Last year, Uganda’s reliance on foreign airlines was coming to an end with plans to revive the country’s national carrier gaining momentum.
To show the seriousness that President Yoweri Museveni was putting into this, the East African nation signed a US$190 million deal with Bombardier Inc. for four regional jetliners.
To further strengthen the airline’s position, the country was also getting into another agreement which would see Airbus sell at least two commercial aeroplanes to the company.
While the cost of the deal was not revealed, those privy to the dealings say the move should be a worthwhile ‘risk’ to breathe life into the national carrier.
Purchasing the two A330-800neo aircraft sought to grow the Pearl of Africa’s aviation sector while providing business opportunities to investors. The target is also growing the local industry.
However, it wasn’t all smoothened out and Uganda was turning to China to revive the airline.
The airline was seeking to secure multi-million loans from the Asian giant whose stranglehold over Africa has taken root-enabled by corruption, largely.
Uganda was hoping to begin operations by the end of 2018 but this did not happen until late 2019 when the first flight took off landing in Nairobi on August 27, 2019.
The country’s transport ministry said the airline had lined up four Bombardier Aircraft with the two Airbus orders expected next year for the commercial flight business.
Engineer Monica Azuba Ntege, minister for transport and public works said, “We are going to focus on regional routes before expanding to other destinations.”
Ntege said that the launch of the flight to Nairobi would boost trade, Uganda’s tourism and agricultural activities.
Before the revival, Uganda Airways collapsed in 2001 having been operational since 1977.
The Airline was founded as a subsidiary of the government-owned Uganda Development Corporation (UDC) in May 1976. This was a replacement of the services previously operated by East African Airways.
Due to mismanagement, the airline was in a delicate cash position in the late 1990s. To save the airline, the Government of Uganda planned to privatise the debt-ridden entity but no investor would help keep it afloat.
With no takers, despite having had several firms declare interest, the government liquidated Uganda Airlines in May 2001.
Uganda Airlines made its maiden 1 hour 50-minutes direct flight from Entebbe to Mombasa on November 11, 2019 with the Bombardier CRJ900 jet touching down at the Mombasa International Airport with 74 passengers.
Banking on three flights a week for the route, the airline seeks to help boost trade between the two East African nations of Kenya and Uganda.
“The flight trip would play a vital role to thousands of Uganda traders who depend on the Port of Mombasa to do business. The route will add value to travellers who used to spend more than three to four hours,” said Harvey Kalama, the airline’s operations manager.
With more than 85 per cent of Uganda’s imported cargo passing through the Mombasa port, Kalama noted that passengers will avoid having to make connecting flights from Entebbe to Nairobi then onward to Mombasa.
With the airline seeking to reclaim its space in the crowded airspace, the country will have to jostle with the likes of Kenya Airways, Ethiopian Airlines and Rwandair among others.
Before its collapse, the airline was serving a total of 15 countries in Africa, Europe and the Middle East.
Already, Kenya Airways has expanded its routing to include the first direct flight to New York in the US giving it an edge over other airlines in Africa without the same offering.
For Uganda Airlines, this would be a tall order up and until it could be in the same position of destination choices.
Since the launch of the route, Kenya Airways has signed 15 Codeshare agreements which have seen it steadily penetrate the highly competitive US market.
During the year, the national carrier ferried over 105,000 passengers, operated 594 flights and continues to establish strategic partnerships to provide options for more seamless connections between Africa and the US.
The airline was the first in East Africa to fly non-stop into a US city and since the launch of the NBO – NYC route on October 28, 2018, the national carrier.
Bleak outlook for airlines’ profits
Africa has only three major intercontinental airlines and only one is profitable.
Ethiopian Airlines has over the years built its reputation beating Kenya Airways and South African Airways to remain the only money-making national carrier on the continent.
It is not managed by the government while the others continue incurring hundreds of millions in losses every year surviving on government bailouts.
And the picture is not about to change any time soon with the International Air Transport Association (IATA) predicting yet another year of losses for African airlines.
SAA, KQ and now Uganda Airlines are among those that have to contend with this reality.
In a report, IATA says that the losses in 2019 will be due to the low load factor and the high cost of operations. The cost of fuel is the biggest culprit.
IATA projects that demand will grow at a slower pace of 4.3 per cent this year down from the 6.1 per cent in 2018. The African airlines will grow at an even slower rate of 3.7 per cent this year in comparison to the 4.3 per cent recorded last year.
Each passenger carried will lead to a -1.0 per cent net margin costing the carriers USD1.54 (Sh154).
The report adds losses for Africa airlines will remain unchanged from 2018 at USD0.1 billion. This trend has been ongoing for the past three years.
Globally, 2019 will be the worst year since 2014 where some airlines will make losses.
Source: The Exchange