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{
    "id": 615219,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/615219/?format=api",
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    "content": "involves people who are qualified but people who must work with high morale because of security reasons. Kenya Airways decided to deal with these human resource problems by outsourcing the hiring of crew from outside service providers. This, in the end let to two tiers of crew members up in the sky. One tier of crew members was outsourced from a service provider called Career Directions Limited and another employed directly by KQ. The two enjoyed two different terms of service. Mr. Temporary Speaker, Sir, this is extremely dangerous. We think that when you are up in the sky, we want teams of workers who are not competing with each other. Both teams should be patriotic to the airline and have confidence in each other. We discussed this sensitive issue and we are putting before the McKinsey team to review the outsourcing method. Outsourcing on its own is not bad in any business but care must be taken on how to outsource and the profitability it brings and how safe it is in terms of industrial relations. It is an area in which we are raising a query and putting a red flag to be looked into in the turn-around exercise of the airline. Secondly, on the issue of human resource, is the redundancy practice that Kenya Airways has involved herself and which has led to long drawn litigation and controversy with workers. We recommend, as the Constitution provides, that there are other methods of dispute resolution which are friendly to labour relations and friendly to productivity and profitability. We encourage the Ministry under which Kenya Airways falls as the mediator to come in strongly and ensure that these bad industrial relations are erased from our books as we turn around our flag carrier. Let there be hiring that adds value to our business. It should not unnecessarily repress the development of certain skills locally and bring substitution where it is not necessary. I am quite sure that Members of the legal sub-committee will expound on this issue extensively when they come to contribute. Let me now touch on the issue of fuel hedging. In the aviation industry, there are two things that are extremely important in operations. The first one is fuel and the second one is financial resources and other service provisions follow. An airline cannot operate successfully, having settled the issues of industrial relations if it does not get its fuel at the right price for purposes of profitability. An airline too cannot operate successfully if it does not access financial resources at a cost it can afford, for purposes of running the airline; either acquiring planes and leasing them and so on. The arrangement of access to finance or capital and fuel is very critical. In the aviation industry, there is something called fuel hedging, which is a very simple thing. In other words, you look at the market and decide how much you want to bet on the cost of fuel for a certain period of time. In the event that the fuel prices go higher, you do not lose but gain, because you will still get fuel at a price you can afford. If it goes too low that your price becomes higher in the international market, you would have secured yourselves a certain profit when it was above what you had hedged. Nonetheless, it is important to hedge for a reasonable period of time and at a reasonable price. This requires market sensitivity studies and marketing experts that will give you the right information to hedge. Mr. Temporary Speaker, Sir, we raised concerns about the ability of the commercial and marketing directors of the Kenya Airways to correctly advise the Board The electronic version of the Senate Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor, Senate."
}