Economic View

On sector growth, operational efficiencies and domestic talent

In what ways is KAFCO deploying its capital investments to keep pace with the growth of the Kuwaiti aviation industry?

ABDULLAH MUHAMMED AL DUAIJANI: Growth of the aviation sector has been on the rise in the Middle East, including Kuwait, which is adding significant new infrastructure capacity to support the expansion of local and international carriers. The opening of Terminals 4 and 5 in 2018 required a wave of new investments from all aviation stakeholders, from ground handlers to maintenance providers, to accommodate the growth in passenger numbers. 

KAFCO’s core business is centred on the supply of aviation fuel to airlines and military customers operating at Kuwait International Airport (KIA) through contracts with international suppliers and resellers. As a result of the expansion of the local aviation sector, we expect an increase in jet fuel sales driven by the growing requirements of local and other commercial airlines utilising Kuwaiti terminals. After the completion of the new Terminal 2, which is expected to have a capacity of 25m passengers, we anticipate sales to increase by 15% compared to the previous financial year.

These developments in civil and military aviation have required investment from our side to ensure reliable and cost-effective delivery of jet fuel for airlines. We have engaged in various capital projects aimed at strengthening our existing infrastructure in order to keep pace with the regional expansion of aviation. Such projects include the rehabilitation of old depot tanks, the construction of a hydrant system at Terminal 2, and the procurement of additional dispensers, refuellers and new hydrant systems at gates B1 and B2 at Terminal 5. These efforts are aligned with the 2040 strategy of Kuwait Petroleum Corporation and the Directorate General of Civil Aviation’s master plan. 

How are operational efficiency and cost optimisation being strengthened across jet fuelling activities?

AL DUAIJANI: A major factor that allows companies to manage cost structure and deliver competitive prices to customers is ownership of infrastructure, and KAFCO has invested in a network of pipelines, depots, trucks and jet fuel supply capabilities. The infrastructure investments are based on growing demand, with many ongoing projects aimed at accommodating the expected increase in passenger numbers following the completion of Terminal 2. Since we own the fuelling facility at KIA, we expect a reduction in cost per unit as a result of the anticipated high volume of sales. 

Focusing on operational excellence and providing quality services can have a positive impact on a company’s financial performance, but also makes the overall local aviation sector more competitive, as it helps expedite the turnaround of aircraft. One of the most important projects we are working on now is the Fuelling Management System, which consists of the automation of into-plane services that can be linked with other existing systems to enable cost optimisation.

What are the ways in which KAFCO is developing its human capital strategy to support future growth and nurture domestic talent?

AL DUAIJANI: Employee engagement and continuous training lie at the core of operational performance. Therefore, we have developed an internal job competencies framework, and a series of annual employee training plans that are aligned with raising productivity and employee satisfaction. The annual training intensity for employees is 48 hours, and this target is achieved by on-the-job training at our facilities, including local and external classrooms, and participation in conferences and exhibitions locally and abroad. 

We initiated an annual talent management programme in FY 2013/14 with the objective of developing the future leadership capabilities of our employees. This ongoing programme is delivered over a span of six months, and includes pre- and post-assessment, classroom training, and 1:1 coaching and assignments. This level of training is required to meet the high safety standards within the aviation industry. 

In addition to training, employee engagement is critical for productivity, which we seek to encourage through performance recognition, awards, social events and increased awareness of the company’s achievements.