Shipping & Logistics

Airlines seek Sh10bn bailout to ride out Covid storm

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A Skyward Express aircraft. FILE PHOTO | NMG

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Summary

  • Domestic air travel operators will require a Sh10 billion state bailout to cushion them from reduced bookings in the wake of business disruptions caused by Covid-19.
  • The operators have seen their revenues drastically tumble after President Uhuru Kenyatta mid last month banned movement into and out of Nairobi, Kajiado, Machakos, Kiambu, and Nakuru in a fresh bid to curb a spike in coronavirus infections.

Domestic air travel operators will require a Sh10 billion state bailout to cushion them from reduced bookings in the wake of business disruptions caused by Covid-19.

The operators have seen their revenues drastically tumble after President Uhuru Kenyatta mid last month banned movement into and out of Nairobi, Kajiado, Machakos, Kiambu, and Nakuru in a fresh bid to curb a spike in coronavirus infections. The affecting the populous counties has sharply cut demand for passenger flights across the country.

Kenya Association of Air Operators (KAAO) executive secretary Eutychus Waithaka yesterday said they are in talks with the State over the relief fund they need to bounce back to business.

The association represents the interest of licensed commercial air operators such Astral Aviation, Skyward Express, 748 Air Services, Fly 540, and Safarilink Aviation among others.

“In my estimation, Sh10 billion is the amount domestic air operators will require to bounce back to business in the next two years,” said Mr Waithaka in a phone interview with the Shipping and Logistics.

“It can be in form of soft loans from the Tourism Fund,” he said.

Mr Waithaka clarified that the Sh10 billion is not a grant or a loan but a “relief fund” to help cushion the sector from collapsing during this difficult time.

Apart from the Sh10 billion r, KAAO also wants the government to remove value added tax (VAT) on the importation of all aircraft spare parts, a waiver that will see cash-strapped domestic carriers free up hundreds of millions of shillings normally locked up in duty refunds from the taxman.

They also want the State to exempt local carriers from paying the minimum tax set at one per cent of gross turnover, which will save the cash-strapped airlines hundreds of millions of shillings annually.

Additionally, they want to be exempted from paying parking and landing charges during the period their planes will remain grounded.

“The waivers plus the relief loan is what we need to weather the Covid storm that has seen our aircraft grounded, again,” he said.
Mr Kenyatta on March 26 ordered  cessation of all movement by road, rail or air into and out of the fice counties her termed as disease infested.

The stiff measures came in the wake of a spike in Covid-19 infections as daily positivity rates averaged 20 per cent from an average of 3.1 per cent in January as the country faces a third wave of the pandemic.