s government came into power, it proposed to sell long- term leases of airports and seaports to raise revenue for infrastructure investments and the plan was led by the global head of McKinsey.

The management of the airports, city councils of Toronto and Montreal launched an anti-privatisation campaign and national poll also found out that 53 percent of Canadians were against the airport privatisation. The Trudeau government succumbed to pressure and shelved the plan, and there were no tantrums thrown around.

Public asset

So, it’s surprising to see the chairman irate with the public interest into this proposal when he knows JKIA is a public asset. To start with, there is false sense of entitlement being demonstrated by the KQ management that they are the rightful managers of JKIA. In the Op-Ed, the chairman looks at KQ competitors stating all revenues from aviation hubs always stays within the hubs to improve both the airline and airport.

The KQ-JKIA deal ideally mimics this model, creating a system where all assets support each other. One thing that needs to be very clear is that JKIA is a public asset, universally owned and managed by government whilst KQ is a private entity - publicly listed on the Nairobi Securities Exchange, but the government only owns shares.

This distinction seems oblivious to many even to the chairman. If he wants such a deal, then the correct approach is for government to take 100 percent control of KQ and hand the airline over to Kenya Airports Authority, which runs JKIA. Third, the chairman says that the deal is meant to position JKIA as an African hub whose status has been declining. There is need to increase the importance of passengers and other airlines to improve airport facilities, terminals, runways and ancillary services. Private ownership of airports is common in Europe because it means it has access to world capital markets when it needs to make further investment. So, the question to the chairman is, why should it be KQ and not another investor?

Strategic investor

A taxpayer whose money has been invested in JKIA over the years will ask, why shouldn’t the government look for a legitimate strategic investor who can establish the airport as a hub then negotiate for KQ’s preferential treatment as a legacy carrier at JKIA? Can KQ really pass a competitive concession bidding if the state is to auction the lease of JKIA?

Last is transparency concern within KQ, the taxpayer is mindful of reports that offshore companies have played and continue to play a role in affairs of the airline and the identities behind these offshore companies remain unresolved.

One of the issues is that these companies were used in leasing and buying arrangements of aircraft at inflated costs. So, the concern that disguised entities want to takeover JKIA is not farfetched.

In conclusion, this deal to the taxpayer is simply about KQ raiding JKIA’s billions in revenue to subsidise its managerial inefficiencies and failing.

The onus is on KQ management to prove us wrong and not to berate.