Kenya Airways could be losing millions of dollars in revenue through an incentive scheme for employees to travel around the world even as it offloads surplus aircraft in a bid to stay afloat.

The scheme targeting the airline’s 4,000 employees allows each of them two free flights in a year, each accompanied by four other passengers. The employees exploit weaknesses in vetting of beneficiaries to sell the buddy passes at throwaway prices to traders, who also enjoy more cargo space because the staff are given higher baggage allowances.

The resale is rampant on the Middle East and Asia routes, with an association of traders confirming that more than 100 of its 4,000 members travel exclusively on the buddy passes throughout the year.

“The traders buy a return ticket from the employees at an average of Ksh30,000 ($294) and can afford to fly to China every week while fellow traders pay the full cost. KQ should have a better vetting tool to ascertain the rightful beneficiaries,” said James Kariuki, chairman of the China Traders Association.

A return ticket to China costs Ksh120,000 ($1,176) on average and has in some instances been sold to traders at Ksh26,000 ($254), a fifth of the price. Through resold tickets, business people save up to 80 per cent on transport and cargo fees but pay taxes and other fees that are not covered by the pass.

Kenya Airways chief executive officer Mbuvi Ngunze confirmed that there may have been cases of abuse of the buddy scheme.

“Some staff may nominate people who would otherwise pay, which can happen. Abuse is monitored,” said Mr Ngunze.

He said that the scheme, which was approved by the board, allows staff to nominate family and friends “with maximum limits and with clear rules.”

Mr Ngunze did not say whether there are any cases of abuse under investigation or what action may be taken.

Although buddy passes are normal in the airline industry, the best practice requires that employees do not benefit commercially from the scheme, the same way work-related benefits should not be passed on to third parties.

Under Resolution 788 of the International Air Transport Association (IATA), which provides for free or reduced fare transportation to an employee for an air carrier, the immediate family — spouse, children, parents, brothers, sisters, and dependants — are listed as the beneficiaries of a buddy scheme. 

Under the Kenya Airways scheme, each employee is entitled to two buddy passes a year with each pass covering five seats — a total of 10 seats. The airline would therefore be losing Ksh3.35 billion ($33 million) in a year, if all the 35,000 seats were sold to traders.

Each seat also comes with 56kg of free luggage entitlement. “Traders seeking to buy space for extra cargo especially on the West African routes are missing this chance,” the source said.

The airline’s 500 pilots are not entitled to the passes after they failed to sign a code of conduct that was a condition for the allocation of buddy passes.

“We were denied buddy passes as part of the benefits because we would not sign the provided code of conduct as a union. If there is a transfer of flights by other employees, it could be pushing the company deeper into losses and immediate action needs to be taken,” said Captain Ronald Karauri, Kenya Airline Pilots Association (KALPA) secretary-general.

The pilots have called for a review of the scheme and the putting in place of more stringent rules. Some international airlines require staff to submit a list of immediate family members and dependents at the beginning of the year, subject to a review after six months, and with no option of selling to third parties.

If resale is proven, the employees risk the benefit being withdrawn and in extreme cases dismissal. 

Other airlines offer an employee one free ticket in a year and unlimited tickets for family members and friends at a set percentage of the full fare with close monitoring to discourage commercialisation.