German multinational Lufthansa is set to launch its new kitchen at the Jomo Kenyatta International Airport (JKIA) in six months, ending NAS Servair’s six-decade long monopoly of in-flight catering business at East Africa’s biggest air transport hub.
LSG Sky Chefs, Lufthansa’s catering subsidiary, says it is on course to open the Sh435 million facility by the end of the year.
NAS Servair has held the catering contract since independence.
The new kitchen, which is co-owned by Kenyan businessmen Matu Wamae and Ndung’u Gathinji, was initially to be built in 2014 but delays have pushed forward the opening date several times.
“We expect the kitchen to go live by the end of 2016,” LSG Sky Chefs’ spokesperson Josefine Corsten said in an interview.
Construction of the kitchen started late last year.
In-flight meals for airlines operating at the JKIA and Moi International Airport accounts for about 80 per cent of NAS Servair’s revenues and the competition could eat into this income if it is not matched by proportional growth in volumes.
NAS also supplies linen, magazines, foreign and domestic newspapers and special gift baskets to airlines on request.
Its clients include British Airways, Ethiopian Airlines, Etihad, Qatar Airways, KLM, Rwandair, South African Airways, Air Mauritius among others including LSG Sky Chefs’ parent company Lufthansa.
LSG Sky Chefs’ entry into the market is expected to impact the quality of service and price of food served on airlines, a welcome development to the 20,000 passengers who travel through the JKIA every day.
“Soon there will be another player. This could see us lose some of our customers,” NAS Servair said in an earlier interview with the Business Daily.
The 25-year contract will see LSG Sky Chefs and its local partners pay the Kenya Airports Authority (KAA) a graduated concession fee based on their annual sales as well as a standard rental fee for the land that the kitchen will occupy.
If its annual revenues fall below Sh440 million in a year, it will pay the KAA five per cent of this amount and part with six per cent in a year where its revenues will be between Sh440 million and Sh660 million.
Revenues above Sh660 million a year will attract seven per cent concession fees.
Kenya is the fifth country in Africa where Sky Chefs has presence through joint ventures. Others are Egypt, Angola, Tanzania and South Africa where it has three facilities. NAS has operations in 14 countries in the continent.
The shifts in the airlines’ catering business comes five years after French multinational Servair acquired a 59 per cent stake in NAS from Kenyan investors led by the late Philip Ndegwa’s family who were exiting the company established in 1949.
The deal was estimated at more than Sh2.25 billion ($26 million) and was billed as one of the biggest buyouts involving a private firm in Kenya.