Introduction to Kenya Airways

In 1976, the East African Community (EAC) collapsed. With the EAC, the three East African Countries of Kenya, Uganda and Tanzania had operated a common market, transport, and communications operations, scientific research institutions and the East African Development Bank (EADB). In July 1976, the East African Airways Corporation (EACC), one of the autonomous corporations under EAC was dissolved, giving rise to Kenya Airways (KQ) in January 1977 (Eken, 1979).

As a government entity, KQ was unable to turnaround a profit over an 18-year period (1977-1995). The 18-year period was characterized by massive debt, financial losses and inability to service loans. As part of the World Bank Group’s economic restructuring model, the International Finance Corporation (IFC) recommended for a privatization of Kenya Airwyas. The major objective of the privatization was a continued operation of the airline as the country’s national carrier, and a turnaround in the operational efficiency and profitability of the airline (International Finance Corporation, 2008).

The 1996 Privatization proved successful, with KQ becoming the first national airline in Africa to complete a restructuring of that type and scale. According to IFC, “KLM Royal Dutch Airlines, purchased 26 percent of the equity and the Kenyan Treasury received over US$70 million from the sale. Over 113,000 Kenyans were able to buy 22 percent of the shares in the airline (the vast majority bought the equivalent of about US$200 worth). Kenyan financial institutions bought 12 percent, international financial investors 14 percent, and employees of the airline acquired 3 percent.”

Despite the early successes of the privatization drive, in April 2012, the Airline launched an expansionist and growth project code-named; ‘Project Mawingu.’ At the start of the Project, KQ had 55 destinations in 45 countries and on 4 continents. The objective was to grow these destinations to 115, in 77 countries on 6 continents by 2021 (Thing’O, 2012). Project Mawingu was majorly hinged on transformation of the Jomo Kenyatta International Airport (JKIA) infrastructure, massive Fleet Acquisition and Hedging to contain the fuel cost volatility (Aerospace, 2013).

To-date, Project Mawingu is cited at the heart of KQ’s unending turbulence. This 10-year strategic plan had assumed an exponential year to year growth in demand. This demand didn’t actualize as terrorism incidences surged in the region and the Ebola crisis in West Africa grounded KQ’s operations in that region (Amollo, 2015). Over and above the external incidences, the fleet renewal didn’t proceed as projected – there was a delayed delivery of the additional aircraft carriers, the Greenfield project to build a new airport terminal at JKIA was delayed (3 years into the project), and a miscalculation on the fuel hedging options as oil prices in the period took a downward trend (Kamau, 2022).

Problem Statement and Objective

KQ has continued a downward trajectory as a loss-making entity, it has not escaped from the historical structural issues that affect entities in the aviation industry (News, 2023). Our objective in this study is to review Kenya Airways as an organization, establish the external and internal factors at play, and use these to inform the type of change required at Kenya Airways. Based on the type and scale of change required at Kenya Airways, we would then recommend a change management strategy (based on an appropriate change management model). A combination of the change management model, strategy and action plan should enable KQ realize its overarching objective of stabilization and growth.

Approach of Planned Change at Kenya Airways

According to Cummins and Worley, organizations seeking to carry out change follow a General Model of Planned Change. This model entails four major change activities: Entering and Contracting, Diagnosing, Planning and Implementing Change, and Evaluating and Institutionalizing Change. In the case of KQ, the first major activity has been performed and will thus proceed with the subsequent activities around Diagnosing, Planning and Implementing Change.

Diagnosis of Kenya Airways

The appropriate change management strategy for KQ is built on establishing how the organization is currently functioning. Our Diagnosis has been based on the ‘Open Systems Model’ on the backdrop that KQ exists in a context of a larger environment (aviation industry and global economy) and this in turn affects how KQ performs and in turn is affected by how KQ interacts with it (Worley, 2008).

Through the Open Systems Model, a review of KQ’s General Environment and Task Environment will be conducted.

A review of the external environment will be conducted together with the review of the internal schema of KQ.

The External Environment

Through the lens of the external environment, KQ has been assessed through the PESTEL model. Politically, the Kenya Government owns a 48.9 percent stake in KQ, the current government has expressed willingness to fully privatize the airline (AlJazeera, 2023). KQ is thus heavily dependent on government regulation at the time. KQ is not immune to the threats of terrorism, political instabilities in destinations where it operates. Economically, the economies of East Africa are grappling with a dollar shortage together with delayed recovery from the shocks of the Covid-19 pandemic. Fuel costs inform a large percentage of KQ’s operational costs. Socially, KQ must always present a brand of hospitality, maintaining this brand comes at a cost. Technologically, KQ must keep renewing its fleet, not only to guarantee service but also security of its passengers. The World Economic Forum has also challenged the Aviation Industry to reach net zero carbon emissions by 2050 (Ellerbeck, 2022). These Environmental Factors present complexities for KQ regarding its response to mitigate the challenges. Finally, on the Legal Front, Kenya Airways must be agile to deal with the dynamics that the different destinations present for its operations. Every country or destination has a different legal framework, KQ must be ready to synergize its strategy to these frameworks.

The Task Environment

According to Michael Porter, the task environment or industry structure can be defined through the five forces analysis of supplier power, buyer power, threats of substitutes, threats of entry, and rivalry among competitors. KQ must contend with the bargaining power of suppliers. In 2022, KQ pilots went on strike grounding the operations of the Airlines. Boeing and Airbus are the major commercial aircraft manufacturers with long lead times, all fleet renewal strategies of KQ are dependent on the prices and timelines fixed by these suppliers. In addition, KQ is affixed to Jet fuel suppliers, Maintenance, Repair and Overhaul service providers to mention but a few. Regionally, most African Countries have retreated to launching their own national carriers such as Tanzania Airlines, Uganda Airlines. This has further amplified rivalry from existing competitors such as RwandaAir, Ethiopian Airlines and Emirates. The threat of substitute products to KQ continue with many of regional travel being limited to road travel while most of cargo continues to be by ship. Finally, KQ must deal with the bargaining power of its buyers. Most travelers have switching flexibilities, while a big bulk of travelers have limited purchasing power and will thus seek airlines that meet their budgetary needs.

Determinants of airline industry profitability (Porter’s Five Forces)

Our Diagnosis of KQ’s external environment is concluded with a further acknowledgement of the rate and nature of change in the aviation industry. Change in the aviation industry is dynamic and complex. Finally, the aviation industry is also understood through the dimensions of the environment. It’s a resource dependent (pilots, aircrafts) environment with massive information uncertainties (Frank Coleman, 2023).

Design Components/Internal Review of Kenya Airways

In order to finalize our diagnosis of KQ, it’s important to review the Design components of KQ, its strategy, technology, structure, measurement systems, and human resource systems. According to the KQ service charter, “Kenya Airways seeks to achieve world class standards in service delivery, product quality and operational efficiency. We believe that we are the airline of choice in Africa and aim to develop JKIA as Africa’s premier hub. We wish to pursue a business model that will deliver a consistent level of profitability and enable sustainable development of Africa. Our actions, behaviors and attitudes are driven by safety, integrity, customer satisfaction and quality at all times.”

Technologically, KQ currently operates a fleet of 38 aircraft with plans to downsize this fleet to 30. Of these, 19 aircraft are leased from other aviation leasing entities (Ch-Aviation, 2022). As per the KQ Board Charter of 2017, governance of the company is vested in the Board of Directors performing the dual role of decision-making and oversight. Appointment of the Managing Director and Finance Director rests with the Board upon nomination by KLM. Finally, the Board is also responsible for establishing the long-term goals of the company and ensuring that effective plans are developed and implemented in accordance with the outlined structure.

Finally, on the human resource front, KQ finds itself in a competitive market for specialized skill and lack of talent based on the region where it operates. KQ also faces challenging relations with the unions to which most of this talent subscribes as members. KQ’s strategy must consider ways of attracting suitable and top talent, while figuring out ways to retain them (Anzaya, 2013).

Change Management Model for Kenya Airways

Based on the external and internal analysis of Kenya Airways, the triggers for transformational change are evident at KQ. The next steps are about the selection of an appropriate change model to deliver this transformational change. Gareth Morgan presents a blueprint (Images of Organization) upon which to score and make a model selection based on the metaphors appropriate to a given organization. Organizations can be viewed through eight metaphors: as machines (operating through precise, efficient and predictable processes), as organisms (living systems adapting and evolving in response to their environment), as brains (intelligent systems processing information, making decisions and learning from feedback), as cultures (sharing common values, beliefs and behaviors), as political systems (arenas of power and conflict), as psychic prisons (closed systems limiting individual creativity and autonomy), as flux and transformation (constantly changing and adapting to new conditions), and as domination and resistance (sites of struggle between dominant and subordinate groups where power is contested and negotiated). We view KQ through the three metaphors of an Organism, Political System and Flux and Transformation. It’s on this basis that an appropriate change model was selected (Esther Cameroon, 2004).

Models of change and their associated metaphors

On this basis, Senge’s systemic change model. Senge et al note that change must be examined through the pathways of initiation, sustainability, redesigning and rethinking. There are balancing forces that act against change (change at KQ won’t happen in a vacuum), any successful change efforts will touch every component of the organization (we won’t anticipate the consequences of our success), our change efforts must thus be adaptable (always redesigned and rethought). Senge’s systemic change model suits the nature of the aviation industry, it delivers the gamma change while allowing adaptability to the uncertainties of the environment. Our change management strategy is about the reformulation of Kenya Airways as a learning organization.

Kenya Airways: A Learning Organization’s Change Management Strategy

KQ’s Change Management Strategy as a learning organization is premised on the three interconnected pillars of; 1. Guiding Ideas, 2. Theory, Methods and Tools, and 3. Innovations in Infrastructure.

1. Guiding Ideas:

At the first corner of our magical triangle at KQ are the Guiding Ideas. With these, the action plan is to redefine, refine and articulate KQ’s Vision, Value and Purpose. KQ’s vision is to be the pride of Africa, by inspiring its people and delighting its guests consistently. The first goal of our strategy is to hire a branding and communication firm to unpack this vision for all the stakeholders of KQ. The purpose of KQ is to contribute to the sustainable development of Africa. KQ will need to amplify this theme in line with the current 2030 sustainable ambitions around reduction of the carbon footprint while also dialing up on the African cultural themes of unity, arts and integration. KQ’s essence is Warm, Caring, Friendly, truly African – The Pride of Africa. On this aspect, KQ must thus partner with other African brands and organizations that bring this essence to life. This essence must be embedded in the culture of KQ as an organization, both internally and externally. The top leadership and management at KQ must espouse this essence. Finally, the values of KQ are safety, customer first, integrity, passion and trust. Our strategy has been designed with these values as the underlying factor. Every decision and action at KQ must always be hinged on the safety criteria (to ensure safety at all costs), to put the customer first, to stand for integrity and to rally up passion and trust. These Guiding ideas at KQ will be further enhanced by the three key guiding ideas of learning organizations (Senge, 1994). Henceforth, KQ must appreciate the primacy of the whole, the community nature of the self (as it seeks to create the pride of Africa) and the generative power of language. KQ’s communication, branding and marketing must always embody KQ as the Pride of Africa. Kenya Airways could consider a full rebranding to “Africa Airways” to break the association of Kenya Airways to Kenya. If Kenya Airways is to be the pride of Africa, then its naming, its language should reflect Africa, not Kenya. KQ must thus stop viewing itself in a Kenya-centric mode to an Africa-centric mode. Its branding, its systems, tools and language must reflect this Africa-centric model.

• Theory, Methods and Tools

On the second corner of our strategic change management triangle are theory, methods and tools. At the heart of our strategy is the introduction of the systems thinking tool to KQ. Through Systems thinking, the plan is to enable the organization to start operating, to view the second order effects of every decision and action. One of the ways to embody systems thinking is the introduction of cross-functional teams. In this case, employees and managers from different departments at KQ will be brought together in a project matrix to define and solve organizational problems. There will also be a deliberate approach to encouraging diversity and inclusion at hiring in order to encourage systems thinking as part of KQ’s genetic makeup.

• Innovations in Infrastructure

The triangle of guiding ideas, theory, methods and tools is completed with Innovations in Infrastructure at KQ. The current structure at KQ vests a lot of power in the board. This reduces a lot of agility required in response to change. For this reason, KQ may consider setting aside an Innovations Faculty independent of the board to enable fast-response methods to change, to anticipate change and encourage dynamic responses. Alternatively, the Board could be redesigned as an Agile Board with faster turnaround to decision making. Performance Evaluation of the Board ought to be restructured from self-performance evaluation to independent quarterly evaluation. The Board must be in position to decentralize most of the decision-making activities at KQ for more agile response.

Change Management Action Plan

Upon review of the change management model, and strategy at KQ, the following action plan has been recommended for adoption to deliver on stabilization and growth.

	Strategic Issue	Strategic Action/Response
1.	Disconnected Vision	Hiring a Branding firm to articulate the ‘Pride of Africa’ vision and purpose both internally and externally. Rebrand all organization aspects to reflect this vision, purpose and values.   Rebrand KQ to Africa Airways to synergize KQ’s vision as Pride of Africa through the generative power of language.
2.	Bargaining Power of Suppliers Powerful Labor Unions constantly jeopardizing KQ’s operations through sit-downs (Bargaining Power of Suppliers)Ground Handling Costs, Maintenance, Repair and Overhaul Costs	Work out collaborative strategies with Labor Unions, involve labor unions in strategic planning with end goal of creating a learning organization.   Seek legal address to prevent KQ pilots from seeking sit-down measures (Africa News, 2022).   Fast-track review and implementation of Project Simba- the Proposed Kenya Aviation Authority and KQ Public Private Partnership to realize operational and strategic synergies.   Amplify Kenya Airways Aviation Training School to provide resource pool for future pilots and captains. The Aviation School should be targeted with a wider view of improving Aviation in Africa.   Embed systems thinking in all pricing decisions such as fuel hedging.
3.	Capacity Adjustments	Remove KQ’s government subsidies thus reducing KQ’s ability to engage in excessive/predatory capacity expansion based on public funding or risk guarantees (Association, 2013)   Pursue new code-sharing agreements with regional airlines, pursue a collaborative versus competitive strategy with regional and national carriers. As the pride of ‘Africa’, priority should be given towards connecting Africa- direct flights from one African country to another.   Systems-Thinking to be embedded in all capacity adjustment decisions, new destinations, countries.
4	KQ Culture	Revamp KQ culture (internal and externally) based on the cultural essence wheel of warmth friendliness as articulated in the customer charter.   Embed an ‘open culture’ to enable free flow of ideas and feedback on any changes to enable refinement of changes for sustainability
5	Process Inefficiencies	Before any further downsizing, KQ must consider a review of its processes to identify internal inefficiencies and pursue lean models based on these redundancies, under-utilizations
6	Growth in Demand	Partner with destination countries to achieve collaborative strategies on travel marketing budgets, consider a cost-sharing on marketing campaign initiatives with destination countries

Conclusion

Upon review of KQ’s external and internal environment, it’s evident that the strategy KQ adopts must be one that’s flexible and agile, yet one that starts slow, and grows steadily. Our KQ change management strategy has been modeled on Senge’s systemic approach that considers organizations in flux and transformation and change models as dynamic in nature. Our approach is about reforming KQ as a learning organization built on the disciplines of building a shared vision, systems thinking, mental models, team learning and personal mastery.

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