Kenya’s airports “grew quickly in 2017”; Kenya Airways proposes to take over Nairobi Airport

In June 2018, the Kenyan cabinet approved Kenya Airways to operate Nairobi Jomo Kenyatta International Airport (NJKIA) on a 30-year concession, having received a privately initiated proposal from the airline. Kenya Airports Authority (KAA) would receive concession fees from Kenya Airways but would face the loss of approximately 90% of its revenues, which were generated by the airport.  The airline is expected to take over the airport’s maintenance, catering, warehousing and ground handling staff.

To avoid lengthy legal issues, the decision is to be effected through a concession with Kenya Airways designated as the private party and Kenya Airports Authority as the contracting authority. Under the  new arrangement, NJKIA – currently under the sole management of the State-owned  KAA, and with estimated annual revenues of KES7 billion (USD70 million) – is to be owned and managed by a holding company that will, in turn, be 100% owned by Kenya Airways under the concession agreement.

However, progress has been slow since then and in November 2018 KAA’s Managing Director said “the merger should not be expected anytime soon”.  He added, “We are yet to decide whether it’s a concession, merger or something else.” The latest position (January 2019) is that KAA is receiving public feedback on the proposal.

The airport is at least growing

Kenyan President Uhuru Muigai Kenyatta said recently that Kenyan airports handled more 10.1 million passengers in 2017 and transported more than 290,000 tonnes of international cargo. Mr Kenyatta attributed the “positive growth” (no actual growth figure was given) to “sound and resilient management and investment”. The government is committed to investing in Kenya’s aviation infrastructure, Mr Kenyatta said, as it seeks to “facilitate the industry and enable it to play its critical role in boosting the growth of our economy”.

The public faces of Kenya’s airports are those at Nairobi and Mombasa as they are the most ‘international’. Official statistics reveal that passenger traffic at Nairobi’s Jomo Kenyatta International Airport (NJKIA) grew by 1.5% in 2015 but by 7.4% in the previous year. 2014 was exceptional though, in the previous two years there had been negative growth, and the best years in the last decade were 2009–2011.

 

Source: Nairobi Jomo Kenyatta International Airport reports

In contrast there have been airline capacity increases each year since 2014 (6.2% between 2017 and 2018).

Kenya Airways is the major carrier with 54.3% of the capacity but LCCs Jambojet and Fly540 play a small part (over 84% of capacity is on full-service/network carriers). Both Emirates and Ethiopian Airlines, each with 5% or less of capacity, offer an alternative hub and spoke network to that of Kenya Airways.

NJKIA airlines by seat capacity, w/c 28-Jan-2019

Source: OAG

The SkyTeam Alliance, of which Kenya Airways is a member, accounts for 58.5% of capacity and is the dominant one.

Infrastructure investment to the value of USD430 million is mooted at NJKIA. A second runway will be built, using part of a loan from the African Development Bank and enabling full load transatlantic flights. Meanwhile, Terminals B, C and D will be redesigned to increase capacity to around 12 million passengers per annum.

Mombasa’s Moi International Airport (MMIA) is a smaller one, handling 1.2 million passengers in 2015, again the last year for which there are official figures. Its growth profile is similar in nature to that of NJKIA.

Source: Mombasa Moi International Airport reports

The capacity increase in the case of MMIA has been even greater between 2017 and 2018, at 27%. In the previous year it was 22.5%.

Kenya Airways is nothing like as dominant at 27.1% of seat capacity with the low-cost Fly540 and Jambojet holding more of it than at NJKIA. Around 21% of capacity is low-cost.

Source: CAPA – Centre for Aviation and OAG

It is perhaps of some concern that well over six million of the 10.1 million total for 2017 flew into or out of Nairobi’s main airport, in a country of 48 million people that does have important regional industrial cities. There are 57 commercial airports in Kenya, some of them in national parks and many only grass strips. Even the secondary airport in Nairobi – Wilson – only generates 300,000 passengers a year.

Certainly, as the Kenyan middle class continues to grow, there will be an impetus for development of the county’s regional airport network.

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