Pan-African airline plans fly into headwinds
Saturday September 03 2022
The quest to create a pan-African airline through a joint venture between Kenya Airways and South African Airways by June next year is facing early turbulence after both carriers sought exemption from clauses on the competition.
Kenya Airways (KQ) last week said it is seeking exemptions from the clauses in Kenya and regional trading blocs, several months after South African Airways (SAA) raised the same plea back home.
The move means it will be difficult to implement the Single African Air Transport Market (SAATM) and the Africa Continental Free Trade Area (AfCFTA) initiatives that are key in having a continental airline.
The partnership was aligned with the aspirations of the AfCFTA, which aims to provide a single market for goods and services on the continent.
The clauses about competition, among others, include sharing of resources and key information about the sector including hubs.
Read: KQ, South Africa carrier sign codeshare deal
This means KQ would have to seek exemptions from the Competition Authority of Kenya as well as the Common Market for Eastern and Southern Africa Competition Commission.
Earlier, the SAA also had sought approvals from South Africa’s Competition Commission as well as the Southern Africa Development Cooperation.
Without the exemptions, the airlines could get into trouble with competition and consumer watchdogs in their respective countries.
Last year, KQ and SAA signed a partnership framework to enable them to form a pan-African airline. Working together will lower travel costs and improve connectivity within Africa.
The airlines are behind schedule on the partnership agreement.
At an investor briefing last week, KQ said both airlines are seeking exemption from certain laws.
“We wanted to see if we can share assets and other resources, but the authorities need to immunise us so that we can overcome hurdles that may come up in regards to anti-trust and anti-competition requirements,” said KQ chief executive Allan Kilavuka.
His sentiments echoed those of Kenya Transport Cabinet Secretary James Macharia, who said the implementation of the open sky policy needs to be done in phases to protect the interests of KQ.
The Memorandum of Cooperation meant partnership in exchange for knowledge, expertise, innovation, digital technologies, and global best practice.
Last month, the two airlines announced an agreement to allow KQ business class customers exclusive access to the lounge at the O R Tambo International Airport.