Africa: What is required to make the new Uganda Airlines a bankable venture
Whatever caused the failure of the national carrier in the late 1990s must be fully tackled.
Uganda is moving ahead full steam to revive its national airline; in February 2019, social media was awash with pictures showing the final test-drives for the first aircraft to be delivered later in the year.
Despite these advanced efforts to revive the airline, concerns remain regarding the viability of the Airline project given Uganda’s unsuccessful history in the aviation industry. Furthermore, the continuous loses registered by other countries operating national carriers serves to augment these fears.
For example, can the revived Uganda Airlines avoid past mistakes of accumulating insurmountable debts and internal financial mismanagement? If the lessons from other countries with national carrier operators (e.g. South Africa, Rwanda, and Kenya), are anything to go by, airlines are not meant to be a profit making business.
Prior to its collapse in 2001, Uganda National Airline had operated for 25 years since 1977. The push to revive the National Airline targets to enhance tourism, brand the country and enhance Uganda’s competitiveness as a conference destination in the region. Indeed, the Government of Uganda (GoU) has released sh129b in FY 2018/19 towards the Uganda National Airline programme, representing about 35.4 percent of the total allocation towards the Ministry of Works and Transport. The proposed budget for Financial Year 2019/20 indicates that the allocation for the Airline will be maintained. To this effect, the GoU procured two air crafts and signed agreements to procure more four jets.
The revived Airline could be viewed as tool of enhancing not only investor confidence (both domestic and foreign), but also reducing the cost of doing business especially for business involved in exporting high value or perishable products. Indeed, manufacturing firms engaged in perishables should be excited about the revival of the airline given the long waiting periods they have been facing to airlift goods to their external markets. Airlines also facilitate tourism—especially where special direct routes to frequented tourist site destinations exist.
Furthermore, employment opportunities as air stewards, pilots, mechanics, and air food catering will be created.
Uganda Airlines could also leverage aircraft engineering services as an alternative source of revenue. This would reduce the cost of flying aircraft engineers, which could undermine the survival of the national carrier. While building aeronautical engineering capacity would take time, for it involves building highly skilled stock of personnel besides ensuring that frontier equipment is at all times available, the national carrier can position itself as a low cost destination for repairing aircrafts.
My considered view of Uganda Airlines is that, whatever caused the failure of the national carrier in the late 1990s must be fully tackled. Particularly, if reviving the airline is on borrowed funds, the likelihood of exacerbating the debt burden is high given the regional and global dynamics of airline business. Yet, as the Uganda National airline joins this competitive business, it must offers discounts or promotional fares on routes where other well established airlines are operating, undertake massive advertisements to first attract locals to use it prior to looking to internationals who might also be promoting their national airlines as well.
Furthermore, Uganda needs to adopt national policy on air transport—requiring that all government officials using public resources to travel be booked on the Uganda Airline to destinations where it has presence. Expansion of routes and air crafts should be taken sequentially and not wholesome. Ideally, we should start small and manage the routes well and where there is increased demand, then the airline can open new routes. Furthermore, the key issue is for the airline to be self-sustaining and not subsidized by the Government all the time.
I foresee this happening if the political economy on air transport ventures is not transparent, less bureaucratic and has not closed all gaps that can leave room for corruption and bad management.
By Madina Guloba