Why Kenya Airways is not yet a strategic national resource

Kenya Airways is a listed company that prioritises return on its shareholders’ equity. FILE PHOTO | NMG

There is nothing as precious to a country as visionary leadership. During Europe’s brutal 17th Century religious war, it mattered on whose side you were on. As the Habsburg Dynasty, which ruled Europe at the time, and the Papacy (Roman Catholic) both sought to stamp out any challenge to their authority mounted by a fast spreading protestantism (primarily the cause of the war), Catholic sovereigns were obliged to unite in opposition to the new heresis.

However, France, then a Catholic sovereign under chief minister Cardinal de Richelieu, boldly abandoned the papacy, citing its own strategic interests. Cardinal de Richelieu went on to articulate the dominance of the pursuit of a nation’s strategic interests. In fact, he invented the idea that the State was abstract and a permanent entity existing in its own right.

This later came to be known as raison d’etat. Under Richelieu, it was in France’s national interest (of European domination) to prevent the consolidation of central Europe. Indeed, the aim of keeping central Europe divided remained the guiding principle of French foreign policy from 1624 to 1871. It was a policy well articulated by the visionary Cardinal de Richelieu who, as a cardinal, owed a duty to the papacy.

There are a number of modern-day visionary leaders. Dubai is a classical case. The senior Al Maktoum, not contemptuous of its strategic location, visualised Dubai as an economic oasis. Some kind of a 21st Centrury Arabian renaissance. A place to stop briefly, replenish the bank account and move on.

Port cities have been known to bring in people on a temporary basis, after which they go back to their countries. Some may decide to stay longer but on the whole, they aren’t meant to be there indefinitely. The Al Maktoums understood this very well and decided to build Dubai around this concept. Discovery of oil reserves couldn’t come in at a better time. They rolled out the requisite infrastructure: a free zone port, connecting roads, a massive airport, shopping malls and towering highrise architectural masterpieces.

But more critically, in mid-1980s, they envisioned an airline to bring in the traffic. The birth of Emirates Airlines. It’s a long story. But to cut it short, in the year 2017/2018, Dubai Airport handled a staggering 88 million passengers. Emirates handled about 70 percent of that traffic.

Brand for services

Today, Dubai is a brand for financial services, tourism and shopping. In 2017, tourism, trade (wholesale and retail) and financial services accounted for 40 percent of its GDP. And Emirates Airlines is a pillar. Indeed, business decisions around Emirates as an airline are country-driven (not company) and it’s overall strategy appears to be equally aligned. The same scenario appears to play out with Ethiopian Airlines.

In Kenya, there is a penchant to designate Kenya Airways as a nationally strategic asset and take misaligned country decisions on it. Where is the visionary articulation of Kenya as a brand for financial services, tourism and shopping that places the airline at the centre? For starters, the planned construction of a new terminal at the Jomo Kenyatta International Airport (Greenfield Phase 1), which had been projected to raise the airport’s annual capacity to 16 million passengers, was shelved.

Secondly, while Vision 2030’s Second Medium Term Plan on tourism carefully outlined steps towards improving Kenya’s offerings, it failed to assign the airline a central role. Further, KQ formulates its business strategies fully contemptuous of the country’s priorities.

For the avoidance of doubt, Kenya Airways is a listed company that prioritises return on its shareholders’ equity. The airline’s ‘strategic asset’ designation is therefore overstated. Consequently, taking country decisions that prop up such a private corporation amounts, in my view, to government generosity.

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