Kenya counts losses as workers fight carrier’s bid to run JKIA

Saturday March 9 2019

Stranded passengers JKIA

The strike by airport workers affected operations at Jomo Kenyatta International Airport and thousands of travellers were left stranded as their flights were either delayed or cancelled on March 6, 2019. PHOTO | AFP 

JAMES ANYANZWA
By JAMES ANYANZWA
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The Kenya Airports Authority ended the week counting losses after scheduled flights were unable to land or take off following two days of chaotic workers’ strike at Nairobi’s Jomo Kenyatta International Airport.

Thousands of travellers were left stranded in the wake of a strike called to oppose a proposal by Kenya Airways to take over management of JKIA.

The over 600 employees, including union officials who attended a briefing session with KAA’s top brass in January, were protesting the authority’s unwillingness to confirm its stand on the planned takeover of the airport’s management.

Minutes of the meeting seen by The EastAfrican show the authority’s managing director Jonny Andersen asking the employees not to dismiss Kenya Airways’ proposal.

“Don’t be quick to say no. Think about it. They are only proposals, nothing is decided,” said Mr Andersen.

The plea did not sit well with the workers who read a sinister motive in the merger proposal. They predict it could render hundreds of them jobless. In particular, they queried how a loss-making entity like KQ could take over a stable and profitable business.

The employees faulted the suggestion by KAA’s lead transaction adviser Njoroge Nani Mungai that the Cabinet would have a final say on the proposal. Instead, they want parliament — the institution tasked with safeguarding public interest — to be the final arbiter.

KAA hired Mr Mungai at a cost of Ksh150 million ($1.5 million) and has already paid him Ksh15 million ($150,000), according to Abdulswamad Nassir, the chairman of Kenya’s parliamentary investments committee.

The aviation workers say the National Treasury’s Public-Private Partnership unit and the Cabinet are made of political appointees and would not be in a position to make a decision that is in the best interest of the public.

“The entire proposal is unacceptable to us,” said Daniel Yatich, a representative of the of the Kenya Aviation Workers Union (Kawu).

Concession

KQ submitted a privately initiated investment proposal to KAA on October 3, 2018 seeking a 30-year concession to manage and develop JKIA.

The annual concession fee is set at $28 million in 2019, and will gradually rise to $35 million in 2028, compared with KAA’s non-JKIA operations which are budgeted to cost $66 million. KQ’s proposal says the airline has fronted three options that will have a direct impact on the KAA staff.

The first is the proposed seconding of all JKIA staff to a special purpose vehicle known as the Kenya Aviation Holding Company (KAHC) on the same terms for a period of 12 months. KAHC is the entity that will manage all airline business in Kenya.

When the secondment period ends, KQ will transfer employees to the SPV while still having the right to choose which employees to move under the transfer proposal. KAA will reallocate those not transferred to the SPV to other airports and airstrips.

The SPV will be given up to three years to assess who among the seconded employees it wants to retain.

The proposal also states that terms of employment offered by the SPV will be similar to or better than the terms of employment with KAA.

Employees retained by the SPV will also be required to agree to a possible reduction of benefits, which they enjoyed as civil servants.

In the second option, KQ proposes that retained employees be transferred to the SPV by way of a tripartite agreement between the SPV, KAA and the staff and that the transfer process will require willing employees to confirm possible reduction in benefits, especially pensions benefits.

Any employees opposed to such a reduction will go back to KAA where they could be declared redundant.

KQ says that in the alternative, KAA could declare all JKIA employees redundant at the outset and pave the way for the SPV to recruit the former KAA employees under new contracts.

These proposals were at the centre of KAA employees strike and the massive protests that followed last week.

Chrisantus Mogaka, a KAA employee said the authority’s massive surplus had attracted the takeover bid.

The aviation workers who included cabin crew, ground staff, security, air traffic controllers and maintenance staff went on strike on Wednesday bringing operations at JKIA to a halt, disrupting travel plans and causing airlines unexpected losses.

Restored services

The strike resulted in cancellation and delays of flights until normalcy was restored on Thursday morning with the help of Kenya Air Force officers. The government said the strike was illegal and amounted to economic sabotage.

“We shall not allow misguided people to interfere with those who want to work, there are a lot of people out there looking for jobs,” said James Macharia Cabinet Secretary for Transport.

The workers are also protesting what they term as unfair hiring practices, poor remuneration and the uncertainty associated with the proposed takeover of JKIA by KQ.

The government said the deal offers the best route to rescue a loss-making KQ, which it says is quickly losing ground to its peers such as Ethiopian Airways.

Mr Macharia said a successful consolidation would leave the aviation sector much stronger.

Several members of Kawu, including its secretary-general, were charged with “inciting an illegal strike.” However, they insist that the takeover is rushed and their concerns are shared by some Members of Parliament.

Kenya Airways estimated losses from the daylong suspension of services to Ksh300 million ($3 million)

Flights to Amsterdam, Mumbai and London scheduled to take off in the morning were delayed by more than six hours after the Kenya’s Employment and Labour Relations court temporarily suspended the strike pending a hearing of the dispute by a conciliatory team formed by the government.
The team is expected to resolve the dispute and file a report within 30 days.

The European Union Aviation regulations require that airlines compensate up to $600 per passenger if they cancel services for more than 12 hours.

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