Air Operators Call for Review of JKIA PIP Concession Process

The concession of Jomo Kenyatta International Airport (JKIA) has sparked controversy, with the Kenya Association of Air Operators (KAAO) expressing its strong opposition to the current process. The association, representing a critical mass of Kenya’s aviation sector, has emphasized the need for transparency, competition, and inclusivity in the decision-making process for one of the nation’s most vital infrastructure assets. In a statement released following their regular meeting on October 4, 2024, the KAAO Board confirmed that it does not support the concession as it is presently conceived, citing concerns over a one-bidder process and a lack of stakeholder involvement.

JKIA’s Strategic Importance

JKIA is a critical node in the regional and international air travel ecosystem. Located in Nairobi, it serves as the largest airport in East and Central Africa, connecting passengers and cargo to destinations across the globe. Its strategic importance goes beyond just passenger traffic; it plays a significant role in facilitating trade, tourism, and economic growth in Kenya and the region. Given its vital role, any plans to alter its management or ownership structure must be carefully scrutinized to ensure long-term national interests are protected.

The proposed concession process, which involves transferring some operational control of JKIA to private operators, has come under heavy criticism. The KAAO has raised alarms over the transparency of the process and the risks associated with awarding such a crucial contract without sufficient competition. According to the association, a well-conceived plan with broad stakeholder involvement is paramount for a successful transition that preserves JKIA’s role as a world-class aviation hub.

KAAO’s Concerns on the Concession Process

The Kenya Association of Air Operators has highlighted several key issues that underline their objections to the current concession framework. Chief among these concerns is the concession process being limited to a single bidder, which, according to KAAO, poses significant risks to the credibility of the overall process. The association believes that the stakes are too high for a one-bidder approach, especially when dealing with such a strategic national asset as JKIA.

Moreover, the association questioned the credibility of the potential partner, Adani Airports Holdings Limited (AAHL), whose privately initiated proposal (PIP) is at the center of the concession controversy. The KAAO’s statement underscored the importance of having a competitive and transparent bidding process to ensure that the right partner is selected and that Kenya secures the best deal possible for the airport’s future operations. The lack of a competitive bidding process also runs contrary to the requirements outlined in Kenya’s Public-Private Partnership (PPP) Act, which aims to promote fair and transparent partnerships between public and private entities.

The board has also called for the immediate return to the drawing board to rethink the entire concession strategy. A collaborative vision that includes input from all stakeholders, including operators, users, and the public, is essential to creating a long-term plan for JKIA that aligns with Kenya’s broader national aviation strategy.

The Need for a Comprehensive Feasibility Study

One of the most critical gaps identified by KAAO is the lack of a comprehensive feasibility study involving all relevant stakeholders. A feasibility study would assess the technical, financial, and operational aspects of the proposed concession, ensuring that all potential risks and benefits are understood before any decisions are made. Without such a study, the KAAO argues, there is no solid foundation upon which to base the concession process. This omission raises concerns about whether the long-term interests of Kenya and its aviation sector are being adequately safeguarded.

The KAAO has called for a feasibility study to be conducted that takes into account the views and needs of all stakeholders. This would ensure that the concession is structured in a way that maximizes value for the country while ensuring that JKIA remains competitive in the face of increasing regional competition.

Vision for JKIA’s Future: A Second Runway and Terminal Expansion

The KAAO has also highlighted the need for a clear vision for JKIA’s future as part of any concession process. This vision must prioritize the development of critical infrastructure, such as a second runway and terminal expansions, to accommodate growing passenger and cargo traffic. The association emphasized that these developments are essential for JKIA to remain competitive on the global stage and to realize its full potential as a dynamic aviation hub.

The board stressed that JKIA is already facing stiff competition from other regional airports, particularly in Addis Ababa and Kigali, which have been investing heavily in expanding their infrastructure and improving their services. To maintain its position as the region’s premier aviation hub, JKIA must continue to invest in its facilities and operations. The proposed concession, in its current form, does not adequately address these long-term development needs, according to KAAO.

Stakeholder Engagement and the Lack of Transparency

Another critical issue raised by the KAAO is the lack of upfront stakeholder engagement in the development of the concession process. The association expressed its displeasure at the way the process has been handled so far, particularly the absence of meaningful consultations with key stakeholders, including air operators, airlines, airport staff, and the public. Given JKIA’s strategic importance to the country’s economy, the KAAO believes that all stakeholders should have been involved from the outset in shaping the future of the airport.

The association’s disappointment is further compounded by the fact that this is not the first time that JKIA has been the subject of a concession process. Several Privately Initiated Proposals (PIPs) and Expressions of Interest have been submitted in the past, yet the current process seems to have bypassed many of the lessons learned from previous attempts. The KAAO is calling for greater transparency and stakeholder engagement to ensure that the best possible outcome is achieved for Kenya.

KAAO’s Memorandum on the Concession Proposal

The KAAO Board has reviewed and endorsed a detailed memorandum on the concession proposal, which it has shared with the Kenya Airports Authority (KAA). This memorandum outlines the association’s position on a range of issues, including the financial model, operational considerations, and strategic concerns.

One of the most significant issues highlighted in the memorandum is the absence of a financial model in the documents provided by AAHL. The KAAO has stated that without a financial model, it is impossible to fully assess the viability of the concession proposal. This omission raises fundamental questions about the feasibility and sustainability of the project, further reinforcing the need for a more thorough review of the entire process.

The Way Forward: A Collaborative Approach to JKIA’s Future

In its concluding remarks, the KAAO reaffirmed its commitment to working collaboratively with the government and other stakeholders to ensure that JKIA’s future is secured. The association advocates for a return to the drawing board, where a new concession process can be designed that is transparent, competitive, and inclusive. This process should prioritize the development of key infrastructure, such as a second runway and expanded terminals, while ensuring that all stakeholders have a voice in shaping the future of the airport.

For JKIA to reach its full potential as a world-class aviation hub, it is essential that the concession process is carried out with the highest standards of transparency and accountability. The KAAO’s call for a review of the current process is a critical step toward ensuring that Kenya’s most important aviation asset is managed in a way that benefits the entire country for generations to come.