Airlines join bid to block Adani deal

Adani Group is seeking a 30-year concession to run the Jomo Kenyatta International Airport, during which it would refurbish the airport and invest in new infrastructure. [Courtesy]

Local airlines have rejected controversial plans to hand over the Jomo Kenyatta International Airport (JKIA) to India’s Adani Airports Holdings.

This adds to the numerous voices that have been opposing the company’s Privately Initiated Proposal (PIP).

The Kenya Association of Air Operators (KAAO)—the lobby representing local carriers, including Kenya Airways - said yesterday handing over JKIA to a private operator should be done through a competitive bidding process.

Adani in April made the proposal to Kenyan authorities to take over JKIA through a 30-year concession, over which it would refurbish the airport and invest in new infrastructure but also have a free hand in running affairs at the airport, including hiking passenger fees and rentals, which it noted that are largely undercharged.

KAAO said at its board meeting held October 4, it had considered the proposed JKIA concession at length and concluded it would be a bad deal for the country.

“The board in its deliberations confirmed that it does not support the concession of JKIA as currently conceived, noting further that the stakes are too high for a one-bidder process for such an important strategic asset, and that the credibility of the potential partner is also in question,” said KAAO in a statement.

“It (the board) noted that the best approach in this complex ecosystem would be for a competitive and transparent bidding process with all the steps envisaged in the Public-Private Partnership (PPP) Act correctly followed.”

KAAO further noted that in considering bringing on board a private operator at JKIA, there is a need for a clear vision of the end game for Kenya, which the PIP by Adani fails to address. 

It added that a feasibility study that would inform the way forward for JKIA should involve all stakeholders.

“This would give all stakeholders - operators, users and the public – the best value from the concession agreement. The board confirmed that it advocates for a return to the drawing board, where a collaborative vision for JKIA’s future can be established; one that prioritises the critical development of a second runway, terminal expansions, and ensures that every stakeholder has an opportunity to contribute from the outset,” said KAAO in the statement.

The government has defended the need to bring onboard private sector players, saying it cannot raise the Sh260 billion funding needed to upgrade JKIA and enable it to become a formidable aviation hub and withstand growing competition from the region. 

Senior government officials, in defending Adani, have insisted that no deal has been reached and that the proposal will be subjected to technical, financial and legal reviews alongside requisite due processes in compliance with the PPP Act, 2021.

This will include public consultation and would also be subject to approvals by the National Treasury, the Attorney General, and the Cabinet.

Despite seemingly getting the support of Kenyan authorities, the deal has been fought by different stakeholders. The Kenya Aviation Workers Union (Kawu) is among the entities that have been protesting the proposal to hand over JKIA to Adani, arguing the deal has been shrouded in secrecy.

The union staged a crippling strike last month in one of its protests. The Law Society of Kenya and Kenya Human Rights Commission have also opposed the plan and succeeded in getting court orders halting the deal pending the hearing of a case challenging it. 

KAAO noted that the airport has the potential to become a regional hub and fight off competition from competitors such as Ethiopia’s Bole International Airport and Rwanda’s planned Bugesera International Airport.

“This inclusive approach is vital for ensuring that JKIA maximises its full potential as a dynamic, world-class aviation hub, particularly in the face of fierce regional competition. The Board observed that given JKIA’s strategic position, there had been in the past several PIPs and Expressions of Interest, which further supported the call for a competitive process,” said the airlines’ lobby. 

Adani has eight airports under its management and development portfolio in India, including the country’s largest Mumbai International Airport in Delhi. These include the country’s largest Mumbai International Airport, which it co-owns with the government-owned Airports Authority of India (AAI). Adani handles a third of India’s cargo air traffic and 25 percent of people who use the country’s airports.