Qatar Airways has signed an agreement to take control of 60% of Rwanda’s new Bugesera International Airport, in a move that will see them greatly influence aviation in the country and the greater region. The deal, thought to be worth around $780 million USD is likely the first of many airport investments by the airline.
What are the details?
Not content with just airlines, Qatar Airways has decided to begin vertically integrating airports into its business model. They have signed a deal with the government of the African country of Rwanda for 60% of their new Bugesera International Airport.
According to CH-Aviation, the deal itself will allow Qatar Airways to not only build the airport, but to own and operate the facility well into the future.
“The partnership features three agreements to build, own, and operate the state-of-the-art facility,” the Rwanda Development Bureau said in a statement to CH-Aviation “The agreements signed today mark a key milestone in the development of Rwanda’s vibrant aviation sector, in the context of the excellent bilateral relationship between Qatar and Rwanda.”
Qatar is believed to have paid in the region of $780 million USDs for the deal, with most of the funds going to the initial construction and first years of operation.
Why is this airport being built?
The airport itself, a new one for the Rwanda capital of Kigali, is desperately needed as the existing airport caps out at 26,177 weekly passenger departures. The original plan for the new airport with a partnership with Portuguese firm Mota Engil would have seen the new airport built to support 32,000 weekly passenger departures (1.7 million passengers per year), but when that deal fell through Qatar stepped in with a much more ambitious target.
Qatar Airways offered to double the money (Mota Engil had been offering $400 million, with rights to profit from the airport after construction) and build a state of the art airport capable of handling seven million passengers a year. That’s roughly three and a half more times capacity than the Portuguese design.
And that is only phase one, with plans in place for the terminal to be expanded to handle up to 14 million passengers per year. Rwanda is a long way off needing such capacity, but perhaps this is where Qatar steps in with its own phase two.
Why does Qatar Airways want control of the airport?
The first and main reason that Qatar is interested in the airport is from a pure profit point of view. Rwanda is a growing country and Qatar stands to benefit by controlling the only airport into the city.
However, there is more at play than just controlling a single airport. If Qatar wanted to expand into Africa themselves, or perhaps through a 49% stake in a local airline (cough cough Air Italy) they would be able to control the slots given to the carrier, the costs of fuel and landing services, as well as influence government subsidies.
We would even bet that Qatar will want to turn this new airport into a hub for themselves in Africa, be it under a different airline brand if needed. In fact (tin foil hat time), there is even a rumor that local RwandAir is looking for funding and that Qatar might just be able to help. After all, they have a shiny new airport…
What do you think? Let us know in the comments.