Tuesday, July 9, 2013

■ KENYA: Regulators grant Kenya Airways/KLM seven-year extension to Unfair Competition exemption.

Kenya Airways
Kenya Airways (KQ) and 26.73% shareholder, KLM Royal Dutch Airlines (KL), have been granted a seven-year extension to their Unfair Trade practices exemption by the Competition Authority of Kenya, having applied in February. The moratorium, introduced when KLM acquired a stake in the Kenyan national carrier back in 1996, prevents competitors from accusing them of unfair trade practices. 

Most importantly, the exemption allows for the setting of prices between the two companies, which can be considered "price fixing" in some quarters, but without violating the Kenyan Competition Act, which defines restrictive trade practices as “any agreement, decision or concerted practice which directly or indirectly fixes purchase or selling prices or any other trading conditions.”

However, the exemption is conditional in that the joint venture airline carrier will be able to set prices on their own, provided they respect the agreed upon terms of routes, schedules, and maximum load, as well as align and coordinate their network management activities.

The plan also involves management of any and all revenues attributed to the performance of the joint venture by any part including setting up joint venture management and analysis systems.

According to The Star,  in its notice published in an official government gazette notice, the CAK said that the exemption "does not grant the parties immunity from the Competition Act" but is there "to promote technical stability through improved technology, skills and expertise resulting from technology transfer, staff exchanges and training avenues."

Meanwhile, CEO Titus Naikuni has lamented the lack of suitable partner airlines available in West Africa with which to form a partnership. On the back of strong economic growth in Nigeria, Ghana and other states, various airlines have expressed an interest in setting up shop in the region though thus far, only Ethiopian Airlines (ET) has been able to turn this desire into a reality with the launch of ASKY Airlines (KP). South African Airways (SA) and Egyptair (MS) have both expressed an interest in investing in the region though with both currently facing difficult financial predicaments, it is unlikely that anything will come into being in the near future.