As uncomfortable as it is to admit, we are witnessing the makings of yet another major corruption scandal at JKIA. We never learn.
The ingredients of this latest outrage emanates from past similar projects that were dead on arrival.
These are the Greenfield Terminal Project, the Mawingu Plan, KQ’s own Privately Initiated Investment Proposal and now Adani. They will form the basis of the four articles in this series.
Greenfield Terminal Project
The initial design capacity of JKIA was to serve about 2.5 million passengers per year but over the years this capacity has been overshot to more than 6.5 million passengers per year.
In the aviation sector, global best practice recommends that the expansion of airport capacity should be provided five years ahead of demand to mitigate against congestion that comes from growth.
This also includes use of the latest technology and constant upgrades of operating systems to avoid gridlock due to an increase in traffic.
This implies that planned major upgrades of JKIA should have commenced from the mid-1980s. And many lessons are there to learn from that we will discuss in this series.
The Greenfield project coming 28 years later indicted the Kenya Airports Authority. It had gone comatose on the job.
Resulting from the old infrastructure and inefficiencies attributed to regulations, Kenya Airways – notwithstanding JKIA as its base - was already facing challenges outside its control as passenger travel experience is both on the aircraft and on the ground.
In fact air travellers spend a lot of time in airports hence airlines do their best to make this experience comfortable and memorable.
The relationship between KAA and KQ has all the time been adversarial, as responses to KQs PIIP from KAA in 2018 will reveal.
KQ exposed to competition
KQ's major competitors in the region, namely, Ethiopian Airlines, Qatar Airways, Emirates Airlines and Etihad Airways all have a major say on the kind of airport infrastructure they use at their home base.
Passengers prefer to use these airlines for their transits and also recommend them to their friends. All these airlines, save for Ethiopian Airlines, were started after KQ and have grown in leaps and bounds.
Ownership structures of these airlines extend to ownership of base airports and serve at their behest as major users and transit hubs.
Transit hubs centralise operations for airlines allowing for better resource utilisation and cost savings.
Passengers can reach a multitude of destinations with a single airline, promoting convenience. Airlines can optimise aircraft utilisation by concentrating traffic through hubs. JKIA, KQ’s hub, is not associated with comfort and convenience, but leaking roofs and power outages.
It is not surprising that KQ’s ticket costs were much higher compared to her competitors.
Their options for enhancing revenues by running other commercial operations at JKIA were severely curtailed; something Adani in its Privately Initiated Proposal, is being offered on a silver platter. This should not be the case.
For KQ therefore, the ambitious airport infrastructure plan dubbed the Greenfield project was long overdue.
Estimated to cost $650million, it would construct a new terminal at JKIA that would have 50 international check-in counters, eight air bridges for docking aircraft, and 45 aircraft parking stands on the linked apron space.
The project would also add a 5.5-kilometre runway to accommodate direct long-haul flights and refurbish three of the existing passenger arrival terminals and departure areas.
The main beneficiary of the airport expansion would be Kenya Airways, which had aligned the proposed expansion with its strategic roll-out of the “Mawingo Plan”.
The plan entailed fleet expansion resulting in more flights, which would put the current terminals under intolerable strain.
Without the new terminal (projected to be ready in 2016), the rapid pace of Kenya Airway’s planned launch of new destinations and quadrupling the fleet size by 2021 would be risky.
Billions paid but no project
The Greenfield project never took off. The Ministry of Transport, the entity that provided policy direction to KAA ordered the cancellation and re-advertising of the tender afresh; a directive that was ignored and the winning firm was awarded and directed to commence construction in December 2011.
The infrastructure plan had been started in June 2011 when the KAA advertised an international tender for the design and construction of a new terminal. More than 100 firms expressed interest in the project.
No mention is made on how this plan would give preference to Kenya Airways, a homegrown company, save for the generic mention of passenger and traffic growth necessitating a new facility.
Between the tender advertisement and the eventual groundbreaking in December 2013, the process was riddled with controversy.
The then Minister for Transport, Amos Kimunya, who had replaced John Michuki, revoked the tender.
The Ethics and Anti-Corruption Commission was called in to investigate irregularities in contract award, a new steering committee was gazetted to oversee implementation of the project; the KAA managing director was sent on compulsory leave but was reinstated by the industrial court to oversee project commencement.
On December 3, 2013, President Uhuru Kenyatta and his deputy officiated the groundbreaking ceremony of the Sh55 billion Greenfield project, terming it as the facility that would cement Kenya as the aviation hub of the region. Completion date was set for 2017 and so began the search for funds.
However, in 2015 the project hit headwinds again after it emerged that a Sh9 billion variance lay hidden in the project contract.
Once again EACC were called in, four top managers were sent home to avoid interfering with investigations on what seemed like corrupt dealings.
In May 2015, EACC gave the greenlight that the project was clean and could go on. They closed the file.
One year later KAA terminated the project, citing economic constraints after the Chinese contractor had excavated the foundation and mobilised all construction equipment.
A parliamentary committee probed the KAA executive revealing that Sh4.3 billion was paid to the contractor as part of the advance payment. This, they claimed, was provided for in the contract agreement.
In May 2019 the contractors, demanded Sh17 billion in compensation for the cancellation of their contract.
KAA MD however refuted the claims on the basis that they had not been verified and that the authority was actually seeking a Sh4.3 billion refund from the firm.
A fire and declining rankings
On August 7, 2013, a mysterious fire razed the arrivals terminal of JKIA leading to the unprecedented closure of Kenya’s main airport and KQ's hub. It was a clear warning that Kenya needed a more modern airport.
KQ's ratings were taking a beating as travellers using the airline associated them directly with JKIA.
Today, instead of a major state of the art regional hub, what is in place is a makeshift catering type tent at a known cost of Sh4.3 billion. An unverified Guinness record in that category.
Skytrax, a recognised airlines ranking agency, gave KQ (and not KAA) a three-star ranking last year following an assessment of both on-board and on-ground service quality (KAA’s responsibility) under the current set-up signifying a steady decline.
Weak areas according to Skytrax included numerous operational delays and difficulties for passengers, as well as a poor airport experience in Nairobi.
Given these outcomes it is KQ (not KAA), which won’t be able to retain customers (considered more valuable than acquiring new ones) due to dissatisfaction.
Air travel is pleasurable moments for passengers from ticket booking to destination arrival. A satisfied passenger easily becomes a loyal customer increasing revenues for the airline.
To date there is no word on whether the Greenfield project was resolved or what the Public Investment Committee gathered from its probe into the cancellation of the project.
A report of the Auditor General on KAA for the year ended June 30, 2023 stated that no evidence was availed on the Cabinet approving the write-off amounting to Sh5.3 billion.
It warned (belatedly after payment) that the correct procedure was not followed and citing possible irregularities. But one thing is clear; that both homegrown Kenyan companies KQ and KAA have been working at cross-purposes on the development of JKIA to the disadvantage of KQ.
This is a path of fatality for KQ - an unfortunate occurrence should it happen yet all that is required is for KAA to prioritise KQ as its major client.
In the next article I will look at the Mawingu Plan. I believe there is two proximate causes to its failure.
One is a failure to reveal the identities of the persons behind the offshore companies in the investment affairs of KQ and the relationship they had with the top management.
We need to know the debt structure in the acquisition of the aircraft, as debt never favours the operations of an airline because of thin profit margins in the industry. Equity is preferred.
Next learning from hindsight from the botched Greenfield project, KQ’s turn around plan will always be at risk if infrastructure support at JKIA is wanting.
Despite a commitment by the government on modernising JKIA, nothing is happening. Yet KQ’s competitors have hit the ground running.
Ethiopia and Rwanda are in advanced stages of modernising and expanding their own airports under the control of their national flag carriers. KQ submitted their own PIIP in 2018 to run JKIA.
This should take precedent over Adani’s proposal (which should not even be considered). However, as is evident there is deep mistrust between KQ and KAA.
