Reviving Uganda Airlines demands more than buying jets

Typical of the Ugandan way, the government has rushed to purchase six jets as it finalised plans to revive Uganda Airlines.

Some technocrats believe that the revival of Uganda Airlines is a turning point in Uganda’s economic development, but forget that it can only be so if the process is well implemented and managed.

The steps and speed taken by government to revive a national carrier that was ran bankrupt by the same government raises critical concerns.

A few weeks ago, local media reported that the Works and Transport minister Monica Azuba-Ntege confirmed that the government had deposited Shs4.43b to purchase six passenger aircrafts for Uganda Airlines that are scheduled to ‘hit’ the skies in November.

The revival of Uganda Airlines was based on the Feasibility Study by inter-governmental departments led by National Planning Authority (NPA). According to the NPA report, the study undertook a detailed review of the causes of success and failures of airlines globally, with particular focus on Africa and the collapse of the country’s previous national carrier.

NPA also reviewed relevant market fundamentals; undertook an evaluation of the different aircraft types; designed the national carrier’s management and operational framework; and undertook analysis on the financial and economic feasibility of the various investment options for the national carrier.

NPA report claims that currently, Uganda loses about $540m annually, in form of higher transport costs (extra charges) to passengers originating and terminating at Entebbe International Airport due to absence of a national carrier. The NPA reports concludes in part that the best-case investment scenario (combined regional and international aircraft purchase) would generate a direct net present value (NPV) economic benefit of $580m, after taking care of all the investment and operating costs, over a 15-year period.

The Uganda Airlines revival review team also identified the CRJ 900 and Airbus A300-200 series as the most appropriate aircraft types for the national carrier’s regional and international operations, respectively. According to the report, the scenario to purchase aircraft for both regional and international operations gives the highest financial and economic benefits to Uganda compared to all the options under the scenario of leasing aircraft.

As I read the report, one thing stood out: Red flags that will affect the efficiency of the airline if government does not act smart. The report recommended that we must address critical issues, including under-capitalisation, weak capacity for airline management, political interference in airline management, corruption in procurement processes, among others.

From the above recommendations, the government needed to pause and walk to a mirror, look direct into self and ask for self-check. The issues raised have become a chronic cancer for most of our public institutions.

Corruption and political interference have become inseparable with any government department that has substantial budget allocations. Before reviving the airline and proceeding to purchase the aircraft, have we taken oaths that we will desist from the above sins that have become part of public’s lives?

Another important question is whether government mapped out international routes and acquired necessary operation permits before spending on the aircraft. The government should have acted smart, undertaken due diligence before rushing to use borrowed funds to purchase jets that might be grounded for years as we set the operation grounds and chasing paperwork that could have been secured before spending.

You have to sympathise with the President that whenever he institutes such committees/inquiries, they generate heavy reports, but only read to him executive summaries from which he has to make commitments, most of which are costly to the taxpayer.

If there was any motivation for revival of Uganda Airlines, it should have been tourism - an industry, whose potential government keeps singing about, but does so little to harness it. Even when the industry is the second biggest foreign exchange earner; with the highest multiplier effect in terms of multiple benefits, which could address issues of unemployment, the government keeps managing this potential casually.

That said, let me highlight how the government can strategically use the airline to impact on tourism and I will share about how we are managing our tourism casually in my next piece.

We have to accept that it will take more time and marketing resources to build a clientele for our national carrier to compete both at regional and international levels. International airline users are more cautious than other ordinary product and service consumers.

They look at safety records of an airline, the efficiency, and service delivery, among others, which we have to be sincere to ourselves that for many years we have failed to deliver in even less demanding public departments. Research has shown that travellers are more loyal to specific airlines as a way of generating miles (travel points).

The most viable path for Uganda is to improve Entebbe International Airport, develop more international airports at least in two regions and work towards attracting big international airlines to consider adding Uganda on their routes.

When the above is achieved, Uganda Airlines can think of tagging its quality aircrafts to international flights to ferry tourists from Entebbe to their planned destinations. This would save on operational cost, help the airline build a profile to help risk into a competition, and most importantly, address issues of connectivity, amongst our tourist destinations.

Tourism doesn’t only contribute to foreign exchange earnings (we need this more than ever before as our shilling hits its weakest rates of close to $1: Shs4000, but also facilitates poverty reduction by generating economic growth, providing employment opportunities and increasing tax collections, and by fostering the development and conservation of protected areas and the environment in general.

There is no doubt that an airline has major potential of contributing to development and promotion of tourism, in our case it would do greatly by addressing the local flight challenges where we have unorganised flight schedules controlled by private companies who charge exaggerated fees. For example, a one-way flight from Entebbe to Kihihi Airstrip costs $300, almost a price for a flight to Dubai!

The government should know that airline management is not a trial business. More disciplined countries are still making losses with their airlines regardless of strict policies we highly lack.

Mr Rwamwiri is the managing director of Africa Wild Explorations.