Why Qatar plan to buy stake in RwandAir is wakeup call for KQ

Thursday February 13 2020

rwandAir

A RwandAir Airbus 330-300 plane. FILE PHOTO | NMG 

By Business Daily

Qatar’s move to open negotiations with RwandAir to acquire a 49 percent stake in the carrier will potentially have serious ramification on regional airlines, particularly the Kenya Airways .

Should negotiations materialise, it will come as a blow to not only KQ that is struggling financially, but also other carriers such as Uganda and Tanzania airlines, which are still at their infancy stage.

The new development, which comes just weeks after Qatar announced that it had acquired majority stake at the new Rwanda Airport, is likely to bring a number of far-reaching changes in the regional’s aviation industry.

KQ chairman Michael Joseph says it is now time to be concerned as a country following this new plan that is likely to impact directly on the national carrier if the government will not take the right steps on the long overdue reforms.

“It is time that we got concerned with what is happening. This is a wakeup call for us especially if we do not move with speed in doing what is right,” said the chairman.

Mr Joseph noted that when KQ was pushing to manage the Jomo Kenyatta International Airport (JKIA), they wanted to make it an East African commercial hub and attract the traffic from other regions. However, the move was opposed leading to the collapse of the plan.

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The chairman said with Qatar Airways acquiring a majority stake at the Rwanda’s new airport and a 49 percent stake in the airline, then Kigali has all the ingredients to become a major hub in the region.

Qatar will make Rwanda its African operation centre where passengers from other African countries can connect flights to Europe or even the US using either Qatar Airways or RwandAir without necessarily having to connect from their headquarters in Doha.

“It will be a very efficient hub in a very stable country in the heart of Africa and are going to take a stake in their national carrier because we see that Africa is another region that has huge growth potential,” Akbar Al Baker, Qatar chief executive officer, said last week.

The carrier, which has one of the youngest fleets in the world, is likely to make Rwanda its second base outside of Doha, a move that will likely see the airline repatriate some of its aircraft to Kigali for connection to other continents.

The move to look for a second base could have been informed by air blockade imposed by Saudi Arabia, the UAE, Bahrain and Egypt for almost two and a half years now, restricting the carrier from flying over their airspace.

wanda is in the process of acquiring Category One status to allow for direct flights between Kigali and America.

European and American carriers have had problems with Middle Eastern carriers, Qatar included, over the heavy subsidy that they get from their respective countries, making them to charge lower fares compared with other countries.

African carriers should have a reason to worry as Qatar Airlines is likely to charge cheaply on tickets once its deal with Rwanda goes through. This will force regional airlines to lower their cost in order to remain competitive.

Qatar Airways is investing Sh131 billion at the new Rwandan Airport making it one of the largest ports in East Africa as it positions itself to become a regional hub, a status currently held by JKIA.

The move follows a deal between Kigali and Doha, which will see the Qatari government own a stake of 60 percent at the new facility.

The partnership will involve building, owning, and operating of the new Bugesera International Airport as it seeks to expand its capacity to seven million passengers a year.

The capacity will almost be at par with JKIA, which is the main hub for Kenya Airways.

KQ and Ethiopian Airlines, which are the largest carriers at the moment in Eastern Africa, will be watching the development keenly to see if the negotiations between Kigali and Doha on RwandAir stake will come to fruition.

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