Kenya Airways - A High Flying Success Story?

10 September 2012
ThinkAfricaPress

Nairobi — There is a certain swagger to parts of Kenya in 2012. Walk the streets of its cities and you see an immense amount of construction going on, from shopping centres to offices to luxury apartment blocks.

Driving along its highways you witness the staggering volume of flatbed trucks moving huge quantities of goods to and from the coast all day and all night.

All too often the story that gets extracted from this bustling energy drags the eye east, to China's relentless investment in the developing world. Predictably, the focus usually falls on the emerging superpower's changing relationships with the rest of the international community or on the 'race for resources' that will increasingly set agendas in the next century or so. What doesn't get much of a look in is how all this is changing the game for Africa's burgeoning middle-classes.

Flights of fancy

By 2020, Kenya Airways is looking to expand its fleet from 30 to 100 aircraft. They're looking to add 40 extra destinations, on top of the 56 it currently offers. These new flights will go to every major location in Africa as well as destinations beyond. One soon to be inaugurated is the Nairobi to Rio de Janeiro flight, which should be available and well-oiled by the time the 2014 World Cup comes around. The story here is about passengers.

As Kenya rides the crest of high and sustained economic growth, helped along by large financial investments from overseas, more Kenyans are able to afford premium products like airline tickets. More passengers means more business for Kenya Airways though its expansion is stunted to an extent by poor infrastructure.

In Nairobi, it is the smaller airport, Wilson, that gets more love from passengers and aviation enthusiasts than Jomo Kenyatta International Airport (JKIA), the main destination for tourists which suffers from bad reputation. Many of JKIA's facilities are outdated, the shops are mostly of little interest, and it is cramped. It was designed back in 1958 to carry 2.5 million passengers a year but now deals with well over twice that number without having been adapted.

The airport is undergoing a series of building projects that should transform it into a home for Kenya Airways in the same way that Heathrow's Terminal 5 serves as British Airways' base. The passenger share for JKIA has steadily increased in the last few years, but faces growing competition in the region from Bole International Airport in Addis Ababa: home to Ethiopian Airlines, which boasts more destinations, a greater number of passengers and a larger aircraft fleet than Kenya Airways.

The contract to build the new flagship Terminal 4 was awarded to Chinese construction firm China National Aero-Technology International Engineering Company back in 2009, but progress is slow. Expansion plans have been widely reported in the Kenyan media since 2006 but, despite various tenders being awarded and promises made by Minster of Transport Amos Kimunya and the Kenyan Aviation Authority (KAA), all one sees as you drive into JKIA are half-finished concrete shells normally bereft of construction workers.

Turbulence ahead: corruption and competitors

Earlier this month, one of the expansion tenders - the so called 'Greenfield Project' - was found to have been cancelled in suspicious circumstances. The loss is said to have cost the government 1.8 billion Kenyan Shillings ($20 million). The episode has highlighted the underlying political infighting that has mired the mooted expansion of JKIA. Large-scale infrastructure projects in Kenya have always been plagued by such issues because of the huge amount that ministers and other individuals can gain in kickbacks, bribes and other misappropriated funds. The notorious Goldenberg scandal of the Moi regime or the more recent Anglo Leasing affair are both recent examples of such practices.

This is not an issue simply within parliament. One person at Kenya Airways (who asked not to be named) put it succinctly: "The two things that inhibit expansion are politics and corruption, both internally and externally".

Beyond the tortuous progress of JKIA expansion, there remain outstanding issues. Pilots, for example, are in short supply. Many choose not to train in Kenya due to outdated equipment or lower standards, which also make them less likely to return home and bolster the ranks of Kenya Airways.

Perhaps the saving grace of Kenya Airways is that it is not solely dependent on Kenyan backers who might be implicated in the issues surrounding the expansion of JKIA. The major shareholders are private, with a significant 26% of the company owned by Royal Dutch Airlines (KLM). KLM are owned by Air France-KLM, created in a 2004 merger, and both are members of the SkyTeam airline alliance which acts as a central management team for 17 major airlines all over the world. It is a huge organisation with hundreds of millions of annual passengers, a combined fleet of more than 4000 planes - not an association to be trifled with.

Kenya Airways became a member in 2007. Since then, SkyTeam has gone on to expand massively, particularly in the Middle East, and has several options for getting passengers to and from East Africa. Etihad, who already fly a number of flights to the region, are purported to be future members and could usurp Kenya Airways' position within the organisation.

With Kenya's middle-class expanding despite the global recession, demand for international travel - particularly with growing links with foreign investors in the Middle East and China - will continue to grow. Any loyalty to Kenya Airways that these increasingly affluent Kenyans might feel will only last as long as it remains convenient. If Etihad or Ethiopian Airways find their way into a stronger position in the overcrowded existing terminals at JKIA, the promise of expansion and further prosperity might just pass Kenya Airways by.

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