KQ bid to take over JKIA heads to court

The controversy over planned takeover of the Jomo Kenyatta International Airport by Kenya Airways is headed to court after aviation workers filed a constitutional petition to stop the deal. 

In the petition, aviation sector union now alleges that the airline owes Kenya Airports Authority (KAA), whose airport it plans to take over, nearly Sh4 billion. 

The Kenyan Aviation Workers Union has also questioned the feasibility of the proposal to hand over JKIA to the airline given its financial health.

Through lawyer Peter Wanyama, the airline’s employees moved to court yesterday to challenge the transfer planned for April, arguing the process is being rushed and will deny the public the right to scrutinise it.

“JKIA is such an important national asset for the people of Kenya. It cannot be taken away (through any arrangement) and given a private entity without any prior meaningful and qualitative public participation. The decision should also be approved by Parliament,” suit papers read in part.  

Employees of the airline argue that JKIA is the most profitable airport in Kenya that accounts for nearly 90 per cent of KAA’s revenue stream. Taking away the airport from KAA, they say will leave it exposed.

The trade union is also questioning the financial benefit of KAA in the deal.  

“The proposed transaction is an oddly unique one. Ideally, in a Public Private Partnership (PPP) transaction, the private entity constructs and provides the infrastructure to the public entity at a fee. But in the KQ/KAA deal the private entity is taking over a strategic public asset without paying anything,” suit papers add. Kenya Airways and KAA are yet to give their replying affidavits. 

Secret undertakings

The workers union says there was no feasibility study prior to the decision that addresses the financial, legal and technical aspects of the project that will satisfy the public that the investment is justifiable in all the four corners.

They are concerned that KAA has rushed to hire consultants to advise on the project in an environment of secrecy and confidentiality.

“There is a real, live and serious threat to the job security, and stability of the persons who work at the airport as well as other stakeholders working and carrying out operations at the JKIA.”

But Transport Secretary James Macharia has maintained that there would be no job losses.  

“There has been no notice on public participation. Nowhere. The petitioner has not been invited to any meeting where the details of the partnership has been discussed,” the petition adds.

The tone

Details of the deal started seeping through on October 5 last year, when Kenya Airways managing director wrote to his peer at KAA stating that it had been proposed that the two enter into an agreement that will result in KQ operating, maintaining, developing, constructing, upgrading, modernising, financing and managing JKIA. According to the suit papers, the deal was to be done based on the PPP model.

KQ attached an Executive Summary of the Privately Initiated Investment Proposal (PIIP). The language and tone of the letter indicated that KAA was only required to accept the proposal and that there was no option for rejecting it,” the aviation workers union notes.

They argue that the executive summary proposed a takeover of the JKIA’s operations and management, through a 30 year concession agreement.

“That the objective of the takeover is to ensure efficiency of both JKIA and Kenya Airways operations by central management to leverage on possible synergies.”

A Special Purpose Vehicle (SPV) will be formed to operate, manage and develop JKIA and that Kenya Airways and the SPV shall be managed under one management structure while the rest of the airports in Kenya will continue to be managed by the KAA.

The SPV is also expected to operate and control JKIA’s assets, revenue sources (both aeronautical and non-aeronautical) and operating costs as well as ensure compliance with local, regional and international standards and norms. It will also collect charges for the use of JKIA by various users.

Aviation workers have protested at the proposal to second all current JKIA staff to the SPV on the same terms they are currently employed in for 12 months after which Kenya Airways shall transfer the employees to the SPV, and shall have the right to choose employees who receive the transfer proposal.

Public debate

“Those that will not be chosen by the proponent will then be transferred/reallocated by KAA to other airports and airstrips,” the workers say.

If JKIA is handed over courtesy of the concession, they say, it will be very difficult for it to meet its legal and financial obligations to its stakeholders and employees.

“A few members of the top management of KAA and the ministry responsible for infrastructure are in a hurry to complete the transaction.

“They don’t want to involve key stakeholders in the decision-making process. They also don’t want to open up the transaction for public debate, scrutiny and participation.”