Eldoret Airport still struggling
Hi there, this is an article by the East African Standard (Nairobi): After nine years of operation, the Eldoret International Airport is yet to break even. Kenya's third largest international airport, after the Jomo Kenyatta International Airport (JKIA) and Moi International Airport (Mombasa), remains largely under-utilised and requires Treasury support to remain afloat. Kenya's national flag carrier, Kenya Airways, has since stopped flights to Eldoret airport, citing non-profitable operations along the route. Eldoret Aiport manager, Mr Harrison Machio, says the facility cannot break even and requires to generate a Sh3 billion revenue annually to be out of danger. A recovery study commissioned by Kenya Airport Authority (KAA) recommends that the airport leases its land to horticultural farmers to increase revenue. It also proposes that the management plant trees at the vast airport land on commercial basis to generate income. "Last year, we only managed to generate Sh423 million from cargo operations and Sh19 million from airport operations, bringing the total revenue to Sh442 million. We had targeted to generate Sh1.5 billion," says Machio. Export business yet to kick off The revenue was generated from 1,804 landings for both cargo and passenger planes, which were recorded last year. Cargo received through the airport during the review period stood at 8,641,550 kg, with 536, 353 being transit cargo to Entebbe Airport in Uganda and the JKIA, Nairobi. Transit cargo was, however, stopped in June 2005, following introduction of new rules that require duty on imported cargo to be paid upfront at the point of entry. The rule was introduced by former Finance Minister, David Mwiraria, in the 2005/06 Budget. "Transit cargo can, however, be allowed if we verify the goods and duty paid before it is airlifted to other destinations," explained Machio. When it was commissioned in 1997, the airport was supposed to boost tourism in the Western Kenya region and be used by horticultural and flower farmers to export their produce. However, Machio reckons that the airport is yet to kick off the export business as flower farmers still prefer using Nairobi due to lack of warehousing and cold room facilities at the airport. "Part of the reason why we are yet to break even is because of lack of export trade," says Machio. It has been a difficult task to attract more carriers to the airport weighed down by poor business. Proposed recovery plan Machio, however, disclosed that the Government had an elaborate plan to spur business growth. He said the KAA plans to construct a multi-million shilling new warehousing and cold storage facilities to attract flower farmers use the airport to export their produce. "To attract flower farmers who have about 15 flower farms within the hinterland of the airport, we are building a new warehouse, with coldroom facilities and this will see the farmers start using the airport for export of their produce to European markets," says Machio. Machio says the new warehouse would accommodate 300 tonnes and will be constructed through a Build Operate and Transfer (BOT) arrangement with private stakeholders. The recovery plan proposed by KAA also seeks to put the airport's expansive land into use to generate additional revenue. "We are going to plant eucalyptus trees on our 700 acres of land, which we hope to generate Sh3 billion from the sale of the trees," says Machio. He says KAA also wants to lease part of the airport land to flower farmers under a 20-year lease agreement to drive revenue. "We hope these measures together with a cost-cutting measures already undertaken to double our revenue." Cargo ban lifted He said the airport workers have been reduced from 120 to 74 as part of the cost cutting measures. There has been only three scheduled cargo flights from the United Arab Emirates (UAE), bring in electronic goods, clothes and some spare-parts. He said apart from the cargo flights, Aero-Kenya makes two scheduled passenger flights to the airport on daily basis. The three carriers -DAS Air, Cargo-Lux and Emirates Sky - make weekly flights, but the business volume is still far below capacity. Machio says Egypt Airline made a test flight at the airport in September last year, but is yet to make a decision on whether to have scheduled flights or not. The airport has not operated smoothly since it was commissioned. After the Narc Government came into power, it imposed a cargo ban, saying the airport was being used as an entry point for drugs and a centre for tax evasion. However, it was re-opened in June 2004 after MPs from the Rift Valley Province led local residents in protests and demonstrations over the closure. After the lifting of the cargo ban, President Kibaki gave airline operators a one year concessions hoping to attract business. The incentives included free parking, a 25 per cent applicable rate for landing and navigation fees to be charged by the Kenya Civil Aviation. "We have reviewed the concessions after the expiry of the one year and we are now charging 50 per cent of applicable landing fees and 50 per cent of navigational fees and still provide free parking," says Machio. Low business Machio says security at the airport has been beefed up to spur business. He said apart from the scheduled cargo flights, Aero-Kenya makes two scheduled passenger flights from Nairobi's Wilson Airport on daily basis. Kenya Airways, he says, used to run domestic flights at the airport but pulled out in March 2004 without giving any reason. However, Machio says low business might have influenced KQ to pull out of the route. "It was after the pulling out of Kenya Airways that Aero-Kenya took advantage of the situation to start two flights on a daily basis." Aero Kenya, Machio says, has been able to sustain the flights, though the number of passengers along the route was still low and that partly explains why the fares are high-Sh 5, 900 for one way flight between Nairobi and Eldoret. "There have been claims that the two flights by Aero-Kenya cannot meet the demand, but this is not true. Usually, there is only high demand during weekends and holidays, with the remaining days registering low business," says Machio. They want to plant eucalyptus trees! Don't know what the economic impact will be, but in South Africa they have become a real plague. I doubt it is a good idea to do that! But hey, why solve a problem if we can generate another? Cheers, Felix