Kenya Airways Officially Asks to be Allowed to Operate JKIA in Order to Weather Financial Turbulences

Kenya Airways has officially declared its interest to operate Jomo Kenyatta International Airport as it seeks to recover from a prolonged revenue drought and maintain a high standing among its peers.

The Kenya Airports Authority, which runs JKIA, says it has received Privately Initiated Investment Proposal from KQ to be granted a concession to operate, maintain and develop the country’s main airport.

“In the PIIP, Kenya Airways PLC outlines the rationale for its request and how this will reposition, support and grow the aviation sector in Kenya,” said KAA’s managing director Jonny Andersen.

KAA says it has appointed transaction advisors to assist and guide a comprehensive due diligence and evaluation process of the PIIP. It insists that the proposal must be feasible and provides value for money to both KAA and the public before it is implemented.

Since the beginning of the year, KQ has been pushing for the public-private partnership (PPP) that will see it take over all the staff and operations of the KAA. This includes ground handling, maintenance, catering, warehousing and cargo.

Other carriers, such as Emirates, Ethiopian Airways, Qatar Airways and RwandAir, are fully owned by their respective governments. This makes it easy for them to interact with their home airports.

The government owns 48.9 per cent stake at KQ, and banks 38.1 per cent. The rest are owned by local and foreign institutional and individual investors. Though the biggest revenue earner for KAA, KQ’s continued financial doldrums may impact negatively on the operationalisation of JKIA, hence the rationale behind the PIIP.

The proposed, once it “satisfies stringent criteria, follow statutory steps and obtain approvals from relevant regulators”, will enable KQ add at least 23 aircraft and more than 20 new international destinations over the next five years. The move is also expected to see improvement of annual passenger numbers to 6.9 million from the current 4.1 million.

Also, 25,000 jobs are expected to be created during the duration of the concession, which for a minimum of 30 years,

The concession, where the KAA will be contracting authority and KQ as the private party, will be held by a special purpose vehicle which will be fully owned by the national carrier.

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By Kenyan Digest

The Kenyan Digest Team