Aviation business confidence grows

Growth in Uganda’s Aviation sector is also evidenced by the continued entry of new airlines both regional and international.

Most respondents in the April Airline Business Confidence Index have cited good performance in the past quarter of the year, predicting better Airline performance in coming months.

The International Airline Transport Association(IATA) report released last week raises confidence in the airline industry, a factor that may increase both public and private investments in the industry.

On the different Chief Financial Officers (CFOs) and heads of cargo sampled around the world, 56 per cent acknowledged passenger travel improvements in the last quarter while 40 per cent expect further growth over the next 12 months. 33 per cent expect no change in the year ahead, while only 27 per cent expect passenger traffic to deteriorate in the same period. The outlook for cargo is similar, with 43 per cent of respondents expecting improvement over the year. This comes after a quarter in which the same percentage of cargo heads said they experienced declines in cargo traffic.

“There has been an improvement in passenger traffic over the last quarter, with an expectation for further growth in the year ahead,” part of the survey explains.
It adds: “Indicators of business confidence and trade have improved over recent months, and that is now reflecting in the more optimistic outlook for passenger and cargo traffic.”

Reacting to these findings, Civil Aviation Authority (CAA)’s Corporate affairs Manager, Mr Ignie Igunduura, told Prosper that just as international players predict, even Uganda’s Aviation will perform better in the next twelve months and coming years provided the economy sustains its growth.

“We have been growing and expect to sustain this growth. Air transport does not work in isolation. It facilities the economy and in turn, the economy facilities it. Provided the indicators of growth are still present and bearing results in our economy, Aviation will also keep growing,” Mr Igunduura said.

He elaborated; “If our investment environment improves, Aviation will perform better and when the economy is stagnant, the aviation industry will be sluggish. Atleast now, there is no reason that will stop our Aviation from continuing with an upward trend in the next twelve months.”

In a recent interview, Mr Alex Mbugua, the Kenya Airways financial director held a related position when he said that more growth in both passengers and cargo transportation will come from Africa and Asia in both the short and long term.

“There are still several unexploited opportunities in this sector. Africa is a huge continent with limited Aviation infrastructure. But statistics show that our economies are growing and that is why Aviation is also steadily catching up. As long as African economies continue to grow, Aviation will also keep growing.”

However, contrary to January expectations of stabilising costs this year, the survey reports that input costs have stayed high, with 64 per cent of respondents indicating that they experienced increased cost pressures in quarter one of the year while 55 per cent expect significant increases in input costs in the coming months. This shows a huge change in perspective as only 19 per cent of the respondents expected increased costs this year during the January survey. These increasing business costs are attributed to the recent spike in oil prices and continued uncertainty about the situation in Iran.