Do we still need Uganda airlines? (Daily Monitor (Uganda))


Fourteen years on, the story of Uganda Airlines has refused to die, not considering that the carrier was long disposed of.
In May 2001 government liquated Uganda Airlines after prospective buyers including British Airways, Kenya Airways, Sabena, Alliance Air and South African Airlines all quit the race citing political pressure and bad state of the carrier’s books.

At the time of its liquidation, Uganda Airlines was hugely indebted with a $6m (Shs21b) debt on its book.
The debt, according to former managing director Benedict Mutyaba had been reduced from $12m (Shs42.8b), which had accumulated over the years.

The liquidation, although a painful reality, did not settle in well with a number of stakeholders, who blamed government for deliberately killing the airline.

Indeed government has been under pressure to revive the airline, however the question that we seek to answer today is: Does Uganda need a national airline?

Government, according to Stephen Chemoiko Chebrot, the Transport state minister hired global audit firm, Ernst Young to evaluate the viability of the airline and “the results where astonishing”.

” we were all astonished by the findings. We are preparing a Cabinet paper which we expect to be approved by October. We are looking at an average of $300m (Shs1 trillion) as the initial injection,” Chebrot told this newspaper last week.

The airline, according to Chebrot, shall initially be a sole government business venture overseen by Uganda Development Cooperation but “we will sell off shares progressively to the private sector until when it is out of government control”.
“the country cannot afford to be both land and air locked,” Chebrot said.

However, whereas Mutyaba puts a case for the revival of the national carrier, he says: “I am skeptical about government managing it.”

“Government does not have a good record of running businesses. Private sector should be persuaded into taking up this venture,” he says, highlighting the need for the airline’s ability to “make money or else it loses meaning”.

The airline, Mutyaba says does not stop at creating employment but will help to turn Entebbe International Airport into a competitive regional hub, marketing Uganda and promoting tourism.

But government, he says should only guarantee private sector players, given that most financiers require it as a condition to advance loan facilities to such huge ventures.

Wastage of resources?
Just like Mutyaba, the former Uganda Investment Authority executive director, Maggie Kigozi, believes the revival should be left to the private sector.

“We are not short of airlines. The aviation industry is not struggling actually government should have helped Air Uganda. We don’t need Uganda Airlines,” she says, adding, “The money that will be put in reviving the (national) airline should be taken to health and education sectors.”

Long over due
However, contrary to Maggie Kigozi’s argument, George Michael Mukula, an industry player and a professional pilot, believes the revival of the national airline is long overdue, as “there is regional demand, which the airline can tap into before even thinking of flying long haul flights such as London or Beijing”.

“Look at the number and frequency of Kenya Airways (KQ) flights and RwandaAir are making across the region, including to South Sudan. KQ alone is doing not less than 12 flights a week between Entebbe and Nairobi. Doesn’t that tell you the potential the region has and how lucrative the route is,” he says.

Entebbe International Airport, Mukula says as a regional natural hub deserves to be promoted and this can only be done with the re-establishment of a national airline.

However, Moses Ogwal, the Private Sector Foundation Uganda policy analysts, advise the revival of the carrier put much concentration on cargo carriers, given the perishable nature of business in Uganda.

According to Ogwal, most of Uganda’s exports, including fish and flowers (horticulture) and agricultural goods are high value and perishable items, which demands that the airline’s objective should among others promote export and stimulate production.

The airline, Ogwal says should not be evaluated in terms of profitability but on its impact to the long term development of Uganda.

Ogwal’s view is supported by Rwanda’s president Paul Kagame who recently said the losses posted by RwandaAir as a national airline are far small compared to what it has delivered in terms of tourism promotion, easing export transportation and marketing the country.

Revival plan now at foot end
According to Kisamba Mugerwa, the National Planning Authority chairman, government is not only studying the revival but also examining the most suitable investors to partner with.
This, Mugerwa says, will help Entebbe International Airport become a competitive regional hub as well as improving Uganda’s aviation sector.

Recently Abebe Angessa, the Ethiopian Airlines area manager told this newspaper that the aviation here (Uganda) was better off with a national carrier.

What others say about the revival of Uganda airlines

According to Edward Kirumira, a Makerere University lecturer there is need for the revival of the national airline given that is important in recreating a national identity.
He advises that it should not be looked at as a purely commercial enterprise but as a source of national identity, which to Simon Rutabajuka, a historian, should act as a precursor for the revival of all other national institutions.

However, Vianney Luggya the Civil Aviation Authority public affairs officer cautions that even if it (Uganda Airlines) is revived it will not enjoy any special status and “will not be treated any different from other industry players”.
However, he agrees that the airline is likely to come with several advantages, including sense of pride, the ability to attract traffic and creation of new routes.

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