Kenya Airways #ticker:KQ (KQ) is seeking exemption from competition rules in its joint venture deal with Tanzania’s national carrier Precision Air.
KQ, which has a 41.23 stake in Precision Air wants regulatory approval to discuss revenue sharing, price setting, route schedules, sales and marketing on the two airline’s joint venture routes in Kenya and Tanzania.
The two carriers already have a code-sharing agreement that allows airlines to sell seats on each other’s planes on the Nairobi-Dar es Salaam route. They have now applied to be exempted from competition regulations until April 2022.
“In the joint venture agreement, the parties intend to align and coordinate reciprocal code sharing on the joint venture routes,” said Competition Authority of Kenya director-general Wang’ombe Kariuki in a notice.
The routes in discussion are Nairobi, Mombasa, and Kisumu, Dar-es-salaam, Kilimanjaro and Zanzibar.
“The parties intend to align and coordinate network management activities with respect to the Joint Venture including terms of routes, schedules, capacity and designation; pricing of ticket fares on the joint venture routes,” said Mr Wang’ombe.
The two airlines are also seeking exemption of competition rules in the management of any and all revenues attributable to the performance of the joint venture by any party.
“…including without limit, setting up joint venues management systems and joint venue analysis systems; and joint marketing and sales activities with respect to joint venture.”
Although competition laws forbid collusion to set prices, the law also allows companies to apply for exemptions. The Competition Authority gave the public 30 days to submit opinions on the proposal.