in Air Transport / Features

Uganda to revive the national airline

Posted 16 December 2016 · Add Comment

After nearly two decades in limbo, the Ugandan Government has announced plans to revive Uganda Airlines as the country's national flag-carrier. Muheebwa Hilary reports.

President Yoweri Museveni, in his first strategic guidelines and directives address to the new cabinet, termed the lack of a national airline “a big shame.”
According to excerpts from the president’s speech, in the next five years (his presidential term runs up to 2021) Uganda will encourage the setting up of a national airline.
“Ugandan travellers are suffering because of not having a national airline,” said the president.
The reviving of Uganda Airlines is part of the president’s efforts to achieve the much-anticipated agenda of turning the country into one of ‘middle income status’ by 2020.
The president directed the newly appointed minister for works and transport to conclude discussions with potential investors to help Uganda start a national airline as a matter of urgency.
Prime Minister Ruhakana Rugunda echoed his remarks.
“In order to meet the economic and other strategic demands, responsible agencies have been tasked to come up with complete guidelines on putting up a national airline,” Rugunda, told the parliament.
Ugandan Airlines was established in May 1976 and started its operations in 1977, with its hub at Entebbe International Airport, about 40 kilometres south of the capital, Kampala. By 1978, the national carrier had at least 15 aircraft fully owned by the government.
In 1999, the airline was stripped of its luggage-handling services, which were handed over to a private company. The airliner was left to limp on, with its only revenue coming from the transportation of passengers and light cargo. This made it operate on a cash-stripped budget, eventually becoming an unprofitable venture.
It was liquated in 2001 after prospective buyers, including British Airways, Sabena, Kenya Airways, South African Airlines and Alliance Air, all quit the race citing political pressure and the bad state of the carrier’s books. At the time, the airline’s heavy debts that stood at more than $6 million. The debt had been reduced from $12 million.
The Uganda Government hired global audit firm, Ernst & Young, to evaluate the viability of reviving the national airline. With increasing passenger and cargo traffic, it was deemed business-worthy.
Traffic at Entebbe Airport has more than quadrupled in the past three years. By 2015, Entebbe Airport was handling 1.4 million passengers and 55,000 tonnes of cargo. With increased agricultural productivity, a growing tourism industry and oil exploration prospects, air traffic is projected to increase.
Some reports say the government is looking at around $300 million as the initial injection into the national carrier revival. The airline will initially be a sole government business venture overseen by the Uganda Development Cooperation. The government will sell off shares progressively to the private sector until it is out of government control.
According to the president, the national airline will reduce travel costs. “A ticket to Nairobi costs between $1,100-1,200 for business class and $500-700 for economy class, depending on the time of booking, while a ticket to London costs between $2,700-3,000 for business class and $1,000-1,300 for economy class. This is a big shame,” he added in his speech.
The airline will face stiff competition from other carriers operating in the region. These include Kenya Airways, RwandAir and Ethiopia Airlines, all which the president said, have not helped a lot.
“I did not care much about a national airline. I thought that our brothers in Ethiopia, Kenya, and South Africa, having airlines, would serve all of us,” he said. “That, however, is apparently not the case. Hence, the ministry of works and transport is directed to conclude discussions with the investors that can help us to start a national airline.”
A national airline would, according to the president, help Ugandans to save $420 million per year spent on travel.
In a country where unemployment is high, the airline will offer job opportunities as well.
“The national airline will also create jobs and career opportunities for our children, who train as pilots at Soroti Flying School,” the president told his cabinet. “These children apparently suffer when they try to get jobs. Apart from joining the Uganda Air Force, opportunities for them are very limited. The airlines of our brothers and sisters that benefit from the Ugandan market should have remembered to treat our children as their own because our purchasing power is supporting those airlines.”
Speaking from Entebbe, the Civil Aviation Authority’s public affairs manager, Ignie Igunduura, reiterated that the matter of a national carrier is still with government for a final decision on its implementation framework.
“The national carrier will help in building Entebbe into a travel hub and build the image of the country’s international airport. It also assists in mobilising various resources for economic growth like tourism and trade facilitation,” said Igunduura.
Being a land-locked country, the national airliner will increase Uganda’s connection routes to the world.
The revival also follows the October 2015 British Airways suspension of its flights between Entebbe International Airport and Heathrow, London, on the grounds that the flights were not “commercially viable”.
British Airways had operated in Uganda for 24 years after re-launching its flights to the country in 1991.
 

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