Impact of Government Intervention in the Recovery of Kenya Airways Following the Covid-19 Pandemic

Abstract

Kenya Airways (KQ) has not been all smooth flying since its privatization. Despite being a private company, the government has often shouldered the burden of keeping the airline afloat. The general objective of this study was to examine the impact of government intervention in the recovery of Kenya Airways following the Covid-19 pandemic. It pursued three explicit objectives; to analyze the impact of Government Policies on the recovery of Kenya Airways following the Covid-19 pandemic, to establish the impact of equity financing to the recovery of Kenya Airways following the Covid-19 pandemic, and lastly to determine the impact of enactment of strategic factors that have been put in place to deal with Covid-19 pandemic within Kenya Airways. The study applied descriptive research design to evaluate the relationship between Government interventions and recovery of Kenya Airways following the Covid-19 pandemic. The target population was 121 comprising of 13 top-level management, 35 midlevel management, and 73 low-level management at Kenya Airways Group. The stratified random sampling technique was used in the identification of the sample size of the study. The Slovin's formula was used to determine the sample size of 93 respondents. The researcher employed the use of questionnaire to collect primary data. The study adopted the use of quantitative methods to analyze the research data. The descriptive statistics of percentages, means and standard deviations were employed, and the inferential analysis of correlation and regression analysis were similarly employed, and the results, thereafter, presented in figures and tables. The findings on the first objective revealed that there is a positive and significant relationship between Kenya Airways recovery and government Policies. The study found that to equip the airline for the future, it is vital that the regulatory environment of the sector is in line with Gulf Carriers unlimited interest-free capital and subsidies provision; The study further found a significant relationship between government policies and recovery of Kenya Airways following the Covid-19 Pandemic. The study established that improving government policies would lead to an increase recovery of Kenya Airways. The study established that insolvency of Kenya Airways is certain without Government bailout. The results on the second objective revealed that there is a positive significant relationship between the equity financing and the recovery of Kenya Airways following the Covid-19 pandemic. The results revealed that nationalization is an inefficient and last-resort option that confines a company to inefficiency and poor management, albeit nationalization being an inefficient operation model it might be the last resort option to ensure the survival of Kenya Airways. The study established that increasing equity financing would lead to an increase recovery of Kenya Airways. In addition, the study found out the rationale of equity financing in the aviation sector under government ownership since this is the normal reaction of a governments as shareholders to ensure survival of the industry, economy and safeguard thousands of jobs. On the third objective, the study found a significant relationship between enactment of strategic factors and recovery of Kenya Airways following the Covid-19 Pandemic. The study established that scaling down operations and destinations are the most prudent decisions with a potential turnaround strategy that can lead to profitability; that diversification of Kenya Airways products has the potential of creating at par alternative business streams other than air passenger transportation; retention of key human resource is crucial to the future performance of the Airline. The study established that improving enactment of strategic factors would lead to an increase recovery of Kenya Airways. The study concludes that government policies positively and significantly relate with recovery of Kenya Airways following the Covid-19 Pandemic. Also, the study concludes that equity financing positively and significantly relates with recovery of Kenya Airways following the Covid-19 Pandemic. Further, the study concludes that enactment of strategic factors positively and significantly relates with recovery of Kenya Airways following the Covid-19 Pandemic. The study recommends the government to put in place more policies that can help KQ to recover from the Covid-19 pandemic. The study also recommends that increasing Government ownership in Kenya airways should be used as the last alternative measure used to recover from the effects caused by the Covid-19 pandemic. Finally, Kenya Airways should also think of strategic ways of dealing with situations like Covid-19 in the future.