15 May 2014

Kenya: KAA Right to Break Catering Monopoly


KENYA Airports Authority has broken the inflight catering monopoly of NAS Servair by licensing a German company to also provide meals to airlines.

NAS has been supplying over 30 international airlines at both Jomo Kenyatta and Mombasa international airports since the 1960s but it has faced no competition.

Monopolies are economically undesirable as they allow companies to overcharge or deliver sub-standard products. Some natural monopolies exist in utilities like water and electricity but in general monopolies should be avoided.

Even if NAS was doing a great job, it will do better when faced with competition. It will be forced to up its game to retain its existing clients.

Moreover as KAA managing director Lucy Mbugua pointed out yesterday, the $5 million investment by LSG Sky Chefs Consortium will create jobs and increase KAA's income from land rental and concessions.

Breaking up the inflight catering monopoly was long overdue. A new international terminal is nearing completion and Kenya wants to become the main aviation hub for East Africa. An important ingredient for success will be providing catering services that are superior to Addis Ababa or other regional capitals.

The KAA has made the right decision at the right time.

Quote of the day: "The one who loves must share the fate of the one he loves." - Russian author Mikhail Bulgakov was born on May 15, 1891.

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