Tricky times for Kenya’s aviation sector, speedy reforms crucial

Kenya dominated the African aviation sector for a long time. FILE PHOTO | NMG   

By KIMANI WAMATANGI

For a very long time Kenya’s aviation sector was leading the rest of Africa by example and often
promised to outdo other sectors contribution to the country’s GDP.

Those were the rosy old days when it could not be imagined that Kenya was capable of giving foreign airlines privileges that other States would never give Kenyan airlines even as reciprocation.

But we in the Kenyan government have permitted and continue to permit foreign airlines to land in more than one Kenyan airport and by implication, we have denied our own airlines chance to make revenue and contribute substantially to the economy by connecting passengers from Jomo Kenyatta International Airport (JKIA) to other destinations locally and within the region.

Whereas we allow 14 of our competitors including Ethiopian Airlines, RwandAir and Qatar Airways to land in both JKIA and Moi International Airports Mombasa, their governments have protective policies that bar Kenyan airlines from landing in any other airport apart from their main hubs. This is one of the many reasons why foreign airlines make more revenue within Kenya than Kenyan airlines.

As if that were not enough, there are other numerous ailments in the country’s aviation sector that have facilitated the sector’s stagnation. Top on the list are aviation infrastructure and the suffocating tax regime. The two must be acted upon urgently as part of a long-term structural condition, lest the sector dies a natural death.

First, Kenya’s aviation sector pays more taxes both in figures and percentages than betting and alcohol companies. Those who impose these taxes fail to realise that these taxes have a huge negative effect on the country’s economy.

We can borrow a few tips from the Dutch, who in 2009, after it was demonstrated that aviation tax had a negative impact on the national economy of the Netherlands, did away with tax. The Netherland’s aviation had hoped to raise over Sh39 billion for the government, but in reality it was costing the Dutch economy Sh170 billion. Thanks to the tax rates on aviation, passengers would employ avoidance measures by driving across the border to neighbouring airports to avoid the tax.

In similar fashion, the African aviation sector, and Kenya in particular, struggles for survival because its potential has not been tapped to contribute to the economy as it ought to.

We are operating below our capacity. Kenyan passengers use foreign airlines more, which surprisingly pay less taxes than local airlines and therefore are more affordable. The number of taxes levied on airlines and their customers is over the top and we as policy makers together with the executive must begin to see the negative impact that these taxes have had on our economy.

As demonstrated, such taxes hamper economic growth and employment through reduced air connectivity which limits business opportunities and active participation of the sector to GDP. Essentially, whilst it is impossible for airlines to be fully exempted from taxes, the government should not tax aviation simply to raise revenue for non-aviation purposes.

Bringing to an end the choking tax regime is the most instantaneous action that the government can prioritise after revising the licences issued to foreign airlines to land in other Kenyan airports other than JKIA. This has to be followed immediately by restoring Nairobi as an international aviation hub through transforming JKIA into a world class airport. It will be an added advantage if we can extend the aviation infrastructure to the rest of the airports and airstrips in the different counties.

Aviation sector reforms are not child’s play. We must prioritise it in our national strategy with a solid framework on which operations will take place beginning with the much-needed synergy with all the players. The aviation authorities should thereafter be submitting consolidated five-year plans every two years on airport improvement towards futuristic standards, comprising project ideas for the nation’s five airports and the over 40 airstrips.

With this, Kenya will be assured of retaining its strategic position which Rwanda is relentlessly going after and edges closer with each heartbeat. It must be remembered that Rwanda and Kenya are now 30 minutes apart in terms of shared destinations triggering possibilities of mass migration by multinational organisations from Nairobi. If not careful, Rwanda might overthrow us politically seeing that it is proving to be a fairly stable nation.

Kenya dominated the African aviation sector for a long time. But just as the naked emperor was conned into believing that he was invisible before others, it is yet to sink into our heads that we, Kenyans, have been depriving ourselves of the much needed revenue and that the more we have pretended to be doing well, our political position in the continent has slipped further away with every stroke on the clock. We simply have to consolidate and optimise on the country’s aviation assets.

The writer is chairperson of the Senate Committee roads, transport and infrastructure.