Another B777-300ER joins the Kenya Airways fleet amid controversy over tax bill


(Posted 06th May 2014)

Kenya Airways yesterday received their second B777-300ER aircraft, joining the sister ship which a few months ago was put into service to Guangzhou / China after being named ‘Masai Mara’ by President Uhuru Kenyatta in a colourful ceremony at Jomo Kenyatta International Airport at the time.

Both aircraft are configured in a two class cabin layout with overall 400 seats in both Premier Class and Economy class. Unlike other new aircraft joining the fleet of Kenya Airways, this particular B777 has been leased from GECAS on a long term basis and will be deployed on flights to the Far East from June onwards.

Kenya Airways is also still due to receive a further 5 Boeing B787-8 Dreamliners this year amid reports that new VAT regulations threaten to rip the financial heart out of the national airline with an estimated tax bill of over 14 billion Kenya Shillings for the new acquisitions.

Delegates at the ongoing 3rd AFRAA Convention for Aviation Suppliers and Stakeholders in Nairobi have broadly condemned Kenya’s taxation on the national airline as it plays into the hands of competitors in Africa but in particular competitors from the Gulf region, where taxes on their national airlines are unheard of. Said one Kenyan delegate at the AFRAA conference on condition of anonymity: ‘If these taxes are not reversed it will mean that KQ has to recover the added expenses through higher ticket cost. The Kenya government is a shareholder in the airline with about 30 percent. They have two board members on the Kenya Airways board. They have all approved the growth plan of the airline under Plan Mawingo. There is something seriously wrong with those people in the same government when they then add such taxes on the airline, taxes competitors do not have to pay. Selling Kenya is already hard. If the fares rise, it could mean that less passengers than projected will travel with KQ and if that is the case the entire growth scenario, all the upbeat forecasts, will deflate. AFRAA has been at the forefront of fighting for member airlines to have African governments stop using airlines as cash cows. In fact airlines are performing a vital service to connect Africa within because our road and rail network is either poor or simply not there where it is needed. It is time our members of parliament give up their lavish lifestyles which has turned them into parasites and focus on serving the nation again. We got enough issues to sort out and not need a whole extra lot of problems those fellow created for the country. Like with tourism in general, they did not listen and now our good fortunes are gone over high taxes and lack of funding for promotion. Do they want to destroy our aviation industry too? What sort of country do they think we will have if this continues?’.

Another delegate pointed to the almost inevitable comparison with major African rival Ethiopian Airlines saying: ‘The Ethiopians must be laughing their heads off over such reports. If this VAT bill sticks as it now is our government and parliament have become unwitting supporters of ET over KQ, but really, I don’t think they even have the capacity to understand what they were doing, understand the consequences and medium and long term damage this does to aviation in Kenya’.

According to media releases seen did the Chairman of Kenya Airways say that this was the second of overall 10 new aircraft KQ expects to receive this year, after taking delivery a few weeks ago of their first B787-8, but considering the inevitable added tax burden, it will no doubt be a mixed feeling for the airline, proud on one side of the accomplishments and a lot poorer in cash on the other side unless parliament at last sees their folly and corrects it.

Watch this space for breaking and regular aviation news from across Eastern Africa.

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