More airlines may exit - player
A signpost of the British Airways sales and administration office in Kampala. The airline last week announced it will have its last flight out of Uganda on October 2. Photo By Timothy Kalyegira.
Kampala- Uganda’s aviation industry could see more exits, given reducing returns on investment, according to Mr Abebe Angessa, the Ethiopian Airlines area manager.
The warning comes at the wake of a British Airways’ notice, announcing it will be exiting Uganda later this year with its final flight out of the country on October 2.
Speaking to Daily Monitor in an interview early this week, Mr Angessa said the reasons that forced out Air Uganda and British Airways were not unique to the two airlines but an industry problem.
The airline industry, according to Mr Angessa, is highly capital intensive but low on returns on investment.
“It takes strong grip, constant watch on cost and firm decisions on how to achieve savings. This is always not easy. It takes purpose and focus to achieve, adding, “…our margins are really small and this is a challenge that we have to deal with all the time.”
Uganda has about 15 airlines operating out of Entebbe International Airport.
Recently, Civil Aviation Authority suspended all operations for locally licenced companies on claims of failure to meet required international standards.
Increasing competition
The aviation industry, Mr Angessa said, has become too competitive, amid dropping global passenger numbers worsened by increasing incidences and accidents and a volatile economic environment.
In an interview early last week, Mr Benedict Mutyaba, the former Uganda Airlines managing director and proprietor of East African Airlines, said the challenges that had informed British Airways’ exit could befall any other company, given a volatile airline industry and the shift of Uganda’s fortunes to the East.
Ugandans have in the last decade shifted focus from the West, moving to China, India and United Arab Emirates, among others, as the key trade destinations.
However, data indicates Uganda continues to maintain strong trade relations with the West, especially the United Kingdom.
For instance, according to Uganda Tourism Board, more than 43,000 people from the United Kingdom visited Uganda in 2014 compared to 33,670 who visited from other countries outside Africa.
Mr Angessa said it was normal to exit the aviation industry, especially, “when things are not going your way”.
“In this business (aviation industry) exiting is not a game changer because others will fill that space,” he said.
On the future of the industry, Mr Angessa predicted good fortunes “ As Africa continues to grow and develop, considering that the aviation industry responds directly to the economic growth and development of the country in particular and the continent in general is experiencing”.
