Kenya Airways

press clippings

A Case Study in Privatization

 The privatization of Kenya Airways was the first-ever privatization of an African airline.  The sale of a major state-owned asset is usually a highly charged political event, and the two-year process by which 77% of the shares of Kenya Airways were sold to a broad array of private investors was no exception.  From the outset the press and public of Kenya speculated as to how and when the process would fail, and which interests would profit from that failure.  Yet the privatization was carried out successfully.

Privatization and the formation of cross-border alliances are trends in the airline industry and in many other industries.  This case study examines the privatization of Kenya Airways as a means for fostering discussion and critical thinking about privatization, liberalization, and enterprise restructuring.  Background material on this case includes:

A basic question for both policy makers and the public is "why privatize?"  Important answers, which must be evaluated based on economic reasoning and the facts of the case, are: The benefits from privatization depend significantly on how it is carried out.  To effectively implement a privatization, policy makers must: For each of these areas, this case study considers the general issues, specific policy steps taken in the Kenya Airways case, and relevant factors for considering alternative policies.   While there is no universal formula for successful privatization, well-thought out policy is important for ensuring that privatization produces widespread public benefits.

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