Its been twelve years since the fall of the Uganda Airlines in 2001, yet the government of Uganda is planning to revive the national carrier in a move geared at boosting tourism and trade in the country. However, this has attracted mixed reactions.
Formation and collapse
Putting in mind the collapse of the East African Airways in 1976 due to political disputes among the East African Community (EAC) leaders, partner states were forced to start their own national carriers.
Tanzania took a head-start with Air Tanzania. Soon after, Kenya Airways (KQ) and Uganda Airlines started operations in 1977. However, while Air Tanzania and Kenya Airlines have stayed afloat, Uganda Airlines only lasted a few years and by the year 2000, the airline was not self-sustaining due to bankruptcy.
The attempts to privatize the airline to revive its profitability and competitiveness didn’t work out. Initially Air Mauritius, Inter Air, Kenya Airways and Sabena expressed interest but declined to submit bids, leaving only SA Alliance/ SAA by 1999. SAA also lost interest, forcing the Government to liquidate the airlines in 2001.
Actual reasons why the airline collapsed
Experts say the Ugandan governmet is highly accountable for is failure – Government failed to support the airline to develop Entebbe International Airport as its hub, and the sale of its ground handling business to Entebbe Handling Services (Enhas), a company linked to foreign affairs minister, Sam Kutesa, led to its demise.
“Another reason was debts,” says a 78-year-old former employee who preferred anonymity.
“The Government owed the airline billions in unmet air travel bills.”
However, the Government to revive national airline
“I am drafting a paper to present to the Cabinet about the viability of reviving the national carrier,” said works and transport minister Eng. Abraham Byandaala recently.
In its recommendations to the Government, the Civil Aviation Authority (CAA), the industry regulator, wants to make a case study into the collapse of Uganda Airlines.
“The causes (of the collapse of Uganda Airlines) have to be analyzed so that we don’t make the same mistakes,” says another source.
Ignie Igundura, the CAA spokesperson, said the Government is yet to respond to the recommendations. “But there is a lot of (political) will to revive Uganda Airlines,” he noted.
Why do we need a national carrier?
- Reviving a national courier would enhance Uganda’s tourism potential and positioning as a conferencing hub. Over the past decade, Uganda has been attracting a considerable number of tourists who take safaris in the country that include gorilla trekking, wildlife safaris and other adventure travels to national parks.
- Entebbe boasts 24 scheduled and unscheduled international operators and 12 non-scheduled local operators. Its passenger handling growth stands at 1.5 million international passengers.
- “There should be an airline that has a limb and spoke operation, picking passengers and dropping them at Entebbe (International Airport),” says Igundura.
- “A national airline is a symbol of national pride and development. A Ugandan would feel proud to travel in a Uganda Airlines than with any other airline.” A national airline would also offer cheaper internal fares, create employment and increase the taxable base.
Starting a national carrier
A national flag-bearer can be started either through 100% government investment and ownership, or a public-private partnership.
For example, while Emirates Airlines, British Airways, Ethiopian Airways, Air Tanzania and Rwanda Air are government-owned, Kenya Airways is a joint-venture between the Royal Dutch Airlines, KLM and the Kenyan government.
Contrary to views that government enterprises are loss-making, Ethiopian Airlines posted a profit of $120m as of 2010, while Rwanda guaranteed $60m for Rwanda Air to purchase new aircrafts and fast-track Kigali International Airport as a hub.
“To start a hub, Uganda needs to invest about $500m to acquire five aircrafts, three of which would ply regional routes, while the other two take-on the longer routes,” says a source.
A hub would help the national airline to rally passenger numbers from neighboring countries due to the low traffic still experienced at Entebbe Airport.
Kenya Airways has a hub at Jomo Kenyatta International Airport, while British Airways has Gatwick and Heathrow airports as its operational hubs.
“When you have a national airline, there are many flights terminating at that airport,” says Igundura.
“Faced with war or any other disaster, Uganda would rely on the national airline to intervene and transport victims and arms.”
Strategies to revive the airline
Private operators are seeking partnership with the Government to re-establish a national airline, led by Air Uganda, a quasi-national flag-bearer belonging to the Aga Khan Fund for Economic Development (AKFED).
“We think of ourselves as a national carrier. Our logo is the Crested Crane, a national symbol,” says Roberto Manzi, the technical director.
“The Aga Khan has asked the Government to own shares (in Air Uganda) so that we operate as a national airline. We have not had a response yet.”
As well, SKA Uganda, another private operator, is seeking partnership with the Government.
“We want a partnership with Uganda to help start a national carrier and develop her export business,” says Andy Lewis, the station manager.
But with widespread corruption, accounting for sh500b loss annually, according to the World Bank, fears abound that this would not be a worthy investment.
“Do we want to divert millions of dollars from health and education to set up an airline which may never be profitable?” asks a source that preferred anonymity.
Raising $500m to buy aircrafts, expand Entebbe Airport and take over ground-handling and catering services is challenging.
“By the time Uganda Airlines was wound-up, it had one plane, which was on and off and yet the Government was subsidizing it at the cost of $1m a month,” says a former manager at CAA.
“Does the country we have that money to throw away?”
Uganda Airlines would also have to compete with established global airlines for international routes and be managed professionally to keep it competitive and self-sustaining.
Works state minister Eng. John Byabagambi says the Government must consider a national carrier not just as a business, but an infrastructure like a road commuting through the air.
“It should be budgeted for,” he says.
“Rwanda Air is not making profits, but the government looks at it as an infrastructure budgeted for and has bought three Boeings. Even Kenya Airlines is not profitable.”
About the Author
Brenda Nabukenya is a travel writer working with Gorilla Trek Africa, specialists in organizing gorilla safaris in Uganda and Rwanda. More of her articles can be read on www.ugandagorillatour.com/blog