1 Legal framework

1.1 Which legislative and regulatory provisions govern the aviation sector in your jurisdiction?

The following laws govern the aviation sector in Kenya:

  • the Civil Aviation Act (21/2013), which provides for the control, regulation and orderly development of civil aviation in Kenya. A number of detailed regulations have been issued under the act;
  • the Kenya Airports Authority Act (Chapter 395 of the Laws of Kenya), which establishes the Kenya Airports Authority (KAA) with the mandate to manage, control and manage aerodromes and other related facilities in Kenya;
  • the Air Passenger Service Charge Act (Chapter 475 of the Laws of Kenya), which provides for the imposition of service charge on passengers departing by air from an airport within Kenya;
  • the Carriage by Air Act (2/1993), which gives effect to the application of the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air in Kenya; and
  • the International Interests in Aircraft Equipment Act, 2013, which gives effect to the Cape Town Convention on International Interests in Mobile Equipment and the Cape Town Protocol on the Convention to International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment.

1.2 Which bilateral and multilateral instruments on aviation have effect in your jurisdiction?

Kenya has ratified the following multilateral instruments, which now form part of Kenyan law pursuant to Article 2(6) of the Constitution of Kenya, 2010:

  • the Chicago Convention on International Civil Aviation, 1944;
  • the Convention for the Suppression of Unlawful Acts Against the Safety of Civil Aviation, 1971;
  • the Rome Convention relating to Damage Caused by Foreign Aircraft to Third Parties, 1952;
  • the Tokyo Convention on Offences and Certain Other Acts Committed on Board Aircraft, 1963;
  • the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958;
  • the African Civil Aviation Commission Constitution and Constitution of the African Civil Aviation Commission;
  • the Montreal Protocols, 1975 and 1976 and the Montreal Conventions 1991 and 1992;
  • the Warsaw Convention; and
  • the Cape Town Convention and the Protocol to the Chicago Convention.

1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

There are two bodies that enforce laws and regulations in the aviation sector. Namely:

Kenya Civil Aviation Authority (KCAA): The KCAA regulates several aspects of civil aviation in Kenya. These include:

  • the licensing of aircraft service providers, operators and aerodromes;
  • the registration of aircrafts in Kenya;
  • the certification of the airworthiness of aircrafts;
  • the enforcement of penalties and fines for breach of the relevant statutory provisions;
  • mandatory and voluntary incident reporting systems through its Aircraft Accident Investigation Department;
  • economic oversight of air services, the protection of consumer rights and the environment, and the promotion of fair trading practices; and
  • the seizure and detention of aircraft for the purposes of securing any unpaid charges or fees for any services performed by the KCAA or as a penalty for contravention of a specific statutory provision

Decisions of the KCAA may be challenged before the National Civil Aviation Administrative Review Tribunal (NCAART). The NCAART has jurisdiction to hear and determine complaints and appeals arising from licences, orders and directions issued by the KCAA.

KAA: The KAA has the power to construct, operate and maintain aerodromes and other related facilities by itself or on an agency basis at the request of any government department.

1.4 What is the regulators' general approach in regulating the aviation sector?

In our view, the KCAA takes a command and control approach in regulating the aviation sector. Under this approach, KCAA sets forth methods, materials and processes with which aircraft and entities must comply in order to legally operate in Kenya.

2 Licensing and market access

2.1 What licences are required to provide aviation services in your jurisdiction? Does this vary depending on route?

The licensing of air services is regulated under the Civil Aviation (Licensing of Air Services) Regulations, 2018 (‘Licensing Regulations'), made under the Civil Aviation Act. To provide aviation services in Kenya, one must obtain an air service licence issued by the Kenya Civil Aviation Authority (KCAA) based on the category of air services to be provided. There following are the different categories of air service licences :

  • scheduled air services (eg, transport of passengers and cargo);
  • non-scheduled air services;
  • aerial work services (eg, agricultural spraying and fire spotting);
  • flying instructions; and
  • recreational flying.

An airline whose principal place of business is not in Kenya requires an operating authorisation to operate scheduled air services in Kenya.

2.2 What nationality requirements must be satisfied to obtain a licence?

Regulation 5(1) of the Licensing Regulations provides that an applicant must satisfy the KCAA of the following nationality requirements in order to be issued with an air service licence:

  • The applicant is a citizen of Kenya;
  • In the case of a body corporate or a partnership, at least 51% of the voting rights in the body corporate or partnership are ultimately held by the government of Kenya, a citizen of Kenya or both; or
  • A Kenyan registered aircraft will be used in operating the air service. This means that the aircraft must be owned or operated by a Kenyan citizen or, where the applicant is a body corporate or a partnership, 51% of its voting rights must be held by the state, a citizen of Kenya or both.

However, an applicant may be exempted from these requirements having regard to the special nature of the air service being provided – for example, where the service is for the purpose of social welfare, charity, humanitarian grounds, assistance in saving life or the public interest.

2.3 What financial requirements must be satisfied to obtain a licence?

Under the Licensing Regulations, an applicant for an air service licence must demonstrate to the satisfaction of the KCAA its ability to:

  • meet at any time its actual and potential obligations, according to its business plan, for a period of two years from the start of operations; and
  • meet its fixed and operational costs incurred from operations according to its business plan, established under realistic assumptions, for a period of three months from the start of operations without relying on revenue generated by the operations.

For the purposes of these financial requirements, the applicant must submit a business plan for the first two years of operation, which should be in the format provided in the Fifth Schedule to the Licensing Regulations. In addition, the applicant must provide the following:

  • the most recent internal management accounts and, if available, audited accounts for the previous financial year;
  • a two-year projected balance sheet and a profit and loss account;
  • a route feasibility analysis which includes a revenue forecast based on the operating costs including (but not limited to) fuel, airport and handling charges, aircraft lease, personnel, aircraft maintenance, catering depreciation and exchange rate;
  • details of the expected start-up costs to be incurred in the period from submission of the application to commencement of operations, and an explanation of how these costs will be financed.;
  • documentary evidence of existing and projected sources of funds for the proposed operations, as appropriate;
  • details of shareholders, including nationality and type of shares held, and the memorandum and articles of association;
  • projected cash-flow statements and liquidity plans for the first two years of operation; and
  • details of the financing of the aircraft purchase or leasing, including, in the case of leasing, the terms and conditions of contract.

For foreign air carriers, the KCAA may accept as sufficient evidence the production of licences, certificates and documents issued by competent authorities in their home state for the purpose of assessing the competence and technical and financial fitness of the air carrier.

In addition, the applicant may be required to prove that the person(s) who shall continuously and effectively control the operations of the air carrier are of unquestionable integrity, and have not been declared bankrupt or convicted of a criminal offence by an appropriate authority. With regard to foreign air carriers, the KCAA may accept as sufficient evidence, with regard to foreign nationals, the production of documents issued by competent authorities in the state of origin or the state from which the foreign national comes showing that these requirements are met.

2.4 What other requirements must be satisfied to obtain a licence? Do specific requirements or restrictions apply to foreign operators?

See Question 2.3.

2.5 What is the procedure for obtaining a licence?

The procedure for obtaining an air service licence is as follows:

  • The applicant completes the prescribed air service licence application form.
  • The applicant submits the application to the KCAA at least 90 days before the date the licence is intended to take effect, together with the relevant supporting documents and a fee of $1,500. Where an application is made in consolidated form for different categories of air services, each category will be considered as if the application has been lodged separately and the prescribed fee must be paid for every category of air services.
  • Upon receipt of the application, the KCAA will publish a notice containing the application particulars in the Kenya Gazette and invite objections to the same. The KCAA will thereafter hold a public hearing for purposes of deciding on the application.
  • The KCAA will decide on the application within 30 days of the date of the public hearing.
  • The KCAA will notify the applicant of its decision and publish its decision in the Kenya Gazette.
  • The applicant must pay, within 30 days of notification of the decision, the annual licence issue fees of $800. The validity period of the licence will be specified in the licence. A licence may be issued for a period of up to five years.
  • The licence is subject to any conditions issued and the KCAA may vary, revoke or suspend it. The licence is not transferable or assignable.

3 Safety and maintenance

3.1 What key safety requirements apply to operators in your jurisdiction?

Aviation safety is governed by the Civil Aviation (Safety Management) Regulations, 2018 (‘Safety Management Regulations'), which were made under the Civil Aviation Act. Under the Safety Management Regulations, an operator must:

  • implement a safety management system (SMS) which includes safety performance indicators and targets that are acceptable to the Kenya Civil Aviation Authority (KCAA) and commensurate to the size of the operator and the complexity of its aviation products or services;
  • develop a plan to facilitate implementation of the SMS;
  • notify and file mandatory reports on accidents, serious incidents, incidents and other safety-related occurrences to the KCAA within:
    • 24 hours in the case of accidents;
    • 48 hours in the case of serious incidents; and
    • 72 hours in the case of incidents and other safety-related occurrences;
  • investigate all incidents that occur during its operations; and
  • establish a voluntary reporting system to facilitate the collection of information on actual or potential safety deficiencies that may not be captured by the mandatory safety reporting system.

3.2 What key maintenance requirements apply to operators in your jurisdiction?

Any modifications or repairs to an aircraft must comply with airworthiness requirements acceptable to the KCAA.

The operator must also ensure that all maintenance personnel receive initial and continuation training acceptable to the KCAA and appropriate to their assigned tasks and responsibilities. This should include coordination with other maintenance personnel and flight crew.

In addition, an operator must develop a maintenance control manual that is acceptable to the KCAA for use by and guidance of maintenance and operations personnel.

Separately, under the Civil Aviation (Operation of Aircraft for Commercial Air Transport) Regulations 2018, an operator must (in addition to the above):

  • ensure that a placard is installed on the aircraft with listed discrepancies, including inoperative equipment or instruments;
  • ensure that maintenance personnel make appropriate entries in the aircraft maintenance records indicating that the aircraft has been approved for return to service; and
  • complete and sign a certificate of release to service which certifies that maintenance work performed has been completed satisfactorily and in accordance with the organisation's maintenance procedures manual.

3.3 Do these requirements differ depending on whether the operator is providing commercial, cargo or private services?

The requirements apply to all air services.

3.4 What are the potential consequences of breach of the safety and maintenance requirements?

Under Regulation 113(1) of the General Aviation Regulations, a of breach of the safety and maintenance requirements leads to the revocation or suspension of the licence, certificate, approval, authorisation, exemption or such other document issued by the KCAA.

In addition, anyone that breaches the safety and maintenance requirements commits an offence and, on conviction, is liable to a fine, imprisonment or both, depending on the nature and extent of the breach.

The operator of the aircraft and the pilot in command will be deemed to have contravened this provision unless they can prove that:

  • the contravention occurred without their consent or connivance; and
  • they undertook all due diligence to prevent the contravention by the third party.

3.5 What best practices in relation to safety and maintenance should operators consider adopting in your jurisdiction?

Operators must have in place an operations manual, a cabin crewmembers' manual, a maintenance control manual and a training programme, which should be acceptable to and approved by the KCAA. The manuals should be regularly reviewed to ensure that they are up to date with developments in the aviation sector. They should sufficiently address the operator's safety and maintenance concerns.

An operator should also ensure that the manuals are made available to employees, and that employees are trained on the operator's safety and maintenance responsibilities. In addition, an operator should ensure that the safety and maintenance procedures under the manuals are properly implemented to avoid action by the KCAA, which may include suspension or revocation of the air service licence or any of the certificates or authorisations issued by the KCAA.

4 Consumer protection

4.1 What rights do passengers enjoy in your jurisdiction in relation to: (a) Flight delays or cancellations? (b) Overbooking? (c) Denied boarding for other reasons? (d) Baggage delay, damage or loss? and (e) Disabled access?

(a) Flight delays or cancellations?

Article 46 of the Constitution of Kenya is the basis of consumer protection laws in Kenya. Under this article, consumers have the right:

  • to goods and services of reasonable quality;
  • to the information necessary for them to gain full benefit from goods and services;
  • to the protection of their health, safety and economic interests; and
  • to compensation for loss or injury arising from defects in goods or services.

Section 91(2) of the Consumer Protection Act, 2012 requires an air carrier to provide such services, including overnight accommodation or meals, as may be prescribed to passengers whose flights are cancelled or subject to long delays.

In addition, Section 93(2) (b) of the Consumer Protection Act provides for the enactment of regulations on the notification of cancellations or flight delays, access to necessary services and compensation to passengers. However, no regulations have been made pursuant to this provision.

A passenger has a right to claim damages under Article 19 of the Warsaw Convention for any damage occasioned by a flight delay or cancellation.

(b) Overbooking?

Passengers may rely on the general provisions of the Consumer Protection Act to make a claim in relation to overbooking, given that the regulations required pursuant to Section 93(2)(b) of the Consumer Protection Act are yet to be enacted.

(c) Denied boarding for other reasons?

Passengers may rely on the general provisions of the Consumer Protection Act and the International Air Transport Association guidelines to make a claim on denied boarding. A member airline must clearly stipulate and include its policy on denied boarding in its general conditions of carriage (passenger and baggage). This information should be available on an airline's website and also on the ‘conditions of contract/carriage' section of the ticket. For example, an airline may refuse to carry a passenger and/or luggage provided that it notifies the passenger in writing that it will not, at any time after the date of such notice, carry the passenger and/or luggage on its flights. In this circumstance, the passenger is entitled to a refund.

In case a passenger is involuntary denied boarding, the airline and its partners have a duty to ensure that the affected passenger is put on the next available flight. For short delays, ground staff should ensure that the affected passenger is provided with refreshments, meals and lounge access, where applicable.

(d) Baggage delay, damage or loss?

Article 18(1) of the Warsaw Convention entitles a passenger to claim damages in respect of losses sustained in the event of damage to or loss of his or her cargo or baggage.

A passenger has the right to claim damages under Article 19 of the Warsaw Convention for any damage occasioned by delay in the carriage of his or her cargo or baggage.

(e) Disabled access?

Under Section 21 of the Persons with Disabilities Act, 2003, persons with disabilities are entitled to a disability-friendly environment to enable them to access buildings, roads and other social amenities, and to assistive devices to promote their mobility.

4.2 Are airfares regulated in your jurisdiction? What other requirements apply to the pricing and sale of flights?

The Kenya Civil Aviation Authority (KCAA) does not regulate airfares in Kenya. Regulation 63 of the Licensing Regulations allows undertakings licensed to provide air service to fix tariffs. Such tariffs must be reasonable, taking into consideration operational costs, service characteristics, commission rates and reasonable profits.

However, operators of air services must collect an air passenger service charge at the rate of $50 for an external journey and about $6 for a local journey on behalf of the Kenya Revenue Authority. The airfare will normally include an element of the air passenger service charge.

4.3 What other marketing and advertising requirements apply to operators in your jurisdiction?

There are no marketing and advertising requirements specific to the aviation sector in Kenya. Nonetheless, operators should have due regard to the Consumer Protection Act and the Competition Act, 2010 in their marketing and advertising activities in Kenya.

Under the Consumer Protection Act, marketing and advertising must not be deceptive, unconscionable, unfair, unjust or misleading.

Section 21 of the Competition Act, 2010 prohibits agreements, decisions or concerted practices between undertakings and/or associations which have as their object or effect the prevention, distortion or lessening of competition in the trade of any goods or services in Kenya or part of Kenya.

4.4 What requirements apply in relation to the retention and protection of passenger data in your jurisdiction?

The protection of personal data in Kenya is governed by Articles 31(c) and (d) of the Constitution and by the Data Protection Act, 2019. Section 25 of the Data Protection Act requires operators (as data controllers or data processors) to ensure that passengers' data is:

  • processed in accordance with the passenger's right to privacy;
  • processed lawfully, fairly and in a transparent manner;
  • collected for explicit, specified and legitimate purposes, and not processed further in a manner that is incompatible with the specified purposes;
  • adequate, relevant and limited to what is required for the purposes which it is processed;
  • collected only when information relating to family or private affairs is required and a valid explanation is provided;
  • accurate and, where necessary, kept up to date, with every reasonable step being taken to ensure that any inaccurate personal data is erased or rectified without delay;
  • kept in a form which identifies the passenger for no longer than is necessary for the purposes which it was collected; and
  • not transferred outside Kenya, unless there is proof of adequate data protection safeguards or consent from the passenger.

Under Section 30 (1) of the Data Protection Act, operators must obtain passenger's consent before processing their data for one or more specified purposes.

4.5 What other general consumer protection requirements are of relevance for operators in your jurisdiction?

Section 2 of the Consumer Protection Act defines a ‘consumer' to include a user of particular services. As such, passengers are consumers who enjoy the consumer rights set out in the act. Under the act, consumers have a right to:

  • goods and services of reasonable quality;
  • the information necessary for them to gain full benefit from goods and services;
  • the protection of their health, safety and economic interests; and
  • compensation for loss or injury arising from defects in goods or services.

4.6 How are consumer complaints in relation to aviation services handled in your jurisdiction?

A consumer may make a complaint relating to aviation services to the KCAA which will consider the complaint and issue any decision that it considers appropriate. Any party aggrieved by a decision of the KCAA may appeal to the National Civil Aviation Administrative Review Tribunal.

However, the courts have jurisdiction under the Consumer Protection Act to hear complaints relating to breach of its provisions. Separately, the Competition Authority also has jurisdiction to intervene in the event of a breach of consumer protection provisions under the Competition Act.

5 Accidents and liability

5.1 What is the applicable aviation liability regime in your jurisdiction?

Aviation liability in Kenya is governed by the Civil Aviation Act and the Carriage by Air Act, 1993, which give effect to the international aviation liability regime under the Warsaw Convention in Kenya.

5.2 What insurance requirements apply to operators in your jurisdiction?

Regulation 15 of the Civil Aviation (Operation of Aircraft for Commercial Air Transport) Regulations, 2018 provides that no one shall fly, cause, or commit any other person to fly an aircraft unless an insurance policy is in place in respect of third-party risks. An insurance policy for commercial air transport aircraft shall cover insurance in respect of passengers' liability, cargo, baggage and mail risks.

Regulation 52 of the Licensing Regulations provides that the holder of an air service licence must be insured at all times to a minimum amount equivalent to: 100,000 special drawing rights (SDRs) per seat in respect of passengers and their baggage; and 17 SDRs per kilogram in respect of cargo for the total number of seats or cargo weight authorised by the certificate of airworthiness applicable to the aircraft to be operated.

5.3 What body is responsible for investigating accidents in your jurisdiction and what procedure will it follow in doing so?

The Aircraft Accident Investigation Department of Kenya (AAID) is responsible for investigating aircraft accidents and serious incidents in Kenya involving both local and foreign aircraft.

AAID conducts accidents investigations under the procedure set out in Annex 13 of the Chicago Convention and Section 54 of the Civil Aviation Act as follows:

  • upon receipt of the accident/incident report, the investigator in charge (IIC) must have free and unhindered access to the aircraft and the site where the accident or incident happened. The IIC has the power to secure and preserve the accident scene and access any information or records relating to the aircraft.
  • the IIC may summon any person that he or she believes has information that may assist in the investigation. Failure to comply with the summons is an offence.
  • where the IIC believes that a person has or is in control of information required for the purposes of the investigation and that person fails to provide it, the IIC may apply to the National Civil Aviation Administrative Review Tribunal for warrants authorising a police officer to enter the premises at which it is believed such information is kept and take extracts of such information.
  • upon completion of the investigation, the IIC must submit a final report of the findings to the cabinet secretary responsible for aviation for publication in the Kenya Gazette.
  • the IIC may, make recommendations (at any stage of the investigation) to the relevant authorities, which he or she considers necessary for aviation safety. Any person to whom the recommendations are made must comply.

5.4 What reporting requirements apply to accidents and incidents in your jurisdiction?

Under Regulation 12 of the Safety Management Regulations, a service provider must notify and make mandatory reports on accidents, serious incidents, incidents and other safety-related occurrences to the Kenya Civil Aviation Authority within:

  • 24 hours in the case of accidents;
  • 48 hours in the case of serious incidents; and
  • 72 hours in the case of incidents and other safety-related occurrences.

6 General operation

6.1 What requirements apply to charter services in your jurisdiction?

The requirements for charter services are set out in the General Aviation Regulations.

Under the General Aviation Regulations, an operator must have in place a current aircraft flight manual accepted by the Kenya Civil Aviation Authority (KCAA) or a current accepted pilot operating handbook or owner's manual, which provides the pilot in command with the necessary limitations for safe operation of the aircraft.

In addition, an operator must maintain a journey logbook for each aircraft engaged in air navigation, in which the particulars of the aircraft, its crew and each journey are entered.

The operator must also:

  • at all times have available, for immediate communication to rescue coordination centres, lists containing information on the emergency and survival equipment carried on board the aircraft;
  • maintain a safety management system that is appropriate to the size and complexity of its operations;
  • not commence a flight unless adequate operating facilities are available for the flight;
  • ensure that passengers are made familiar with the location and use of seatbelts, emergency exits, lifejackets, oxygen dispensing equipment and other emergency equipment provided for individual use, including passenger emergency briefing cards;
  • ensure that the aircraft is airworthy and has all certificates aboard before a flight;
  • carry a sufficient amount of useable fuel to complete the planned flight safely and to allow for deviations from the planned operation; and
  • develop a checklist for flight procedures and ensure that this is complied with.

6.2 What requirements apply to the carriage of cargo in your jurisdiction?

In addition to the requirements set out in question 6.1, operators are required under the General Aviation Regulations to ensure that all baggage carried on an aircraft is adequately and securely stowed.

6.3 What environmental requirements apply to operators in your jurisdiction?

Article 42 of the Constitution and Section 3 of the Environmental Management and Co-ordination Act, 1999 (EMCA) oblige operators to ensure a clean and healthy environment.

Section 82 of EMCA provides that no operator shall:

  • operate an aircraft in such a manner as to cause air pollution in contravention of the established emissions standards; or
  • import any machinery, equipment, device or similar item that will cause emissions into the ambient air in contravention of prescribed emissions standards.

The National Environmental Management Authority (NEMA) sets out the prescribed emissions standards. These are contained in the Third Schedule to the Environmental Management and Co-ordination (Air Quality) Regulations, 2014.

Where the operations lead to emissions that are likely to cause air pollution, Section 80 of EMCA requires the operator to obtain an emissions licence from NEMA. The emissions licence is issued subject to conditions that NEMA considers necessary to control air pollution.

Pollution is an offence under Section 142 of EMCA; on conviction, one may be liable to a fine ranging from KES 2 million (about $20,000) to KES 5 million (about $50,000).

6.4 How are aviation services taxed in your jurisdiction? Do any special tax regimes apply to this sector? What indirect taxes are of relevance to operators?

A railway development levy is payable under Section 8(2) of the Miscellaneous Fees and Levies Act 2016 at the rate of 2% of the customs value of the aircraft by the importer of the aircraft at the time the aircraft enters the country. Importers of aircraft may apply for an exemption from the levy, which usually takes 45 to 90 days. An exemption will be granted where import of the aircraft is in the public interest or will promote investment.

Importers of aircraft are exempt from payment of an import declaration fee under the Miscellaneous Fees and Levies Act when imported or purchased before clearance.

Upon confirmation of payment of the relevant taxes and levies, the Customs Services Department of the Kenya Revenue Authority will issue an importer with a customs clearance certificate. The aircraft must be imported into the country in order for the tax to be payable.

Recently, the Finance Act, 2020 changed the status of the following items, which were previously exempt from value added tax, to standard rated (ie, taxable at 14%):

  • the hiring, leasing and chartering of helicopters of tariff numbers 8802.11.00 and 8802.12.00;
  • helicopters of an unladen weight not exceeding 2,000 kilograms (kg) of tariff numbers 8802.11.00 and 8802.12.00;
  • aircraft of unladen weight not exceeding 2,000 kg of tariff number 8802.20.00;
  • other parts of aircraft or helicopters of tariff number 8803.30.00;
  • aircraft launching gear and parts thereof, and deck arrestor or similar gear and parts thereof of tariff number 8805.10.00;
  • air combat simulators and parts thereof of tariff number 8805.21.00; and
  • other ground flying trainers and parts thereof of tariff number 8805.29.00.

These amendments took effect on 1 July 2020.

The Tax Laws Amendment Act, 2020 also introduced changes to the manner in which aircraft are subject to capital allowances for the purposes of corporate income tax.

Previously, aircraft were subject to capital allowances at the rate of 25% per annum on a reducing balance basis. These items will now be subject to capital allowances at the rate of 50% in the first year of use and 25% of the residual value per year on reducing balance.

Separately, the payment of rent in respect of an aircraft or an aircraft engine to a non-resident person without a permanent establishment in Kenya is exempt from withholding tax under Section 35(1) (c) of the Income Tax Act. However, payment of any interest or commitment fee in respect of an aircraft lease or financing agreement is subject to withholding tax at the rate of 15% of the gross interest or commitment fee.

6.5 What is the applicable employment regime in your jurisdiction and what specific implications does this have for operators in the aviation sector?

Employment matters in Kenya are governed by:

  • the Employment Act, 2007;
  • the Work Injury Benefits Act, 2007 (WIBA); and
  • the Occupational Safety and Health Act, 2007 (OSHA).

The provisions of these statutes bind operators in the aviation sector.

The Employment Act sets out the basic minimum terms and conditions of a contract of service that must be reflected in every employment contract, including in the aviation sector. The Employment Act prohibits discrimination and sexual harassment in the workplace. In this regard, an employer must promote equal opportunity and equal pay for work of equal value. In addition, an employer with at least 20 employees must have a sexual harassment statement or policy in place.

WIBA provides for the payment of compensation to employees for work-related injuries and diseases contracted in the course of their employment. In this regard, an employer must:

  • have work injury insurance in place;
  • report an injury or accident to an employee to the director of Occupational Safety and Health Services within seven days of learning of the injury or accident; and
  • pay compensation in respect of such injury or accident.

OSHA provides for the safety, health and welfare of employees in the workplace. An employer is required under OSHA to:

  • have a safety and health policy statement in place;
  • carry out appropriate risk assessments in relation to the safety and health of employees and, on the basis of the results, adopt appropriate preventive and protective measures;
  • organise a safety and health audit of the workplace at least once every 12 months by a safety and health adviser, who must issue a report on the audit to the director of Occupational Safety and Health Services; and
  • register its workplace and obtain a certificate of registration.

7 Ownership, financing and leasing

7.1 What body administers the aircraft register in your jurisdiction?

The Kenya Civil Aviation Authority (KCAA).

7.2 What are the formal and documentary requirements for registration?

Prior to registration, an aircraft may be grounded to undergo inspection by the KCAA to ensure its airworthiness. Upon successful completion of the inspection, an aircraft inspection acceptance for registration note (AIR-051A) is issued to accompany documents lodged for registration.

In addition, immediately after registration (where registration is in respect of a lease), the lessee should also lodge an irrevocable de-registration and export request authorisation (IDERA). The IDERA is a voluntary measure by the lessee (as the aircraft operator) in favour of the lessor and/or financier in the prescribed form under the Cape Town Convention, which must be lodged with the KCAA for acknowledgment and countersigning by the director general of the KCAA.

However, it is also advisable to have a parallel power of attorney for deregistration and export, as an IDERA is not a document that another government entity is obliged to recognise.

The following information and documents must be submitted together with the application for registration of an aircraft:

  • documents of ownership of the aircraft (bill of sale) or a copy of the duly stamped lease agreement. This is very important, as the KCAA need to evaluate and approve the terms of the lease. The purpose of evaluation is to ascertain that the parties' rights and obligations are clearly set out, in particular in respect of the operation and maintenance of the aircraft;
  • a written notice submitted to the KCAA by the owner of the aircraft authorising and identifying the person making the application on behalf of the owner;
  • in case of a body corporate, a written notice identifying an officer of the body corporate, and stating his or her address for the service of documents, including the registration certificate issued by the KCAA; and
  • for imported aircraft that were previously registered in a foreign country:
    • a cancellation certificate or statement issued by the authority responsible for registration of aircraft in that country stating when the registration was cancelled;
    • a description of the aircraft which identifies it by reference to its manufacturer;
    • if the aircraft has previously been registered in Kenya or elsewhere, the particulars of the registration mark, if it has been reserved for the aircraft;
    • the name and address of each person who holds a proprietary interest in the aircraft and a description of that person's property interest;
    • an airworthiness report;
    • a customs clearance (or exemption) certificate;
    • a certified copy of the aircraft's current insurance certificate
    • the name and address of the registered owner, if different; and
    • the physical location where the aircraft will be usually stationed.

    7.3 What is the process for registration?

    The process for registering an aircraft is as follows:

    • An application for registration in the prescribed form is submitted to the KCAA. The application should be accompanied by the prescribed application fees and the relevant documents set out in question 7.2.
    • Upon receipt of the application, the KCAA will review it and register the aircraft if the requirements for the application are met.
    • The KCAA will issue the owner of the aircraft with a certificate of registration.

    7.4 Is registration of real estate rights, transactions and encumbrances mandatory? What are the consequences of failure to register?

    The Civil Aviation Act and the regulations made thereunder do not provide for registration of real estate rights, transactions and encumbrances. However, interests in an aircraft must be notified to the KCAA for the purposes of entering the interest on the aircraft register.

    7.5 What operational requirements are of relevance for aircraft lessors and financiers in your jurisdiction?

    In practice, an aircraft financier/lessor should require the lessee to execute:

    • an IDERA over an aircraft to be registered against an existing proprietary interest in the aircraft with the KCAA; and
    • a deregistration power of attorney to enable the financier to have the aircraft deregistered and exported in the event of default.

    Lessors should ensure that the aircraft lease is perfected and submitted to the KCAA for approval, and issued with a letter of approval.

    7.6 What rules govern the detention and seizure of aircraft

    Under Section 63 of the Civil Aviation Act, the KCAA has wide powers to seize and detain an aircraft for the purposes of compliance with the requirements for aircraft operations.

    The KCAA and the Kenya Airports Authority (KAA) have the power under both the Civil Aviation Act and the KAA Act to seize and detain an aircraft where an operator has failed to pay any fees payable to them (eg, navigation, landing, take-off or parking fees).

    In the event of default:

    • if the lessor/financier has previously lodged an IDERA with the KCAA, the lessor/financier may require the KCAA to de-register and export the aircraft without any further reference to the lessee;
    • the lessor may apply to court for an order requiring the lessee to surrender the aircraft to the lessee where a lessee is in default and has refused to surrender the aircraft; or
    • the lessor/financier may exercise any other option under the specific aircraft lease/security agreement, which may include seizure of the aircraft.

    8 Airports

    8.1 How are airports owned and regulated in your jurisdiction?

    Airports in Kenya can be privately or state owned, depending on the aerodrome category, and are regulated by the Civil Aviation (Aerodromes Certification, Licensing and Registration) Regulations, 2018 (‘Aerodrome Regulations').

    However, the major airports in Kenya are owned and operated by the Kenya Airports Authority (KAA) on behalf of the state, since the KAA has the mandate under the KAA Act to administer, manage and control all state-owned airports (currently eight in the country).

    8.2 What requirements must be satisfied to obtain airport authorisation in your jurisdiction? What is the procedure for obtaining authorisation?

    Operators must comply with the minimum requirements set out in the Aerodrome Regulations to obtain airport authorisation in addition to the requirements set out in question 8.4.

    8.3 What key safety and maintenance requirements apply to airports in your jurisdiction?

    The Aerodrome Regulations set out the safety and maintenance requirements that apply to airports in Kenya.

    An aerodrome operator must have in place an aerodrome manual approved by the Kenya Civil Aviation Authority (KCAA). The manual must contain the safety and maintenance procedures relating to the specific aerodrome. In this regard, an aerodrome operator must:

    • comply with the safety and maintenance conditions endorsed on the aerodrome licence;
    • maintain adequate, qualified and skilled personnel for the operations and maintenance of the aerodrome; and
    • operate and maintain the aerodrome in accordance with the procedures set out in the aerodrome manual.

    With regard to the safety requirements, the Aerodrome Regulations provide that a person must not:

    • store inflammable or other dangerous goods at an aerodrome, except with the authorisation of the KCAA and in accordance with prescribed standards;
    • disregard safety measures against fire, including smoking in a prohibited place, causing a false fire alarm, storing flammable goods in the aerodrome without authorisation or tampering with firefighting equipment;
    • access restricted areas, except with the aerodrome operator's authorisation;
    • test-run an aircraft engine within an aerodrome, except within the aerodrome operator's designated maintenance facility; or
    • obstruct or interfere with proper use of the aerodrome.

    An aerodrome operator must maintain an emergency control and command centre within the aerodrome for use during an emergency.

    8.4 What requirements can airports impose on operators that use their facilities?

    An airport can impose any requirements necessary to comply with aerodrome safety and maintenance requirements under the Aerodrome Regulations.

    In particular, under Regulation 52, an operator has the following responsibilities and obligations:

    • to maintain the aerodrome in a serviceable condition;
    • to keep the aerodrome free of unauthorised persons, vehicles and animals which are not under proper control or any other restrictions;
    • to mark all restrictions in accordance with the prescribed guidelines;
    • to inform the KCAA of any alterations to restrictions or works on the aerodrome;
    • to install approved wind direction indicators to show the surface direction of the wind and ensure that they function satisfactorily;
    • to maintain the prescribed markings in a conspicuous condition and ensure that they are readily visible to aircraft in the air or manoeuvring on the ground;
    • to make facilities available and ensure that they are in serviceable condition, and that all installed apparatus functions efficiently;
    • to appropriately mark unserviceable areas on the landing terrain;
    • to inform the KCAA if the aerodrome becomes unserviceable for any reason or where any portion of the surface of the landing area deteriorates to such an extent that the safe operation of aircraft may be endangered;
    • to submit to the KCAA such reports on the condition of the aerodrome as may be required by the KCAA;
    • to ensure that organisations performing activities at the aerodrome comply with the safety requirements specified by the operator; and
    • to report all incidents and accidents at the aerodrome to the KCAA.

    8.5 How are the following regulated in your jurisdiction: (a) Airport charges? (b) Slot allocation? (c) Air traffic control? and (d) Ground handling?

    (a) Airport charges?

    The Civil Aviation (Regulatory Fees and Charges for Air Navigation Services) Regulations, 2012 regulate aircraft landing and parking fees. Aircraft landing fees range between $5 and $1,750 (depending on aircraft weight), and are payable within 30 days of receipt of invoice in respect of landing fees. Late payment attracts interest at a rate of 18% per annum, calculated on a daily basis.

    Aircraft parking charges at the daily rate of between $6 and $130 (depending on aircraft weight) are payable where the aircraft is parked for more than six hours continuously. All registered aircraft used for training programmes are charged parking charges at half the prescribed rates.

    (b) Slot allocation?

    Slot allocation is guided by the International Civil Aviation Organization guidelines on slot allocation. Slot allocation by the KAA must be fair, non-discriminatory and transparent, and take into account the interests of all stakeholders

    (c) Air traffic control?

    The Civil Aviation (Air Traffic Services) Regulations, 2018 provide for regulation of air traffic control.

    Air traffic control is undertaken by licensed air traffic controllers of the KCAA, who give instructions, advice and information to pilots so that they can fly safely, efficiently and quickly. Air traffic controllers keep track of flights using radar and the latest computer systems.

    Air traffic control has the following responsibilities:

    • Aerodrome control (tower): Aerodrome controllers are in charge of controlling movements on and off runways, and ground movement of aircrafts and vehicles around the terminals.
    • Approach control: Approach controllers are responsible for maintaining the required distance between aircrafts that are departing and arriving. They cannot see the aircraft in the air, but follow them on radar displays. They take over responsibility for the aircraft from tower controllers once aircraft pass a certain altitude following departure and hand over arriving aircraft to tower controllers at a certain altitude once the tower controllers can see the aircraft.
    • Area control (en route control): Area controllers are responsible for the safety of aircraft at higher altitudes, in the en route phase of their flights. Generally, the area under their jurisdiction is determined by international boundaries.

    (d) Ground handling?

    Handling charges vary with flight capacity and range from $30 to $100 per flight.

    9 Competition

    9.1 What specific challenges or concerns does the aviation sector present from a competition perspective? Are there any pro-competition measures that are targeted specifically at operators?

    The Competition Act, 2010 governs competition matters in Kenya and has played a critical role in ensuring competition among operators by creating competition safeguards in the aviation sector.

    In the aviation sector, just as in other sectors, any act which has the objective or effect of preventing, distorting or lessening competition in trade in any goods or services in Kenya, or a part of Kenya, is prohibited under the Competition Act.

    Regulation 60 of the Licensing Regulations provides that anyone engaged in the provision of air services shall not be a party to any agreement between undertakings or any decision of any undertaking. Prohibited agreements include those that directly or indirectly fix fares or rates, that limit aircraft capacity or that limit the sharing of the air transport market, among other things.

    For this reason, cooperation agreements between operators (which often agree on routes or schedules of flights) may be construed as a type of prohibited agreement under the Competition Act.

    However, where an operator wants to enter into such an arrangement, it must obtain an exemption from the Competition Authority prior to implementing such an arrangement.

    9.2 How are forms of industry cooperation such as pooling, code-sharing, alliances and joint ventures treated from a competition perspective?

    See question 9.1.

    9.3 Does the aviation sector in your jurisdiction benefit from state aid? What forms does this typically take and what rules apply in this regard?

    While there is no official state aid programme in Kenya, Regulation 62 of the Licensing Regulations provides exemptions where state aid is compatible with competition, if the state aid:

    • is of a social nature;
    • aims to make good damage caused by natural disasters or exceptional occurrences;
    • is granted to the local economy in certain areas of Kenya to compensate for economic disadvantages;
    • aims to promote the economic development of areas where the standard of living is abnormally low or where there is a serious underemployment;
    • aims to promote the execution of an important national project or to remedy a serious disturbance in the economy;
    • aims to facilitate the development of certain economic activities or of certain economic areas, and does not adversely affect air services conditions to an extent that would be contrary to the public interest; or
    • aims to promote culture and heritage conservation, where such aid does not affect air service conditions and competition to an extent that would be contrary to the public interest.

    9.4 Are there any applicable obligations or incentives to ensure service on routes that are socially desirable, but not commercially viable (eg, to remote areas)?

    We are not aware of any obligations or incentives to this effect.

    10 Disputes

    10.1 In which forums are aviation disputes typically heard in your jurisdiction?

    There are three main forums:

    • The National Civil Aviation Administrative Review Tribunal (NCAART) has jurisdiction to hear and determine complaints or appeals arising from licences, orders or directions issued by the Kenya Civil Aviation Authority (KCAA). Anyone that is dissatisfied with a decision of the NCAART may appeal to the High Court. Any appeal from the High Court to the Court of Appeal may be brought on matters of law only.
    • The High Court has jurisdiction under Section 6 of the International Interests in Aircraft Equipment Act, 2013 to hear and determine disputes relating to aviation financing and appeals of decisions of NCAART.
    • The parties to aircraft lease or financing agreements may also agree to refer disputes arising from such an aircraft lease or financing agreement to arbitration. Section 36(1) of the Arbitration Act (Chapter 49 Laws of Kenya) provides that a domestic arbitral award is binding and is enforced through an application to the High Court to enforce the same. Similarly, an international arbitral award is binding and enforced in accordance with the New York Convention upon application to the High Court to enforce the same.

    10.2 What issues do such disputes typically involve? How are they typically resolved?

    There are numerous issues that arise in aviation claims, including:

    • wrongful death claims – the Kenyan courts have held that the applicable law on wrongful death claims against carriers on international carriage is the Carriage by Air Act and the Montreal Convention, and not normal rules of tort. For this reason, they are subject to the two-year limitation period;
    • liability and settlement/compensation claims – in Kenya, these are governed by the Carriage by Air Act and the Montreal Convention (carrier's liability, third-party liability and product liability claims); and
    • non-payment of rent/event of default claims under a lease.

    The NCAART has jurisdiction to hear and determine complaints and appeals as discussed in question 10.1. After hearing a dispute, the NCAART may:

    • award damages;
    • confirm, set aside or vary the order or decision in question; or
    • make an order for the maintenance of the status quo of any matter or activity which is the subject of a complaint or appeal before it until the complaint or appeal is determined.

    The High Court has jurisdiction, under the International Interests in Aircraft Equipment Act, 2013, in respect of:

    • any claim brought under the Cape Town Convention or the Protocol to the Cape Town Convention;
    • the grant of relief;
    • the award of damages; or
    • any other matter provided for under the Cape Town Convention or the Protocol to the Cape Town Convention.

    The courts have jurisdiction under the Carriage by Air Act to hear compensation cases for death, injury and loss or damage to property in relation to carriage by air. Where the claim is below KES 20 million (about $200,000), the magistrates' court will have jurisdiction. Where the claim is above KES 20 million, the High Court will have jurisdiction.

    Where parties to a lease or financing agreement have entered into an arbitration agreement, they refer any dispute arising within the agreement to arbitration.

    10.3 Have there been any recent cases of note?

    The NCAART has not reported or published any cases recently.

    There are also no recent notable cases published relating to the aviation industry in Kenya.

    11 Trends and predictions

    11.1 How would you describe the current aviation landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

    How would you describe the current aviation landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

    COVID-19 continues to have a significant adverse impact on the aviation industry in Kenya. Measures taken to combat the spread of the virus led to the temporary discontinuance of passenger operations across national borders.. As a result, costs continued to accrue without corresponding revenues resulting in radical strategic choices by key stakeholders to stop the financial bleeding of airlines and guide operations in the ‘new normal' through:

    • the renegotiation of lease payment terms;
    • the launch of the Magical Kenya Tourism and Travel Health and Safety Protocols (by the Ministry of Tourism and Wildlife), with a view to ensuring the safe revival of the tourism industry after Kenya reopened its borders on 1 August 2020;
    • the recent tax amendments discussed in question 6.4; and
    • more recently, the proposed nationalisation of the national airline, Kenya Airways PLC in a bid to revive it through the National Aviation Management Bill, 2020, which is progressing through the legislative process in Parliament. The bill would provide for:
      • the establishment of the Kenya Aviation Corporation, which would be the holding company for all aviation assets in Kenya;
      • the transfer and consolidation of the national airline and the Kenya Airports Authority (KAA);
      • the establishment of operations in the national airline, the KAA and the Aviation Investment Corporation (collectively referred to as ‘operating entities'); and
      • the efficient management, financing and operation of the corporation and the operating entities.

    12 Tips and traps

    12.1 What are your top tips for operators in your jurisdiction and what potential sticking points would you highlight?

    Operators should prepare a pre-registration checklist of what is needed to register an aircraft and work closely with the Kenya Civil Aviation Authority and other regulators at the pre-registration and registration stage to ensure that they are fully compliant with all requirements to import or register an aircraft.

    Separately, operators should ensure they are compliant with both local and international health and safety guidelines in the current climate. For the time being, they should adopt a ‘wait and see' approach before making an investment, due to the uncertainty caused by the COVID-19 pandemic.

    The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.