Plan. As Uganda Airlines prepares to propel its wings into the turbulent skies, it will find the regional industry saddled with loss-making, high costs and protectionist policies. African airlines are expected to report a $300m net loss in 2019, according to the International Air Transport Association (IATA) as Ethiopian Airlines remains the only profitable airline. How does the revived airlines hope to break even in a sluggish industry with low passenger numbers, writes Frederic Musisi.
According to the Civil Aviation Authority (CAA), passenger and aircraft traffic flowing through Entebbe International Airport grew by 10.2 per cent between 2017 and 2018; of these, 1.8 million were passengers, an addition of almost 200,000, from the 1.6 million recorded in 2016. It is estimated that 60 per cent, or roughly 1,080,000, of the total passenger traffic through Entebbe airport are Ugandans. With the average price of an air ticket being roughly $450 (Shs1.6m) that totals up to $486m (Shs1.8 trillion).
“The math adds up; that number is significant,” revealed the Uganda National Airlines Company Limited technical director, Mr Cornwell Muleya, during an interview with this newspaper.
Mr Muleya was answering the questions of “what and where is the new Uganda Airlines’ comparative advantage in a notoriously fickle aviation industry?” not just closer home in the region but globally.
About five airlines have ceased operations since the year began, joining 15 others, which folded in 2018, as a result of stiff competition, and political and economic volatility.
In 2017, British Airways suspended flights to Uganda, ostensibly, owing to bad business, followed by Etihad in March last year, and South African Airways announced reduction of flight times to Entebbe by one. The driving factor was the volatile economic conditions. Mr Muleya, however, opined that the decision was premised on the airlines’ strength in their home markets, as Uganda was merely a foreign route.
“Entebbe was one route for those airlines but Uganda Airlines will be sitting on a home market. Once you control the home market you are in good business,” he said.
He added: “Ours is a demand based plan; we have looked at where the people are going, and have chosen the routes carefully based on that. We do know where the traffic is going so we have chosen routes.”
Before its demise in 2001, Uganda Airlines had established a regional footprint. According to data from air traffic analyser OAG, as of November last year, Ethiopian Airlines emerged as the largest operator at the Entebbe airport offering 140,000 outbound seats in the first quarter of 2018, followed by Kenya Airways with 127,000 seats and RwandAir with 90,000. The data showed that passengers going into other countries used Ethiopian Airlines’ business route between Entebbe and Addis Ababa.
“When you control the home market you control everything,” Mr Muleya argued.
The revived Uganda Airlines will fly two phases; phase one being the consolidation of the regional market, particularly focusing on East, Southern African, Central, and a little bit of North Africa, while phase two is the long-haul flights.
The regional market includes 18 destinations such as Nairobi, Kigali, Bujumbura, Goma, Kinshasa, Kisangani, Goma, Dar-es-Salaam, Mombasa, Kilmanjaro, Juba, Khartoum, Mogadishu, Hargeisa, Johannesburg, Addis Ababa, Lusaka, Harare, and Zanzibar. Currently, there are three main competitors in this market: Kenya Airways, which has the most frequency to Entebbe airport: Rwanda Air: and Ethiopian Airlines.