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Shipping & Logistics

Ethiopia’s Sh500bn planned airport set to land JKIA a blow

Bole International Airport
Bole International Airport in Addis Ababa, Ethiopia. FILE PHOTO | NMG 

Ethiopia and Rwanda are positioning themselves as the next aviation hubs on the continent with the planned massive investment in new airports that are likely to steal the thunder from the Jomo Kenyatta International Airport (JKIA), which is one of the largest facilities in the region.

Ethiopia will in the next six months start the construction of a $5 billion airport with a capacity to handle 100 million passengers, which dwarfs JKIA that can handle 7.5 million people annually.

The Ethiopia’s move, which is aimed at complementing the current Bole International Airport in Addis Ababa, is projected to boost the revenues of the Ethiopian Airlines that has direct management of the facility.

With the projected capacity of 100 million passengers a year, the new facility will be much bigger than Heathrow Airport in London and the Dubai International, currently number one worldwide in aircraft handling.

The airport is poised to become a major international hub for connecting passengers, especially in the US where the airline has direct flights in different American cities.

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This comes at a time when Ethiopian Airlines has established a joint venture in other African nations including Malawi, Chad, Zambia and Mozambique with talks on going to revive Nigeria and Ghana. This will see the carrier use its presence in these countries to bolster its numbers.

The move implies that passengers who would have used other airlines such as Kenya Airways for direct flights to the US, can now connect easily to Ethiopia from the countries where the carrier has partnered with their local airlines.

Ethiopian Airlines reported a 25 percent increase in profit to $260 million in 2018-19 financial year riding on the back of more passengers and cargo, according to a report on the carrier’s website. During the period, the airline earned a revenue of almost $4 billion, an 18 percent increase than the previous year.

On its part, Rwanda has partnered with Qatar Airways to build a mega airport that will see JKIA play a second fiddle to it in the region once completed. The new facility is expected to eat into the number of regional passengers travelling to the US and other countries outside the continent, given Qatar’s largest connection network.

Qatar Airways is investing Sh131 billion in the new Rwandan Airport following a deal between the two countries. The deal will see the Qatari government own a 60 percent stake in the new facility.

The move will pile pressure on regional carriers including KQ, which may be compelled to cut their ticket prices to remain competitive in the market, considering that most of the Middle-Eastern carriers, including Qatar, are highly subsidised by their governments.

Rwanda’s new Bugesera facility will be the country’s third international airport after Kigali International Airport and Kamembe International Airport in western Rwanda.

At Sh131 billion, the new airport will be more than double the investment that Kenya would have invested in the now cancelled Green Field Terminal at the JKIA, which was to position Kenya as a leading hub in the region.

Transport Cabinet Secretary James Macharia cancelled the Green Field Terminal in 2016 saying there was no value for money and that the existing capacity was enough to handle an increase in number of passengers. However, this may come back to haunt the country has regional countries have embarked on aggressive projects to expand their airport.

Tanzania is also expanding its airport, whereas Kenya seems to have stopped further expansion of its own main port of entry. The second runway that was supposed to be built at JKIA has been cancelled with the government saying that it is still weighing its viability.

Economist Toni Watima says JKIA has to strategies and align itself with development going on in the region in order to maintain its competitive edge as a leading hub, especially for cargo.

“JKIA remains a major hub but that depends on how it will reinvent itself to maintain its competitive edge,” he says.

Many people, he adds, still prefer Nairobi as a hub for cargo and that Kenya Airports Authority should look for a strategic partner to revamp the cargo wing.

Data from African Airline Association indicate that JKIA was number three in terms of cargo handled in Africa, coming behind OR Tambo in South Africa and Cairo International Airport in Egypt.

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