Local airlines seek Sh3bn bailout as coronavirus bites

April 3, 2020 / Comments (0)


Domestic air travel operators are seeking a Sh3billion government bailout to cushion the carriers from reduced bookings in the wake of the coronavirus (Covid-19) pandemic.
The operators have been recording a drop in revenues after the State banned the entry of travellers from coronavirus-hit countries, closed schools indefinitely and encouraged working from home, a move which has seen few passengers book flights.
Kenya Association of Air Operators (KAAO) executive secretary Eutychus Waithaka Tuesday said they had sent a request for the bailout through the Ministry of Transport.
The associations represents the interest of all licensed commercial air operators such Fly 540, Safarilink, East African Safari Air Express (formerly Fly-SAX), Jetways among others.
They are seeking the funds to settle staff salaries as well as navigation and landing charges at airports.
“We have formally sent a memorandum to the state through the Ministry of Transport requesting that they set a side Sh3billion to help keep domestic airlines in the country stay afloat during this difficult moment,” said Mr Waithaka in a phone interview with the Business Daily yesterday.
“It is the State which will decide the form in which the money will come. It could be in form of tax concessions or release from banks,” he said.
Mr Waithaka clarified that the Sh3 billion is not a grant or a loan but a “relief fund” to help cushion the sector from collapsing during this difficult time.
Apart from the Sh3 billion relief fund, KAAO also wants the government to reduce air passenger service charges, a move that will encourage more travelers to continue booking tickets.
They also want the State to partner with development financial institutions such as the World Bank to reduce the burden of debt to help stabilise the aviation industry before normal operations resume.
The association further noted that they were in talks with the Labour Ministry to look at a possibility of workers in the sector taking pay cuts rather than sending them home.
“We are sending them on leave. We are trying hard not to knock them off,” he said.
Kenya has so far confirmed 59 cases of the Covid-19 and its critical tourism and farm export businesses have been feeling the pinch from the economic impact of the coronavirus pandemic.
The State has imposed restrictions, including cancellation all flights save for cargo planes, ordered shutdown of bars and nightclubs, restaurants to operate as takeaway units, and put a freeze to church services and weddings and capped funeral gatherings to 15 people.
Domestic carriers in the country are among the hardest hit industry amid the coronavirus outbreak, a move which has seen operators such as Jambojet combine some of its flights to western Kenya.
Source: https://www.businessdailyafrica.com/corporate/companies/Local-airlines-seek-Sh3bn-bailout-as-coronavirus-bites/4003102-5510096-w4fk17/index.html

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