Companies

Kenya Airways drops proposal to run JKIA

jkia

Jomo Kenyatta International Airport. FILE PHOTO | NMG

doreenwainainah_img

Summary

  • Local carrier Kenya Airways (KQ) has dropped its bid to run the Jomo Kenyatta International Airport (JKIA), 10 months after it submitted the embattled proposal.
  • The move by the aviation firm comes after Parliament in June voted to nationalise KQ due mounting debts that have threatened to ground the company.

Local carrier Kenya Airways (KQ) has dropped its bid to run the Jomo Kenyatta International Airport (JKIA), 10 months after it submitted the embattled proposal.

The move by the aviation firm comes after Parliament in June voted to nationalise KQ due mounting debts that have threatened to ground the company.

“Following a board decision at the last board meeting held on August 27, 2019, we are formally withdrawing the Privately Initiated Investment Proposal (PIIP) from the consideration of Kenya Airports Authority (KAA), the Public-Private Partnership Committee (PPP) Committee of the National Treasury. As you may be aware, the PIIP (Privately Initiated Investment Proposal) did not take off and a new direction – nationalisation was adopted,” said Kenya Airways in a statement.

The National Assembly’s Transport committee recommended that the government establishes the holding company with four subsidiaries comprising KAA, KQ, JKIA and a centralised Aviation Services College, which will run independently.

KQ had proposed the formation of a subsidiary dedicated to managing operations at Kenya’s largest airport for a concession period of 30 years. KQ’s plan, contained in its PIIP, included the creation of a special purpose vehicle — a unit of a company which is shielded from the parent firm’s financial risk — to operate, maintain and develop JKIA.

The carrier’s proposal to take over JKIA was opposed by a section of its staff who went as far as to down their tools in protest.

In April, the government backtracked on plans for the partnership, seeking alternatives to save the airline.

As a result, in July, a report by the Departmental Committee on Transport, Public Works and Housing was adopted by the National Assembly which recommended, among others, the nationalisation of KQ and the creation of an Aviation Holding Company to consolidate the country’s aviation assets.

“There is a team that is currently working on a Bill that will provide for how the nationalisation process will be managed. The expectation is that the Bill will be tabled in Parliament for debate fairly soon. If passed, and after presidential assent, it will then become law. This law will provide clear guidelines and the next steps to be taken to complete the nationalisation process,” said KQ.