Uganda Airlines may not fly in turbulent environment

Government has been under pressure to return the flying crane in the air soon. This objective crystallised in 2014 with a commitment by the former minister of Works Abraham Byandala that Uganda Airlines would return. The absence of a national carrier must be evaluated in a wider context.
First has been the deteriorating quality of air links to Entebbe. Regardless of the shine put over it, Entebbe has not really recovered from the departure of British Airways in 2015. BA marked a steady drip of departures starting with Air France, Gulf Air and others over the years. The rest of the carriers fly in to pick up “loose” change. Second has been the rapid fall from grace to grass of Kenya Airways a combination of corruption, mismanagement and simply bad fortune. Kenya Airways can barely marshall a working aircraft into Entebbe despite possessing four prime routes. The life of KQ is in a balance after years of making losses.
Uganda’s exports are mostly agricultural. In the high segment horticultural sector, limited air links have hampered exporters as their cargoes are second priority to other airlines that have primary customers elsewhere. For example, a Turkish air cargo decamps first to Istanbul outside the EU before connection. KQ prioritises their own cargo. Strict import regulations have left farmers at the mercy of cargo hijackers who blend cargo with contraband exposing them to losses when law enforcement kicks in.
The current aviation environment is a mixed bag. Rich countries like the oil rich Middle East invested in aviation at a time of high oil prices when their opponents were at their weakest. Even as oil prices leveled off, they gained a foothold, hence the rise of Emirates, Qatar, and Etihad. The older European airlines which have a higher cost structure (mostly regulations, higher wages and higher ground costs) could not match equipment and pricing offered by the newer airlines most of which have minimal pension costs. The American airlines are mostly out of Africa; very little direct trade exists between Africa and Europe.
If Uganda enters the market today, it will be coming on the back of rapidly expanding Air Rwanda and Air Tanzania Corporation. Air Rwanda behind the gloss is yet to make a profit. Air Tanzania seems to be on mostly trial runs and is likely to have a big domestic market. The conversation between Transport State Minister Aggrey Bageire and Parliament recently seemed very casual. In 2020, fuel prices are going to start rising again, before sharper rises in 2023 onwards. This will be in early years of operation. After years of promises, Uganda is only now preparing to hire a consultant to advise us on what needs to be done and wants to borrow funds to pay the consultant!
The minister washed his hands off more controversial questions. First the liquidation of Uganda Airlines got rid of everything including the name. The use of the name “Uganda” as a business name is regulated by law. Someone is preparing a huge pay-day just to redeem the name. The ownership of handling services in Entebbe must also be reviewed urgently as airlines make as much as half of their profit from cargo and handling. Entebbe’s cargo franchise in fat years is mostly funnelled to the carrier even though the physical appearance of the terminal and condition of the runway are the responsibility of Civil Aviation Authority. A plane needs two wings to fly; and cargo is one of them.
The Standard Gauge Railway is a big project which will bleed Uganda of billions to lay 900 km of track and 39 new stations. Tanzania has jettisoned the Chinese in favour of the Turkish and Portuguese and cut its costs in half. Uganda has collateralised its future oil revenues at probably a great discount to pay for SGR. This is hardly the environment in which to entertain more loans which will require QU to take off the ground. We will just be repeating Bujagali the fifth or sixth time.
Mr Ssemogerere is an Attorney-at-Law and an Advocate. [email protected]