Uganda Airlines was re-launched against a huge reputation risk burden

Wednesday September 11 2019



Raymond Mugisha

Raymond Mugisha 

By Raymond Mugisha

When it was announced that the national carrier, Uganda Airlines, was going to re-launch, there was significant public reaction especially on social media and a lot of it was negative. Whereas it would have been unrealistic to expect uniform sentiments from the public about the project, the extent of negativity that came through regarding it appeared too much.

Personally, I do not see any reason why I would fly an alternative airline if Uganda Airlines is available on my route. And I actually do not know much about Uganda Airlines yet, since I have not had a chance to fly with them and I am also not privy to information about them beyond what is publicly available. It is Uganda’s airline and I simply have a predetermined preference for it.

On the other hand, many other Ugandans have expressed a different stand and their views have been expressed, especially in social media reactions. Some of such people have indicated lack of trust in the airline, to the extent that they say that they will prefer to avoid using it for their travel needs.

The variation between the two standpoints above is an example of the substance of what is called reputation risk. Both positions are not based on facts. I have no experience with the airline, and I believe neither do many of the people that have expressed their discomforts about it.
Reputation risk is partly driven by the set of perceptions that stakeholders hold of an entity and can be a result of rumors, negative publicity whether true or false, previous experiences related to an entity as well as general opinions that an entity will not deliver what it promises, among other things. It is the danger to the good name of an entity arising from negative publicity, stakeholder perception or uncontrollable events.

By its nature, since it is largely attached to human emotion, reputation risk is one of the hardest to manage by aid of direct mathematical simulation, which is meant to quantify the damage that an entity is exposed to from various fronts. Predicting reputation related events is ordinarily difficult and as a result, we may only quantify the likely consequences of potential damage to reputation.

Currently, all negative reactions to Uganda Airlines have been mainly speculative, with no major event to fuel negative publicity. Whereas there can be put in place a deliberate plan to counteract the negativities, it is also possible to ignore such negative public reactions to fizzle by themselves, with time.

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However, just like any other business, the airline will in future possibly face circumstances that can be used to run a negative “campaign” against it. What has been happening with the public expressing negativity about otherwise trivial issues such a minor spelling mistake, a handwritten boarding pass and others is red flag that should make Uganda Airlines list reputation risk as one of their inherently highest risk exposures.

So to speak, there are strong indicators that the Ugandan public, who are a key stakeholder in the airline, would gladly pick on any major adverse event if it happened to the airline and amplify it to potentially harmful proportions. This would be a big threat to the airline’s strategy and can affect revenues. It could also dent key relationships with counter-parties and partners such as suppliers, global regulatory entities and air traffic control agencies in other jurisdictions.

The fine detail of reputation risk management cannot be highlighted in this space, but in view of current conditions, Uganda Airlines possibly already has or will need a clear reputation management policy. This policy should define the parameters for effective response to reputation events. It should take care of, among other things, a response plan relating to adverse social media events. A crisis management and communication plan will also be derived from this policy to define processes that would be used to respond to critical reputation situations if they crystalized.

The reputation management policy and accompanying operating documents would have to be communicated across the organization and understood by all staff. Their content would also form part of the induction program for new staff, rehearsed and periodically updated to address environmental changes and lessons learnt by the organization along the way.

With time, conditions will change, relevant public sentiments may shift, customers may experience quality service and communicate regular positive accounts about the airline and this exposure to reputation damage may therefore finally cease to be a major one for the airline. However, currently indications from the public imply that it should be given attention.

Raymond is a Chartered Risk Analyst and risk management consultant
rmugisha@afriaccent.com

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