Making Kenya the Aviation Hub in Africa
The aviation industry plays a critical role in Kenya’s development agenda. The industry catalyzes other sectors such as tourism, manufacturing, horticulture and the hotel industries, which contribute billions of shillings to Kenya’s economy and also offers thousands of jobs. In 2016, for example, the aviation industry contributed Ksh58.9 billion to the economy, which represents1.1 per cent of GDP. In addition, more than 620,000 jobs were created directly and indirectly within the industry and other associated sectors. The aviation industry is expected to achieve annual growth of 5 percent by 2030.
The aviation industry in Kenya dates back to a joint venture among Kenya, Uganda and Tanzania in running the East African Airways in the 1940s. After the breakup of the East African Community (EAC) in 1977, the three East African countries have been developing their own aviation industries including establishing national carriers and modern international airports. As articulated in Kenya Vision 2030, the country aspires to be a regional aviation hub. Therefore, the Medium Term Development Plans (MTPs) have continued to prioritize modernization of international and domestic airports and airstrips in order to increase commercial flights connecting the country to the region and the world. This is expected to increase commercial activity within enterprises serving the airports, increased job opportunities as well as enhanced revenue from a thriving aviation industry.
Currently, Kenya has the largest aviation infrastructure in the EAC region with five international airports: Jomo Kenyatta, Moi, Kisumu, Eldoret and Isiolo airports. Isiolo International Airport opened in mid-July, 2017 and is expected to support the LAPPSET corridor, market the Isiolo resort city and support the East African Miraa industry. In comparison, Tanzania has three international airports; Rwanda two while Uganda and Burundi have one international airport each. Additionally, Kenya has six domestic airports: Wilson, Wajir, Malindi, Lamu, Manda, and Lokichogio and over 500 airstrips widely spread across the country.
Kenya also handles heavy traffic compared to other EAC members. For example, in 2016, Jomo Kenyatta International Airport (JKIA) handled 7.5 million passengers compared to Julius Nyerere airport of Tanzania which handled 2.5 million passengers and Entebbe international airport 1.5 million passengers. However, Addis Ababa Bole International handles 1 million more passengers annually compared to JKIA. The construction of JKIA terminal three, once completed, is expected to increase annual passenger handling capacity to nearly 30 million passengers, paving way to becoming a regional hub.
Because of the ongoing upgrading and modernization of infrastructure for the international airports, JKIA was named the best improved airport by the Airports Council International (ACI) Airports Service Quality (ASQ) Awards in 2015. More recently, Kenya has been given a nod by the US Federal Aviation Administration (FAA) to have direct flights to the US. The Government is also upgrading and modernizing domestic airports and airstrips to widen air transport network domestically while exploiting economic potentials at county level. Notable among these airstrips include: Manda (Lamu); Mandera; Kitale; Suneka and Kabunde (HomaBay).
Although Kenya Airways, the national carrier, serves a wider network compared to other EAC members, it is facing significant competition from Ethiopian Airline in the wider Eastern Africa region. Kenya Airways, with a fleet of 36 aircrafts serves 53 destinations with 79 routes in 41 countries as compared to Ethiopian Airline with a fleet of 88 aircrafts serving 121 destinations with 210 routes in 72 countries. RwandAir is a growing competitor with a fleet of 13 aircrafts serving 26 destinations with 43 routes in 23 countries.
The national carrier performs fairly well in the aviation global rankings but it has areas that require attention. For example, in July 2017, Flight stat, a global ranking body in the aviation industry, ranked Kenya Airways 9th for airlines on-time performance while Ethiopia Airlines was position 12 – along the middle east-Africa route. Globally, Kenya Airways was 49th with a score of 7.24 while Ethiopian Airline was 38th with a score of 8.3 – for quality of services and on-time performance.
There has been a growing number of international airlines serving the Kenyan market and more potential to exploit. Those from Eastern Africa are: Ethiopian Airline, RwandAir, Precision Air, Jubba Airways and the Ugandan Vule Airways, which is expected into the market soon. Airlines from other African regions include: South Africa Airline, Air Seychelles, LinhasAéreas de Moçambique (LAM), Royal Air Maroc of Morocco, Air Madagascar, Air Mauritius and EgyptAir. Kenya has a bigger market in Europe with KLM, Swiss International Airlines, Turkish Airlines, Lufthansa, British Airways, Alitalia and Air France set to resume in March 2018 following an 18-year absence. There is a growing market in Asia that has seen Korean Airlines, Air China, Cathay Pacific (flag carrier of Hong Kong), Air India, Thai Airways International, United Arab Emirates, Etihad Airways, Oman Air, Qatar Airways, Royal Jordanian Airlines, Saudi Arabian Airline and Singapore Airlines serve the domestic market.
Kenya will be launching a direct flight to the US in 2018, but is yet to establish partnership with Latin America. In particular, Kenya has been blamed for taking too long to ratify the Open Sky Agreement signed on 8th July 2010 for direct flights between Kenya and Brazil. Currently, Kenya’s horticultural exports to Latin America pass through Europe, thus lowering its returns. There is hope, though, following negotiations with Jamaica held on the 3rd of January 2017, over the signing of air service agreements. Enforcing air service agreements between Latin America and Kenya is expected to strengthen trade ties and boost demand for air transport, particularly in the wake of globalization.
Along the Mombasa route, Neos Air and Blue Panorama from Italy, and Air Spolka from Warsawis have resumed flights to Kenya. Dutch airline Aushaanair is also set to resume operations to Mombasa later this year. Although there is a growing number of airlines serving the domestic market, many travellers are yet to embrace this form of transport, as it is relatively expensive. As such, the modernization programme on domestic aviation infrastructure should go hand-in-hand with promotion of domestic travel.
The aviation industry in Kenya is regulated by the Kenya Civil Aviation Authority (KCAA) while the airports are managed and maintained by the Kenya Airports Authority (KAA). They ensure growth of a vibrant and competitive air transport industry and modern airports that meet international standards. Kenya is also a signatory to the Chicago Convention of 7th December 1944, which established the International Civil Aviation Organization (ICAO). The convention establishes international air law, standards for bilateral air service agreements (BASAs) and exempts air fuel from tax, but Kenya is yet to comply with it. The aviation operations are also guided by standards and recommended practices (SARPs) of International Civil Aviation Organization (ICAO), of which Kenya is a full member. Kenya is also one of the 44 signatories of the Yamoussoukro Declaration of 1988, which requires African countries to implement Open Skies policy in order to increase traffic through hub points.
During the 29th AU Summit held in Addis Ababa in July 2017, African leaders resolved to have a single African air transport market launched in January 2018, with more than 40 countries expected to be signatories. This comes at a time when Africa is considered the most expensive air transport market in the world due to individual nations’ policies and regulations that hinder air connectivity. The East African countries continue to practice protectionist policies to cushion national carriers from competition leading to a high cost of doing business. Entry of national airlines in the EAC points to efforts in the right direction towards Open Skies policy. This will reduce air travel costs while increasing passenger traffic for all routes. Liberalization of the region’s airspace is estimated to increase the blocs’ GDP by US$ 200 million per year while increasing passenger traffic by about 46 per cent per year. This policy will also boost tourism and trade sectors.
To realize the aspiration of becoming an aviation hub in the region, Kenya needs to fast-track the upgrading and modernization of airports and fully equip them fully with excellent facilities capable of attracting more international commercial airlines to the market. The modernized and capacitated airports will not only accommodate more passengers and cargo but also allow offering top class services to passengers, enthroning Kenya aviation industry in the continent. A well-structured public-private partnerships will guarantee private investors participation in partnering with the Government in the modernization of airports.
Putting the right leadership at the helm of the national carrier will ensure sound business practices and steer the airline into a robust recovery path to profitability and maintain a competitive edge. In addition, there is need to strengthen human resource management to ensure stable, reliable and efficient operations of the airline. Furthermore, with the competitive global economy, the industry needs to embark on a clear and aggressive marketing strategy.
Finally, EAC countries should fast-track full implementation of the principles of the Yamoussoukro Declaration. This will promote competition in the region through higher traffic and reduced seat costs, increase contribution to GDP and create new jobs. In addition, it will boost investment in the region by reducing the cost of doing business.
Authors: Felix Kiminyei and Brian Obiero, Young Professionals, Infrastructure & Economic Services Division
Photo: Courtesy of Kenya Airports Authority (KAA)