In defence of Kenya Airways bailout

It is worth noting that as the world is gingerly moving out of the pandemic, we need to take the opportunity to see how it impacted various industries and economies.

Among those that were affected first is the airline Industry. When Covid-19 struck in 2020, virtually every country imposed travel restrictions that practically stalled logistics.

As a result, capital-intensive ones like the airline industry may never recover unless governments have a proactive intervention.

Until last week when the Kenyan government, through the Treasury’s supplementary budget, allocated Sh26.6 billion to recapitalise Kenya Airways (KQ) #ticker:KQ , the future of the airline was uncertain. And that is not good for our economy.

But the social media was not kind to the national carrier, arguing that it did not deserve a bailout. However, many of the arguments against KQ were not right.

Covid-19 has had an unprecedented impact on the international passenger seat capacity, affecting the gross operating revenues of the airline.

National carriers play a critical role in development, promoting the tourism sector and providing employment opportunities and paying taxes. It is also a global industry that connects people, cultures, and businesses across continents.

Without air transport, the hospitality industry that provides jobs to thousands of people and agricultural output that support many livelihoods is disrupted. We have seen this happening during the pandemic.

Since airlines have long been viewed as vital national emblems, governments have used them as their preferred instruments for marketing their countries abroad. KQ is also used to market our cultures and to brand our country.

When for example, I see a KQ aircraft taxiing on foreign runways, I always see our national identity in those countries. Yet, we never pay for the airline's branding to the country.

Most people rarely associate the national carrier as part of the vital infrastructure for our growing agricultural sector, especially the horticultural farmers.

When talking about how Kenyan flowers dominate the global market, we need to recognise that KQ has played a critical role.

Some people may argue that investment in international logistics is the role of our fledgling private sector.

But, although our private sector has been growing, it has not done well in heavy capital investments. Hence, the government needs to invest in transport infrastructure to help farmers export their horticultural produce to foreign countries.

In 2020, Kenya earned $1.4 billion (Sh125 billion) from horticultural exports, and that figure is expected to grow.

In my view, the success of a national carrier depends on what we do. I know of some logistics enterprises that have expressed interest in investing locally.

They see an opportunity in Kenya, located centrally to Europe, the Middle East, and Asia. They would have exploited the chance if it were not for our petulance.

For this reason, the national carrier should expand routes, especially within the Africa Continental Free Trade Area. Kenya should seek to improve horticultural produce to feed the world, perfect agricultural value chain, and, in the process, create thousands of jobs.

Kenya is not alone in bailing out its flag carrier. Italy bailed out its national airline Alitalia in March last year even though it had been under receivership long before the pandemic.

The Italian government injected $650 million to salvage the national carrier from bankruptcy.

The US government, which does not have a designated national carrier, pumped a $54 billion Covid-19 bailout fund into the struggling airline industry.

KQ may have its weaknesses, but it plays a pivotal role carrying horticultural produce to markets outside the country and helps create jobs from airport handlers to the farmhand and the airline staff.

KQ is a critical infrastructure for tourism and agriculture. The two sectors also happen to be the highest contributors to the country's GDP.