After nearly two decades of absence from the skies, Uganda Airlines has been re-launched, restoring its position as the East African country’s national carrier. The airline officially resumed commercial services on Tuesday with a flight from Entebbe to Nairobi in Kenya.
With its fleet of twin-engine Bombardier CRJ900 regional jet airliners, Uganda Airlines will initially fly to seven regional destinations in Kenya, Tanzania, Somalia, South Sudan, and Burundi, CEO Ephraim Bagenda said ahead of the first flight to Nairobi. Two more of those planes are expected next month.
“We undertake to be a world-class airline that will exceed customer expectations through high-quality service,” Bagenda said during a ceremony on Tuesday at Entebbe International Airport – the country’s sole international airport.
More so, there are plans to launch flights to destinations in south and central Africa. CNN reports that services to the Democratic Republic of Congo (DRC), Ethiopia, Rwanda, Zimbabwe, Ghana, South Africa, and Rwanda are expected to be added from September.
As commercial services resume after 18 years since the former debt-ridden carrier ceased operations, the Ugandan government, among other things, will have on its mind two crucial issues as regards operating a state airline. The first is the unavoidable, stiff competition with the other national carriers of neighbour countries in the East African region and second, quite common on the continent, is achieving profitability.
By re-starting its national carrier, Uganda is hoping to get a share of the East African aviation market. One problem with that is the business is currently dominated by Ethiopian Airlines – one of, if not the best carrier, in Africa.
Moreover, Uganda Airlines will be competing not only with the Ethiopian carrier, but also counterparts in Rwanda and Tanzania, who have invested heavily into their national carriers in the past few years, as well as the troubled Kenya Airways.
On the issue of profitability, the outlook looks gloomy based on empirical evidence that has shown that it is near impossible for state-owned carriers in Africa to make profits. Air traffic has been growing in Africa and over the next two decades, it is projected to grow six percent a year – twice as quickly as in mature markets. However, a majority of state-owned flag carriers on the continent are losing money.
Kenya Airways (KQ), for instance, has been generating losses since 2014 after a failed expansion plan. The carrier acquired a number of aircraft only to later experience a slump in tourism and business travel spurred by a series of attacks by Somalia-based fighters.
KQ has not recovered ever since and was renationalized in July. According to reports, the embattled carrier’s 2019 half-year loss more than doubled to $83 million, sinking shareholders into a deeper negative equity position of $156 million.
Several state-run flag carriers across the continent are in a similar position with the notable exception being Ethiopian Airlines. As explained by analysts, the carrier has avoided the mistakes of other regional carriers by distancing itself from political interference.
For Uganda Airlines, the plan is to be wholly funded by the government, but hopes to be self-financing after two years, the CEO said. And the carrier’s revival will “reduce the cost of air transport and ease connectivity to and from Uganda”, Prime Minister Ruhakana Rugunda said at the ceremony.
The goal is to help keep some of the $450 million Ugandans spend annually on foreign travel within the national economy. While the prime minister added that citizens will benefit from having direct flights originating near their capital instead of having to take expensive, indirect routes on rival airlines.
To compete with big regional players like Ethiopia Airlines, the re-launched Uganda Airlines is running promotional fares that will last for two months. But in the long run, Uganda is banking on its emerging oil industry and the tourism sector to drive the carrier towards attaining self-sustenance.
The older Uganda Airlines was founded by the country’s former dictator Idi Amin in 1976 – operating from 1977 – but was liquidated in 2001 during a push to privatize state firms.