Oman Airports signs MoU to develop Kilimanjaro Airport – future potential public-private operation


Several years ago it seemed as if the Oman Airports Management Company (OAMC) was on course, at one and the same time, to welcome inward investment from outside the country and to invest selectively in airports outside it. A previous concession agreement for the Muscat and Salalah airports had been in place for two years to 2004, but then fell through.

The pandemic put paid to both sets of activities, but now OAMC has signed an MoU to develop Kilimanjaro International Airport in Tanzania, one which serves as a gateway to a multitude of world standard tourist attractions, in a country that is replete with mineral resources.

However, as this agreement develops it will focus attention on East Africa and the opportunities that potentially lie there for investors.


  • Oman Airports has signed an MoU to develop Tanzania’s Kilimanjaro Airport.
  • The potential exists to increase the commitment to a public-private operation.
  • Such an agreement did exist in the past, with other private sector entities.
  • Tanzania as a whole offers both business (mineral wealth) and tourism attractions, and the airport lies at the heart of much of it.  

MoU covers development of multiple landside and airside facilities in Tanzania

The Oman Airports Management Company (OAMC) has announced that it signed an MoU with the Kilimanjaro Airports Development Company to develop facilities at Kilimanjaro Airport, including a VIP terminal, hangar facility, hotel, business park and shopping centre.

The MoU forms part of a series of agreements between the governments of Tanzania and Oman.

This fairly low-level agreement does raise the question of whether the OAMC will finally start to take not just an operational but a financial interest in airports outside the country’s borders, as it intimated it might do several years ago.

The CAPA Airport Investors Database contains information and data on OAMC, which is owned by the Government of the Sultanate of Oman.

OAMC has hinted previously at its willingness to receive inbound investment and to seek opportunities abroad

OAMC is responsible for the management and operation of the country's two main airports – Muscat International and Salalah (since Jan-2002) – and also for the new airports of Duqm, Sohar and Ras Al Hadd, which opened in 2018. Also, together with an operation and maintenance agreement signed in May-2019 with Petroleum Development Oman to operate and maintain Fahud Buraimi, Marmul and Qarn Alam airports.

Despite these new regional airport responsibilities on its own territory, it was as long ago as Nov-2016 that it was revealed that OAMC would (a) start looking again beyond its borders for foreign investors and an equity share could be made available to suitable parties to assist in the further improvement of its airports and (b) would seek to become an investor in foreign airports.

Previous inbound concession deal fell through (2004)

With regard to the former, OAMC and the government would always be likely to tread warily.

A previous attempt was made at a 25-year concession for the operator in 2004, specifically on the Muscat and Salalah airports at that time and involving the UK’s BAA plc and partners, which had been awarded preferred bidder status.

However, the deal fell through and the government reassumed management of the airports in Nov-2004.

OAMC had reappraised its own success in improving the Muscat and Salalah airports over the previous two years, which BAA acknowledged, but the main reason was that it proved impossible to achieve financial closure on the terms of the privatisation and the development of a new terminal at the Seeb airport.

But from mid-2018 onwards the tide had started to turn again.

The Omani government said it was considering the sale of a partial stake in the airports' management company by 2020, amid an Arabian Gulf-wide drive towards privatisation and fiscal consolidation in the wake of lower oil prices. (Remember those??)

Then, in Jan-2020 the Oman Aviation Group (OAG) – which was created in Feb-2018, comprising Oman Air, Oman Airports Management Company and Oman Aviation Services, with the aim of coordinating aviation activities in the country (and which was then dissolved in Jan-2021) – confirmed that the government was considering privatising the Muscat airport in isolation. Its CEO said, "Privatisation will continue to be an option as long as it's to the benefit of the group and it's to the benefit of the country".

It is known that OAG had been seeking up to OMR6 billion (USD15.6 billion) to expand both Oman Air and Oman's airports, and the group had issued a request for proposals to local and international banks, with the first tranche expected to be raised by 2020.

The Oman Aviation Group considers privatisation of Muscat Seeb Airport report from CAPA in Mar-2000 provided a comprehensive report on that development at the time.

COVID-19 has put paid to inward airport investment for now

Some, or even all, of this might have happened since then but for the intervention of the COVID-19 pandemic, which has occasioned no less than five separate peaks in Oman since Mar-2020. The one in Jan-2022 to Mar-2022 was the most ferocious, although it has again settled back to almost zero daily cases each day.

Seat capacity is returning but remains at only 60% of 2019 levels, and the flag carrier, Oman Air, is only on 43% (week commencing 13-Jun-2022).

In common with most other countries, the desire to attract private sector attention has been thwarted as the price of investment may not be as high as it was for some time to come yet (and even allowing for the unusually high price achieved at Sydney, Australia, for the airport there).

Externally, interest had increased again since 2019

But what of the foreign investment that had been hinted at by OAMC?

That only evidence of that came in Jan-2019 when OAMC’s CEO, Aimen bin Ahmed Al Hosni, stated that the company was seeking management contracts with several governments.

Specifically, it was negotiating long term management deals for “six hubs internationally and locally” and expressed the intention to finalise an agreement for one international airport by EOY2019. Again, COVID-19 intervened there.

So this recent development in Tanzania will refocus attention on OAMC’s intentions outside Oman.

According to local press reports, the MOU signed with the Kilimanjaro Airports Development Company (KADCO) is intended primarily to ensure that Tanzania will benefit from Oman Airports’ experience in airport management and VIP services.

‘Raising revenue’ for both the Tanzanian government and OAMC underscores this agreement

The MoU stipulates that OAMC will undertake the development of the general terminal for VIPs and the hangar facility at Kilimanjaro International Airport, the development of a five-star hotel for passengers, and a business complex/shopping mall in the airport. The MoU has scope for development of “other facilities” that may be agreed upon mutually between the parties.

The key to a financial involvement is the statement, “This partnership will serve in developing the facilities referred to in the text of the MoU to ensure the provision of high-standard services as part of efforts to raise revenues for both the Tanzanian government that owns the airport and Oman Airports”.

Moreover, the agreement is one of six MoUs that were signed in the fields of economy, investment, tourism and energy during the visit of President Samia Suluhu Hassan to Oman. During that time, Oman and Tanzania set up a mutual investment fund that aims to invest in several sectors, including agriculture, fishing and mining.

A deal was also signed between the Oman Investment Authority and the Zanzibar Investment Promotion Authority. Omani businessmen and women were urged to invest in the fields of agriculture, minerals, tourism and fisheries.

The private sector has had a large share of Kilimanjaro Airport in the past

The Kilimanjaro International Airport has an interesting history where ownership is concerned.

The second busiest airport in the country after Dar es Salaam, in 1998 Kilimanjaro became the first international airport in Africa to be privatised (under a public-private model) and is operated by the Kilimanjaro Airport Development Company (KADCO) under a 25-year concession that was due to expire next year (2023).

However, the original ownership of the concession – which included a 75% shareholding by the British engineering consultancy Mott MacDonald, along with Inter-Consult of Tanzania (24%) and the Tanzanian Government (1%), with the airport operated by Schiphol Group – has changed in favour of a public one, “a corporate body having perpetual succession and common seal”, after the privately held equity was sold in Aug-2009.

Abu Dhabi Airports, dnata, GMR and TAV have all been attracted to Tanzanian airports

That hasn’t stopped other investors and operators looking at Tanzanian airports, although a decade has passed since the bulk of that interest.

For example, in 2008 Abu Dhabi Airports Company, in its first foray into external airport management, was attracted by the development of Zanzibar Airport and the “booming” tourism industry there, but no concrete investment was made.

In 2011 both India’s GMR and Turkey’s TAV entered into discussions with the Tanzanian government over proposed tenders for existing or new airports, but again nothing came of it.

Then in the following year an entrepreneur, the Tudor Investment founder Paul Tudor Jones, agreed to finance the USD350 million construction of an international airport at Mugumu – the Serengeti International Airport to serve the city of Mugumu, Tanzania and the nearby Serengeti National Park. It remains a ‘proposed new airport’ in the CAPA Airport Construction Database.

In Nov-2021 dnata, the Emirati airport services provider, signed a concession agreement with Zanzibar's Government to oversee the operation of Zanzibar Abeid Amani Karume International Airport's new terminal three, in partnership with SEGAP, Emirates Leisure Retail (ELR), and Maritime and Mercantile International (MMI).

The agreement marked dnata's first operation in Tanzania and included investment in a cargo centre, while SEGAP, a JV between Egis and AIIM, supports the Zanzibar Airports Authority in a management capacity.

Apart from this private sector interest, Tanzania has benefitted from the financial largesse of organisations such as the African Development Bank, which in Dec-2019 approved a USD272.12 million loan to Tanzania's Government for the construction of Dodoma Msalato International Airport. That, in part, comprised USD50 million in co-financing with the Africa Growing Together Fund, which is a co-financing facility of China's Government.

Tanzania’s allure lies in its mineral wealth and expansion of tourism

The attraction of Tanzania to foreign governments and private sector organisations alike lies in its mineral wealth, which encompasses metals (gold [the fourth largest producer in Africa], iron ore, nickel, copper, cobalt, silver), industrial minerals (diamonds, tanzanite [a unique mineral], ruby, garnet, limestone, soda ash, gypsum, salt, phosphate, gravel, sand, dimension stones and graphite), and fuel minerals (coal, uranium).

Fifty per cent of the country’s exports derive from mining, and much of it is of gold. Much of it remains untapped, and recently natural offshore gas deposits have been discovered.

Nevertheless the country remains a poor one, as agricultural policies are not up to the job.

Tourism might be a way of improving living standards.

The country has many tourist attractions: approximately 38% of the land area is set aside in protected areas for conservation. There are 17 national parks, 29 game reserves, and 40 controlled conservation areas, including the Ngorongoro Conservation Area and marine parks.

Travel and tourism contributed 17.5% of Tanzania's gross domestic product (GDP) in 2016 and employed 11% of the country's labour force. In 2019 the Tanzanian tourism sector generated USD 2.6 billion in revenues, with 1.5 million tourist arrivals.

COVID-19 ensured that figure declined to 616,000 in 2020, with revenues reduced to USD1.06 billion, but the potential is clear, and in Oct-2021 the Ministry of Natural Resources and Tourism was granted TZS90 billion (USD38.5 million) for the financial year 2021-2022 – part of the IMF loan for emergency financial assistance to support Tanzania’s efforts in responding to the pandemic.

Most importantly perhaps, Tanzania is also home to Mount Kilimanjaro, which is the highest point in Africa and highest standalone mountain in the world. Climbing it (fairly easy compared to most) has become the ambition of a growing number of people around the world for personal satisfaction or to raise funds for charity.

There are clearly numerous reasons why external airport operators and investors would find the airport to be an attractive proposition, and it is perhaps surprising that others have not.

The airport is positioned ideally for all the country’s tourism draws

Kilimanjaro International Airport is located between the regions of Kilimanjaro and Arusha in northern Tanzania.

The airport is the major gateway to the Kilimanjaro region, which is a major international tourism destination comprising Mount Kilimanjaro, Arusha National Park, Ngorongoro Crater, and the Serengeti National Park.

Passenger traffic figures are not available after 2016, when there were 3.7 million.

As of the week commencing 13-Jun-2022, seat capacity, which has already exceeded 2019 levels this year, stands at 92% of the 2019 figure. That is primarily because of domestic rather than international capacity gains.

Kilimanjaro Airport: weekly total system seat capacity, 2019-2022* (projected)

The domestic/international capacity split just now is exactly 50:50.

The biggest airline by capacity is the heavily indebted flag carrier Air Tanzania, which was bailed out by the government in May-2021 to the tune of USD194 million.

The largest foreign airlines by the same measure are the regionally (East Africa) dominant Ethiopian Airlines and Qatar Airways, while the major European presence comes from KLM.

Kilimanjaro Airport: system seats for all airlines/business models, week commencing 13-Jun-2022

The majority of international seats are to and from Ethiopia, Qatar, and the Netherlands, in that order.

The low cost revolution hasn’t arrived yet

Unsurprisingly, in a continent where low cost airlines are still to make a serious mark, full service accounts for the majority of seats at Kilimanjaro, followed by those on regional airlines. While almost two thirds of seats are on unaligned airlines, all three of the major alliances do at least have a presence.

OAMC in pole position to exploit further opportunities

In summary, while there is never a ‘good’ time to invest in African airports, some of which still have a large imbalance between aeronautical and non-aeronautical revenue generation, a tourist-oriented airport such as Kilimanjaro, which offers a cornucopia of attractions nearby, and which can easily be included in future two-centre vacations (for example with the exotic Zanzibar) will prove to be an attractive proposition once regular levels of tourism are again attained.

The accord reached between the Tanzanian government and OAMC puts the latter in pole position to exploit opportunities as they occur at the airport from this early base, including the resumption of a full-scale public-private administration, should both parties eventually seek it.

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