The KAAO Board considered the proposed JKIA concession and endorsed the views of its membership in relation to the concession.
The Board of the Kenya Association of Air Operators (KAAO) revisited the controversy surrounding the leasing of the Jomo Kenyatta International Airport (JKIA) in Nairobi to Indian conglomerate Adani during its regular meeting on October 4, 2024, and exposed serious flaws by the government during the course of the deal.
Per a statement released on Tuesday, October 8, the KAAO Board considered the proposed JKIA concession and endorsed the views of its membership concerning the concession. This was after a detailed review process involving its members culminating in a presentation and a final review at the Board.
The Board in its deliberations confirmed that it does not support the concession of JKIA as currently conceived, noting further that the stakes are too high for a one-bidder process for such an important strategic asset, and that the credibility of the potential partner is also in question.
Simply put, the KAAO board stood against the government’s proposed JKIA leasing to Adani, faulting the latter’s credibility and believing that the importance of the country’s main airport was so high that one bidder could not be considered entirely.
KAAO CEO Liz Aluvanze speaking during a board meeting on October 4, 2024. /KENYA ASSOCIATION OF AIR OPERATORS
The board therefore noted that the best approach in this complex eco-system would be for a competitive and transparent bidding process with all the steps envisaged in the Public-Private Partnership (PPP) Act correctly followed.
“The Board further opined that a clear vision of the end game for Kenya needed to be articulated, starting with adherence to the principles laid out in the National Aviation Policy and a well-developed JKIA masterplan which should form the business case for a concession process,” KAAO recommended.
“Reflecting on the need for a feasibility study involving all stakeholders, it was observed that this process had not taken place. This would give all stakeholders – operators, users and the public, the best value from the concession agreement.”
KAAO also confirmed that it advocates for a return to the drawing board, where a collaborative vision for JKIA’s future can be established; one that prioritizes the critical development of a second runway and terminal expansions, and ensures that every stakeholder has an opportunity to contribute from the outset.
By the board’s recommendation, the government would have to go back to square one in its bid to revamp the country’s largest airport, one that would prioritize matters such as the construction of a second runway which can be used as an alternative in the event disruptions when planes are taking off and landing on the current runway cause disruptions at JKIA with devastating consequences.
“This inclusive approach is vital for ensuring that JKIA maximizes its full potential as a dynamic, world-class aviation hub, particularly in the face of fierce regional competition,” added KAAO.
The Board observed that given JKIA’s strategic position, there had been in the past several PIPs and Expressions of Interest, which further supported the call for a competitive process.
Further noting the sequencing of events leading to the review process, the Board expressed its displeasure and disappointment at the lack of upfront stakeholder engagement in the development of such a critical plank of Kenya’s aviation sector, meaning that the government was faulted for failing to involve other parties in the expansion deal.
The Board also reviewed and endorsed its detailed memorandum on the concession proposal, which it revealed has now been shared with KAA, and sets out KAAO’s opinion on several issues.
“The memorandum was based on the review of documents provided after a stakeholder briefing on 29th August 2024, which were received on 2nd September 2024 and included the Head of Terms Agreement Version 13th August 2024, the Feasibility Report by Adani Airports Holdings Limited (AAHL) and the Privately Initiated proposal by AAHL dated March 2024,” added the statement.
“However, the financial model was not included, which significantly limits our ability to assess the proposal’s viability and raises fundamental questions about its overall feasibility and sustainability.”
The Kenya Association of Air Operators (KAAO) is a registered National Umbrella Body mandated to provide an authoritative and unified voice of advocacy for the Kenyan Aviation Industry.
Entrance to Jomo Kenyatta International Airport in Nairobi. /MARVIN CHEGE.VIRALTEAKE
