Kenya Airways leads race to run Nairobi airport

Kenya Airways leads race to run Nairobi airport

Kenya Airways, running at a loss since 2013, is close to winning approval to run the country’s main Jomo Kenyatta international Airport in Nairobi.

As part of a profit and expansion drive the partially state-owned carrier intends to run the airport in tandem with state-run Kenya Airports Authority (KAA). The proposal has been given the green light by the government and now awaits parliamentary approval, which is expected in the coming year, according to Kenya Airways Chairman Michael Joseph.

Profitable carrier

Last year the government restructured $243m of Kenya Airways debt, as part of broader restructuring to nurse the airline back to financial health.

The airline ran into trouble five years ago after attacks by regional Islamist group Al-Shabaab led to a downturn in tourism. The purchase of a new fleet of Boeing planes then compounded the carrier’s woes and overall debt.

Taking over control of Kenyatta airport is said to be crucial to the survival of Kenya Airways as it now faces limited financial choices. The proposal would enable the carrier to grow its fleet from 32 to 55 and start flying to 20 new international destinations by 2022.

The airport itself has been described as a ‘cash cow’ bringing home $133.93m for the KAA per year.

Stiff competition

In the wake of a de-regulated airspace for 23-African countries, implemented by the African Union earlier this year in the form of the Single African Air Transport Market, many African sovereigns are looking to re-vamp their ailing carriers.

RwandAir, Rwanda’s national carrier, has recently signed a three-year sponsorship deal with Premier League football team Arsenal whose players will wear “Visit Rwanda” on their sleeves next season. South Africa has injected $400m into its struggling state airline South African Airways in an effort to prop up the business as it implements a turnaround plan.

All look towards Ethiopian Airlines, the continent’s most profitable carrier, who continue to boast year on year profit. It remains to be seen how well the continent’s smaller carriers can compete with the likes of Ethiopian and hugely profitable non-African airlines like Qatar Airways and Emirates.

Even Ethiopian – previously the African public-led success story – has recently begun a process of privatisation. While admirable perhaps the money African governments spend bailing out their national carriers would be better spent elsewhere.

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