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Mon 14th Jun - AM

Kenya Airways seeks to run main Nairobi airport to boost earnings

Kenya Airways is close to winning approval to run the country's main airport in Nairobi, looking to copy a model that has enabled rivals to overtake it, its chairman said on Monday. Michael Joseph said the loss-making airline had proposed forming a special purpose vehicle with state-run Kenya Airports Authority (KAA) allowing the airline to run Jomo Kenyatta International Airport for a minimum of 30 years. Kenya Airways, which is owned 48.9 percent by the government and 7.8 percent by Air France/KLM, had $2 billion of debt restructured by the government and shareholders last year and it is planning new routes as it tries to recover from years of losses. The plan to run Jomo Kenyatta airport is vital for the national flag carrier's survival as it has faced limited choices after last year's financial restructuring, Joseph said. “All our competitors are state-owned, state-controlled, state subsidised and managed for the benefit of the airline. We are the odd one out,” he told Reuters. The carrier also faces stiff competition from state-backed carriers, including Gulf-based Qatar and Emirates. Joseph said the cabinet discussed the proposal and gave the “go-ahead” last week. Transport Minister James Macharia declined to comment when asked by Reuters if the proposal had been approved by the cabinet. 

The plan to change Kenya Airways' model, which will require parliamentary approval, will be finalised some time this year, Joseph said. The Jomo Kenyatta airport is owned by the KAA, which has run it until now. Kenya Airways proposes to pay the airport authority concession fees and to run other profitable services at the airport including catering, fuel distribution, cargo and ground services facilities and maintenance. The concession fees have not yet been agreed upon. As the airport operator, Kenya Airways would have a say on takeoff and landing slots, though Joseph denied that is the aim. Joseph cited Ethiopian Airlines, which uses a similar model to the proposed one at its hub in Addis Ababa.
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