KQ services unattractive to travellers, probe finds

A Select Parliamentary Committee says Kenya Airways made its service unattractive to customers through high ticket prices and frequent flight cancellations despite intense competition among airlines.

The committee formed two months ago by the Senate, Kenya’s lower House, to probe the national carrier’s nose-diving finances said evidence gathered so far also pointed to poor investment decisions, industrial unrest and lack of expansion in Africa among the five major problems that plunged it into a record $251 million after-tax loss.

“Prima facie evidence so far gathered shows that the airline faces major problems which the committee is looking deeply into with management as well as other stakeholders,” Prof. Peter Anyang’ Nyong’o said yesterday.

Among the investments under scrutiny is the buying and leasing of aircraft as well as fuel hedging “under arrangements which are not profitable to the company, thereby leading to sky rocketing indebtedness”.

Kenya Airways chief executive officer Mbuvi Ngunze attributed the firm’s losses to competition from Middle East carriers, hedging losses and high operating costs as disillusioned investors called for an end to the strategic alliance between the airline and its 26 per cent owner KLM.

Treasury Cabinet Secretary Henry Rotich has said a decision would be made in two months once experts present their findings.

However, he said at least $500 million would be required to put the airline on the path to recovery. It is not clear whether this amount includes the $200 million being borrowed from the Cairo based Afrexim (Africa Export Import Bank) and the $42 million injected by the government earlier this year.