Economic performance is key

Unlike many other sectors of the economy, aviation growth is directly linked to the performance of the economy. Many of the big airport hubs and carriers are located in big economies. There is, therefore, a need to evaluate all strategies and initiatives of our economic growth and development that will support the young airline as an economic infrastructure.

Considering the average income per capita of Africa at $1,000 though other more developed African countries hit $ 1,600, there is still work to be done if air transport propensity to fly is to be enhanced. Uganda’s income per capita as in 2020/2021  financial year stands at $910 and in comparative terms to a country like Ethiopia at $944, with the best African Airline, one can be confident that Uganda Airlines can do well given the natural endowment that we have and are not yet fully exploited and marketed. Most of the key commercial  aviation decisions especially on air  route service development are directly pegged on the economic indicators in terms of gross national product, income per capita, tourism numbers, exports/imports, disposable incomes and the propensity to fly in that particular economy.

Uganda, just like other African countries has been experiencing a high population growth since the second half of the second half of the 20th century. However, the propensity to fly factor has remained low as the middle income class is low and unstable. This has affected many potential air routes to and from Entebbe leading to some airlines closing the Uganda route.
Accordingly, despite Africa representing 15 percent of the world’s population, the 230 airlines present in African Air space ,operate only 5.5  percent of the world’s commercial passenger and freighter aircraft. The forecasts and significant population growth will deliver more demand for air travel if the other economic indicators improve proportionately.

A study prepared for the international Air transport Association (ITATA), points to the current demand being lower than it could be because of the barriers restricting intra-African air markets. It is envisaged that the Yamashukuru declaration (YD)  by ICAO and the common market for African Air transport could be a major breakthrough to stimulate air travel, both intra and inter-continental. Currently, these lack a political commitment across Africa unless aviation is main streamlined in all economic agendas as a driver of economic development. The liberalization will create competition and along it, service improvements and lower costs of air travel that will attract business and leisure flyers.

The following factors affect the propensity to fly which requires the attention of our economy’s planners;
Economic health-propensity to fly goes up when people have enough disposable incomes to afford vacations and when the overall economy reflects growth in business and therefore need for business and leisure trips. Current Uganda’s economic initiatives can effectively support this if well-monitored.

Demographic changes- A growing population like that of Uganda can increase the propensity to fly merely by raising the people living within an economy, especially if efforts are made to develop a strong middle class and sustain it. In many successful hubs with their Airlines, this is a major factor. Market maturity-As with demographic changes, propensity to fly does not increase  indefinitely as the economy grows. Infact it tapers off as the market matures and approaches saturation. Uganda’s economy, if well managed, still has a good opportunity to support the  airline if both monetary and Fiscal policies are further aligned and aviation ,main streamlined. Crises-unexpected crises like Ebola, covid 19,wars will always directly decrease the propensity to fly but requires a very good national public relations mechanics and respective preparations.

Land transport-Air transport competes with Land transport but the latter has a very clear advantage of time and safety. Uganda’s roads have  improved in the last 30 years but Air transport is still better in time and safety. Aviation sector needs supporting economic strategies that will  attract private low cost operators to operate domestic carriers for example a low cost airport in Kajansi or Entebbe where they pay less charges and not interfere with the legacy carrier operations. This will increase the propensity to fly as air travel will be affordable.
Airport hub Status-Countries with Air Connectivity far out of proportion to their sizes, because of their airport’s hub status, have a higher propensity to fly owing to the availability of air services. Countries like Singapore, Seychelles, UAE are very good examples which Uganda can emulate by further investing in both Entebbe and other potential international airports.

By and large as we evaluate the performance of Uganda Airlines, we need to appreciate that its performance is directly pegged on the total performance of our economy that affects the propensity to fly factor. Uganda’s economic journey shows growing  economic indicators and is to-date fourth in Africa but if Uganda Airline is to effectively deliver its benefit of an economic infrastructure, aviation must be  mainstreamed in economic planning.
All efforts need to be made to further improve our gross domestic product with more value addition and marketing in order to enhance the propensity to fly.

Authored by Prof.Tom Davis Wasswa,PhD,FCIM