Nov 25, 2014
General
caxias

The stand-off between Frontier Services Group FSG, a Hong Kong listed company, and Kenya Civil Aviation Authority (KCAA), over an aviation licence is set for the courts.

The stand-off between Frontier Services Group FSG, a Hong Kong listed company, and Kenya Civil Aviation Authority (KCAA), over an aviation licence is set for the courts.

At the centre of the row between KCAA and the investment firm is an application for the renewal of Kijipwa Aviation’s licence that was declined by the authority.

The investment firm argues that KCAA has on many occasions failed to provide valid reasons for its refusal to renew the licence for the Mombasa-based aviation firm in which it bought a 49 per cent stake.

“We have written seven letters to KCAA requesting for a valid reason but none has been responded to. The option therefore is to proceed to court to have the matter resolved,” FSG chief operating officer Peter Philips said in an interview.

The authority said earlier that its decision had been informed by the uncertainty regarding the ownership of Kijipwa and non-compliance with Kenyan laws that limit foreign ownership of aviation firms to 49 per cent.

“There are shareholding questions about the company,” KCAA acting director-general Joseph Kiptoo said in an October 26 interview.

But FSG says its purchase of stake in Kijipwa strictly complied with the requirement that locals hold a 51 per cent stake in an aviation firm.

“Our lawyers are currently finalizing on the paperwork and soon we shall move to court to initiate a process that will obviously take longer than we anticipated,” said Mr Philips.

HEAVY BLOW

The decision by KCAA, the aviation industry regulator, dealt a heavy blow to the investment firm which had outlined ambitious plans of setting up an aviation training centre for both pilots and certified aeronautical engineers at the coast.

Currently, professional Private Pilot Licence and Commercial Pilot Licence holders have to go overseas, mostly US and Britain, for training. FSG wanted to set up such a facility in Kenya to serve East Africa.

“We had set up a very ambitious business programme but the licensing headwinds have stalled the whole process,” Philips said.

Kijipwa was part of the investments firm’s wider strategy of cashing in on the region’s and country’s nascent extractive industry as well as logistics services.

FSG, whose board chairman is former US Navy Seal Erik Prince, already has a 49 per cent shareholding in Phoenix Aviation, a Kenyan company.

In May, KCAA expanded Phoenix Aviation’s licence allowing it to operate chartered flights to Asia. This gave FSG room to target Chinese mining firms with operations in Africa as major clients for its logistics services.

FSG was formerly known as DVN Holdings Ltd but it changed its name to Frontier Services Group Ltd in March 2014 through regulatory filings to the Hong Kong bourse.

FSG is eyeing a slice of the oil and mineral wealth in Kenya and Africa through provision of passenger and freight services to oil and mining companies transporting staff, machinery and spare parts to remote areas such as Lokichar and Lokichoggio in Turkana.

“Kijipwa was appealing to FSG due to its strategic position near the Port of Mombasa, and the legendary reputation of its founder, Mr Alan Herd,” FSG chief executive Gregg Smith said in a separate interview.

FSG had reportedly lined up 25 aircraft for Kijipwa’s airstrip located on the grounds of Bamburi Cement in Mombasa, to provide specialised aviation services and aerial survey of installations such as oil pipelines to players in the extractive industry.
Return