UNION SEEKS TO STOP ACQUISITION OF AIRPORT.

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Jomo Kenyatta International Airport(JKIA).

BY SAM ALFAN.

Kenya Aviation Workers Union has moved to court seeking orders to suspend Kenya Airports Authority and Kenya Airways PLC from implementing of any decision regarding the acquisition of Jomo Kenyatta International Airport(JKIA).

In a certificate if urgency filed by the workers union also wants the court to issue orders directing KAA, KQ, Transport CS , Treasury CS and Attorney General to stay the implementation of any decision regarding the acquisition, takeover, and privatisation of JKIA by Kenya Airways or its related companies and subsidiaries pending hearing and determination of the petition.

“That Pending the hearing and determination of this Application inter parties conservatory orders do issue and be directed to the Respondents, their agents or anyone authorised by the respondents or acting under the respondents to stay the implementation of any decision concerning any arrangement under the Public Private and Partnership Act between Kenya Airways or any of its subsidiary companies on one hand and Kenya Airports Authority on the other hand regarding Jomo Kenyatta International Airport by Kenya Airways,” said the Union in their court papers.

Through lawyer Peter Wanyama, they want the court to suspend the implementation of any decision regarding the acquisition, takeover, and privatisation of Jomo Kenyatta International Airport by Kenya Airways or its related companies and subsidiaries.

Union further wants the court to issue conservatory orders to stay the implementation of any decision concerning any arrangement under the Public Private and Partnership Act between Kenya Airways or any of its subsidiary companies on one hand and Kenya Airports Authority on the other hand regarding JKIA.

According to their court papers,they argue that on October 5, 2018, the Managing Director, Kenya Airways wrote to the Managing Director, Kenya Airports Authority (KAA)stating that it had been proposed that KQ and KAA enter into an agreement that will result in KQ operating, maintaining, developing, constructing, upgrading, modernising, financing and managing Jomo Kenyatta International Airport based on the Public Private Partnership (PPP) Model.

They claim that 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.

“In the Executive Summary, Kenya Airways proposes a takeover of the JKIA operations and management, through a thirty-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,” say the union.

The Union further claim that, under the Proposal by Kenya Airways, a Special Purpose Vehicle shall 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 shall continue to be managed by the Kenya Airports Authority.

Among other things, the SPV shall oversee, operate, maintain and develop JKIA, Operate and control JKIA’s assets, revenue sources (both aeronautical and non-aeronautical) and operating costs, ensure compliance with local, regional and international standards and norms, Collect charges for the use of JKIA by various users.

They also claim that , the proposal states that all current JKIA staff shall be seconded to the SPV on the same terms they are currently employed in for a period of twelve months.

It is also claimed that once the secondment period is over, Kenya Airways shall transfer the employees to the SPV, and that Kenya Airways shall have the right to choose employees who receive the transfer proposal.

“Those that shall not be chosen by the Proponent shall then be transferred/reallocated by KAA to other airports and airstrips. The responsibility for costs for potential redundancies of employees not willing to be seconded or transferred to the SPV shall be defined by the parties during the negotiations,” state the court documents.

JKIA is maintained and operated by KAA and accounts for nearly 83% of KAA’s revenues and 51% of the recurrent expenditure and therefore if JKIA is handed over courtesy of the concession, it will be very difficult for it to meet its legal and financial obligations to its stakeholders and even the employees working at and who may eventually be absorbed by other.

They add that 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,” said the Union.

They argue that 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.

They say the decision should also be approved by Parliament.
The Union also claim that the union has learnt that the KAA, KQ and Transport ministry are at a very advanced stage of taking over JKIA. The process could be completed in April 2019.

“The respondents should hurry the process without addressing fundamental questions as KQ owes KAA nearly Sh 4 Billion Financial,” says the union.

JKIA is the most profitable airport in Kenya. It accounts for nearly 90 % of KAA’s revenue stream.

“That the proposed transaction is an oddly unique one which is Ideally in a Public Private Partnership 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,” they further says.

The union further claims that the main objective of the take over is to allow the private entity (KQ) to make profit.

“Why are the respondents using a public asset to benefit private companies that own KQ without any form of consideration? is this not a back-door privatization?”poses the Union.

It is said that KQ will principally operate JKIA which means KQ will oversee collecting fees from other operators.

The claim the move is not anti-competitive and unconstitutional as KQ has intrinsic financially problems that have arisen from bad management decisions.

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