Dear Erick

We spoke. I suggest as follows:-

1. JUSTIFYING BACKGROUND
a) Article 227 provides for promotion of local industries.KQ is our local
airline,hence part of local industry.
b) Section 3 (i) of the PP + AD Act (2015) reiterates the same promotion of
local industry, sustainable development
c) The ownership of KQ is currently summarised as follows

NO PERCENTAGE [%]

I G.O.K funding
II KLM partnership
III Local (Kenyan Shareholders)
IV Others Shareholders

Presumably, from the above table, the GOK and Kenyan shareholding totals to .%
of ownership.Because this ownership is above 51%, then promoting KQ also amounts
to promoting local contractors as envisaged in sections 3 (j) as read together with 155
(3)(b) and 155 (4) of the PP + AD Act (2015) obligates that preferential treatment be
accorded to the category of the firms.

d) Section 157(2), the responsibility of prescribing the preferences rest on the

cabinet secretary for the time being responsible for finance.In doing so, the
Cabinet Secretary shall consider Economic and Social Development factors.

e) The economic and social development factors that the Cabinet Secretary may
consider includes but not limited to:

(i) Directive leading to all public entities (PEs) procuring their air tickets
from KQ means increased revenue and profitability (ceteris paribus)
(ii) Increased revenues offer opportunity to enhance employment
opportunities or at worst protect jobs already obtained.This has
multi-plier effects.
(iii) Increased capacity to buy more supplies and in the process expand
business opportunities, also with multi-plier effects.

(iv) Increased tax revenues

 (v) Savings on foreign exchange reserves resources which otherwise
could have been used when tickets were procured from foreign
airlines.
(vi) Helps in establishing Nairobi as aviation (transport) hub as it is more
difficult to create and sustain such a hub if the national airline is facing
challenges.

f) Other national airlines such as Ethiopian, South African and British Airways have
over the years made it compulsory that where public funds are used, the
respective national airlines shall be given first priority.

2. THE REGULATIONS

In exercise of the powers conferred by section 157(2), the Cabinet Secretary makes a
PP + AD Regulations (2016) that:

e.g. where public funds are used, the travel agents will be directed to procure such
tickets from KQ, unless the journeys are to destinations not covered, either in full
or in part by KQ routing.

3. SUSTAINING THE DIRECTIVE

Currently, KQ is said to be one of the most expensive airlines in the world if not the
most expensive.Because of the new constitution, increased awareness among the
public, NGOs, sensitivity to exorbitant pricing in public procurement among other
factors,it is prudent to investigate why KQ rates are much above those of other airlines
and take corrective action.

Failure to do so may lead to public outcry, which in itself can lead to reversing the
policy and the proposed law through the regulations.

N/B Please note that I have not fixed the percentages as I do not have the figures.

Good night.

Meyo