Uganda is not ready for a National Airline

In recent weeks, there have been press reports about the revival of the Uganda Airlines. I was the last chairman of Uganda airlines and I would not want to mince words about this and the revival of Uganda airlines is not something I would support now. There are reports that since the airline was closed, traffic has increased. Yes indeed traffic has increased but that does not favor a Uganda based airline yet. We are lucky, we have Air Uganda to look at. Air Uganda is funded by Aga Khan and is not short of money. Uganda is technically short of money and starting an airline is not something I would recommend for the Ugandan airline. There are four reasons why.

One, Uganda’s economy is still small, even in the region it does not have the capacity to hold an airline. You could argue that Rwanda a much smaller economy has an airline, yes it does but looking at its financial performance, I know it is struggling. If I am not mistaken, recently it was in the papers either seeking government support or having received government support. Airline business requires numbers and the volume at Entebbe is still so small and is not about to grow substantially unless oil comes. Just because of the size of the economy, we can’t run an airline. We do not have the numbers. Kenya and Tanzania have a bit of tourism which attracts visitors. Kenya has had the advantage of the economic stability which nobody in the region has had. While Tanzania has always been politically stable, experiments with socialism reduced its economic stability.  During the Idi Amin period, even the little industry that we had walked across the border. Kenya’s industrial base is the biggest in the region and with tourism, the economy can beef up the numbers of an airline.

This leads me to the second reason. This is historical. The East African airways which was jointly owned by Kenya, Tanzania and Uganda was one of Africa’s airline. This was closed in 1977 when Kenya got tired of Idi Amin and decided to break the community. At the time, Kenya took the decision to take all the planes and the routes. Idi Amin decided then to establish Uganda airlines. There was no way Uganda would compete with Kenya airways, they had the planes, the experience in management, there were more politically stable and Uganda had been isolated. The airline business has been designed like many other things to favor the developed countries and it definitely favors those who have an airline and those who are strong traders.  Countries have agreements with one another to allow their airlines to fly into their respective countries, so when Uganda signs an agreement with a country say Britain, it allows the specific British National airline to land in Uganda correspondingly Uganda is allowed to land a specific national airline to land in the U.K.  This is a cup of tea for the airlines in the developed countries. They have the planes, what do they do? They pass a law not allowing planes that make a lot of noise in their countries. Most third world countries have old planes that make a lot of noise. They pass a law that does not allow airlines that emit carbon dioxide. 3^rd world countries have these types of planes. They require you to have a visa three months before you travel and for the ordinary people, you have to show you have land, a family, a job and possibly children before you get a visa. If you are buying a ticket from the developed countries, you will find a cheap ticket, if you buy a ticket from the developing countries, the cost is always very high.  The big airlines worldwide negotiate contracts with oil companies, British airways for instance with over 350 planes on almost 300 destinations, 2000 flights a week, tankers fuel at 60cents per liter. This is based on their volume. Your Uganda airlines will tanker fuel at 1.5 dollars per litre. How can airline compete ins such circumstances? Unless if it going to Arua or Kasese. I recall that even when Uganda airlines was operating, because it had one plane, Kenya airways made sure Uganda airlines flew without passengers. They would schedule their flight 15mins before or after the Uganda airlines flight. Since Uganda airlines had one plane and at times it would delay, people preferred to fly Kenya airways.

Management is the third reason I would advise the revival of Uganda airlines. Today Uganda has no strong local bank and yet we have billionaires around. Unfortunately the local billionaires with exception of our leading Business men who have earned their fortune the hard way do not make this money through business. It is said that some politicians in the country are stinking rich but have never run a business. The point is there is no Uganda public enterprise that is not faced with management problems, real or imaginary. It seems all we do is waiting for these managers to make mistakes and push them down. Of course there are cases of mistakes or actual Impropriety, the history of Uganda’s public enterprise is that if you are one, you are waiting to be scandalized in one way or the other, it is not surprising that most of the multi-nationals have foreign CEOs. These companies do not yet have confidence in Ugandan managers. Of course they are also many areas where they have no skills, tourism, catering is staffed by Kenyans and Ethiopians. So who will manage this airline and may work so well but at the end of the day leave frustrated or be forced out. I pay tribute to those managers who manage Uganda’s enterprises successfully.

The last reason I would not recommend to the airline is the cost involved. There are various ways of funding an airline. If you have the money, you can purchase the equipment. Companies like emirates do this. If you do not have, you can lease a plane. There is an individual in Ireland who had over 400 planes but he did not have an airline, he would simply just lease them out. You need to by good equipment in sufficient numbers but like I said in the beginning, Uganda does not have that money technically and if you are poor the financiers will screw you. You see what money lenders do to people in the local market. If the numbers existed, you could lease planes but since the numbers do not exist, I would not recommend establishing an airline.

However, if we are smart enough, the cargo business is good business. Cargo planes do not have the fuss the passenger planes have. Dutch air was successful because it was primarily in cargo. That would be a good start for Uganda airlines. When the oil flows and the numbers can come in and we can fix our tourism and improve our labour productivity, have our managers gain international repetition, then we can go for the airline. But as of now, an airline in Uganda is a stillbirth.