Hainan Airlines signs multi million US Dollar deal with Astral Aviation of Kenya


(Posted 15th May 2014)

During the recent visit by China’s Premier Li Keqiang to Kenya was, what can be termed a major aviation deal signed between Kenya’s Astral Aviation, which only last week joined the African Airline Association as a full member, and China’s largest privately owned airline, Hainan Airlines.

Based in Haikou does the airline, which was founded in 1989, operate a fleet of 129 aircraft with a further 26 on order and fly to nearly 500 domestic and international destinations around the world.

Rated by Skytrax as a five star airline, this constitutes indeed a major aviation development and though both parties have been remarkable reserved over their MoU it now throws the doors wide open for Astral Aviation to expand not just their core cargo business but perhaps even enter passenger aviation.

An initial investment was to be worth some 50 million US Dollars which should set Astral on the road to major expansion at a time when the airline business in the region, following the arrival of Fastjet in Tanzania and Jambojet in Kenya was stirred up big time.

Hainan’s parent company HNA is said to be worth nearly 140 billion US Dollars, invested in aviation, airports, ports, banking and financial services and other major infrastructure companies.

The news come at a time when the government of Kenya is under sustained pressure to revise the VAT Act under which new aircraft and spareparts are subject to 16 percent Value Added Tax, a measure which was broadly condemned by the AFRAA Convention two weeks ago and also drew sustained criticism from the UNWTO’s Dr. Taleb Rifai, his main direction being the African Union over attempts to levy airtickets and hotel accommodation which is seen as hugely detrimental to the evolution of African aviation. There is speculation that pressure from a Chinese investor of such substance as HNA could however swing the vote in the direction of rescinding the VAT provisions, but only time will tell if the growing opposition against such measures by the Kenyan airline industry will bear fruit. Watch this space for breaking and regular aviation news from the Eastern African region.

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