No need for merging Uganda Airlines and Uganda Air Cargo

Friday November 15 2019

 

By HGK Nyakoojo

The brand new Uganda Airlines has only recently taken to the air with much fanfare. Some of people, including yours truly, thought that the government was ill-advised to prioritise its re-establishment.

Only a few government-owned airlines in the world actually make profit. A recent report indicates that in Africa, only Ethiopian Airlines has been making profits consistently.

Some unconvincing rationalisations were made for establishing Uganda Airlines, including that it would be a boon for tourism development! That is false. Why? Because valuable tourists to Uganda do not come from Bujumbura in Burundi, Juba in South Sudan, Kigali in Rwanda and Kisumu in Kenya, among others.

And now that Uganda Airlines is here, the people at Uganda Air Cargo have come to the fore to alarm the industry with their cries of woe! They are at least Shs55 billion in debt and want a handout from the national Treasury.
They might well get their wish, unfortunately! But then the New Vision editorialises the matter advocating a merger between Uganda Air Cargo and Uganda Airlines. I vehemently disagree.

First, Uganda Air Cargo has such massive liabilities that the new airline should not be burdened with so early in its own tenuously uncertain life. Instead, one should ask why Uganda Air Cargo failed. And it is probably either because it is mismanaged or there is no sufficient business for it to be profitable, or both.

Why should Uganda Airlines take on Uganda Air Cargo’s liabilities when it can establish its own cargo carrying subsidiary if and when it establishes that there is sufficient business to sustain it?

Advertisement

Back to where I started. In my opinion, Uganda Airlines was established more for prestige and not as a business project. It should, therefore, be left alone to thrive or collapse without “assistance” from some other seemingly failing enterprise.
Failed enterprises get liquidated. That is what happened to the first Uganda Airlines and is perhaps the one rational option left for Uganda Air Cargo.
HGK Nyakoojo,
Buziga, Kampala

Advertisement