A looming strike by airport workers at the Nairobi-Jomo Kenyatta International Airport is threatening to shut down the economy.
Operations at the Jomo Kenyatta International Airport (JKIA) will come to a halt next week if a strike by employees of the Kenya Airports Authority (KAA) and members of the Kenya Aviation Workers Union (KAWU) enforce an industrial action announced today.
Employees of KAA, JKIA, duty free shops and companies operating at the country’s main airport have warned that they will ground tools seven days from today, as they move to oppose the proposal to have Kenya Airways takeover management of the facility for the next 30 years.
“Today we are releasing a strike notice and the strike is not limited to KAA employees. It will also cover Swissport Kenya Limited, Tradewinds Aviation Services, Eurocraft Agencies Limited, Kenya Aerotech Limited, Duty Free Shops and the taxi operators,” KAWU Secretary General Moss Ndiema told reporters at the airport.
The union has called for the stepping aside of the Norwegian KAA Chief Executive and Managing Director Jonny Andersen, whom they accuse of duping employees in the ongoing negotiations to relinquish airport operations to the national carrier.
On October 3, 2018, KAA received a Privately Initiated Investment Proposal (PIIP) from Kenya Airways (Plc) requesting that the Airline be granted a concession to operate, maintain and develop the Jomo Kenyatta International Airport (JKIA).
In the PIIP, KQ has proposed to form a special purpose vehicle (SPV) specifically dedicated to operating, managing and developing JKIA for a period of 30 years.
An SPV is a subsidiary of a company which is protected from the parent company’s financial risk. It is set up under conditions set out in Section 59 of the Public Private Partnerships (PPP) Act.
Andersen is leading KAA in the negotiations which if passed, KQ will take charge of all airport operations at JKIA among them ground handling, warehousing, maintenance, catering and cargo services.
This means KAA will hand over its mandate to the national carrier in a government backed deal aimed at helping the airline in its turnaround strategy after years of losses.
The union which also represents employees of KQ and the Kenya Civil Aviation Authority (KCAA) says the move will render over 20,000 people redundant, hence the need to oppose it.
“We are determined as a union and the people of Kenya to fight this process. We will fight it here on the ground. We will fight it in the courts, we will fight it at parliament, we will fight it on every forum until Andersen leaves. If he will not be out of KAA within seven days, we are going to ground operations,” Ndiema said, noting that all airports across the country will come to a standstill.
KQ is said to have come up with a 463-page proposal on the takeover of the airport, which employees decry has been kept a secret between the top managers of the airline and KAA.
A section of the proposal, seen by The Exchange , shows KQ has given KAA three options on how to handle the transition of KAA and staff at the JKIA.
The first one is by seconding all the current JKIA staff to the SPV on the same terms for a period of 12 months , after the secondment period, KQ will transfer employees to the SPV with the right to choose who receive the transfer proposal. Those not absorbed will be reallocated to KA for redeployment to other airports and airstrips.
The SPV will then have a three year incubation after which KQ will decide on who to retain.
Another option comes under the transfer to the SPV where those who agree to be absorbed will be required to take a cut on their benefits.
The other option is KAA to make all JKIA employees redundant at the outset; and the SPV would then have an option of recruiting the former KAA employees under fresh contracts of employment.
Union vs KAA
The union has accused the management of keeping the proposal documents a secret as the fate of over 20,000 employees hand in the balance.
“I understand it is called ‘Project Simba’. Nobody has bothered to engage unions. Nobody had engaged workers; nobody has engaged the ground handling organizations. Why is that document being kept as a top secret?,” Ndiema posed.
The union has further accused Anderson of negotiating a Chief Operating Officer (COO) position for himself while leaving out the staff at the hands of KQ’s decision.
Andersen in a statement on January 23, however said the process will involve consultations before any final decision is made, adding that the board of directors and management has appointed Transaction Advisers to advise it on the PIIP, including carrying out a comprehensive due diligence and evaluation of the PIIP.
“As our valued stakeholders, it is mandatory and important that we get the views and feedback of all relevant stakeholders on the proposals made by KQ in the PIIP,” said Mr. Andersen.
If implemented, the strike will bring to a standstill East Africa’s busiest airport and Kenya Airway’s hub from which it operates to over 53 destinations globally.
It will affect all international arrivals and departures, dealing a blow to the country’s economy. JKIA is also a connection hub to the region and Africa at large.
Most hard hit sectors will include the tourism sector and the horticultural sub-sector as Kenya remains a net exporter of flowers and horticultural products.
At least 4.1 million passengers use JKIA annually with the number projected to grow to 6.9 million under the new rearrangement.
The Nairobi Securities Exchange (NSE) listed airline has the backing of the government in the deal as it seeks to revitalize its balance sheet after turnaround efforts in the last three years bore little fruits.
KQ is pushing to take control of the airport which generates between US$69.4 million (Sh7 billion) and US$79.3 million (Ksh8) billion annually.
The airline has been reporting loses in recent times with the worse being in 2016 when it sank into a Ksh26.2 billion loss (US$259.7million). This was a further fall from Ksh25.7 billion (US$254.7 million) loss reported in 2015.
The turnaround programme at the airline has however helped it reduce its losses to Ksh5.6 billion (US$55.5 million) in 2017. It reported a Ksh4 billion (US$39.6 million) loss in the half year period ended June 2018.
Kenya Airways operates 38 aircrafts of which majority are leased.