Skip to main content

THE GOOD THAT CAN COME OF THE NEW UGANDA AIRLINES



I have fond memories of the Old Uganda Airlines.

As a secondary school child, I took advantage of ticket concessions (my mother worked for Uganda Airlines) to fly to the UK to buy clothes and other goods for sale to my friends at school.

These trips were a great adventure and served as a good foundation for the businessman I am today.

It has been reported that the first two planes of the revived Uganda Airlines will be landing in the country within the month. The finance ministry has been presenting to parliament their needs to pay off deposits on the first two of six planes they are to take possession of in coming months.

The project has its equal share of supporters and critics. I am a qualified supporter of the project.

In business nothing is certain. We deal in probabilities. When getting into a venture we often must weigh the risks versus the returns of a project. If the risk of failure outweighs the potential profit we stay away, otherwise you are gambling. But if the returns far outweigh the risks, we jump in with both feet.

In my mind the benefits of Uganda Airlines taking to the sky far outweigh the risks and the government and all Ugandans should back the project to the hilt....

"Uganda is abundantly gifted by nature. The question then arises that if this is an indisputable fact, then why are we still struggling as a country? There are many reasons but I believe that a major reason is that we have not yet unlocked the full potential of our natural endowments for the benefit of our people....

The govt has been very focused on infrastructural development for the last 9 years, roads, bridges, electricity, clean water. Unfortunately, nearly always there is the typical small-time lag between investment and results, then it will certainly pay off. We can’t wait to the dividend to fully manifest, and so need to soldier on to developing our much-needed airports, national Airline and aviation services.

Look at a map of Africa, land-locked Uganda has a central location on the continent. We are surrounded in all directions by a fast-growing population that has an upward income trajectory.

Imagine if we had non-stop flights from Europe, Asia, Southern Africa, West Africa, North Africa, North and South America bringing passengers and cargo either to the country or for onward delivery to other destinations?  Our tourism would boom and trade numbers would skyrocket to reflect the new convenience.

The jobs created by the airline would be the tip of the iceberg, all the supporting logistical and hospitality industries that would spring around this initiative is where the action would be. It is such infrastructure that will unlock our competitive advantage of being at the center of the continent or the world, for that matter. The old Uganda airlines that was closed in May 2001 had crossed a point of no return in the economic and social times, even the best idea at the wrong time just won’t materialize. The time to start afresh with no historical baggage has arrived.

A credible airline would inject added impetus into our fast-growing horticultural sector. We have untold potential in the growing of fruits, vegetables and flowers, unfortunately we still have some deficiencies in the sectors’ value chain, not least of all the need for expanded cold storage, and sort out the challenges faced to evacuate our produce to the markets of Europe and Middle East through frequent and consistent flights out of Entebbe. Other high value exports – like Gold that outperformed coffee as our country’s leading single export by value, would be stimulated.

Related to that other sectors in which we can quickly develop a competitive advantage are tourism, mining, agroindustry, financial services, health-tourism, making Uganda a regional education centre and ICT services hub. These indirect profits are not so obvious to show and directly relate to the airline.  

I have only touched the surface of what potential a viable airline can unlock for this country.

That being said, earlier concerns I had with the project still persist.

The airline business is a long-term commitment. I have no illusion that in the best of circumstances the airline will be making losses for a long time – recent startups like Rwanda Air that was launched in 2001 and has never shown a profit to date. Attempts to sugar coat this reality may give the treasury false expectations and they may not have the stomach to keep subsidizing this project for very long without showing a direct financial profit return.

A close look at South African airways (SAA) is quite insightful and revealing. SAA operates the profitable airport businesses and through its subsidiaries owns Air Chefs, the profitable catering business, the ow cost carrier Mango, South African Travel centre, and south African airways technical. Then why would such an established airline fail to post a profit.  Some have suggested the risk of flying to less profitable routes, high maintenance cost, poor fleet management and the occasional speculation or absence of hedging against spikes in fuel prices

The last time SAA posted a profit was in 2011. It has since made financial losses year in year out on average of a million dollars a day.

Let’s take a look at another well-established airline closer to home Kenya airways. (KQ). KQ has a fleet of 44 planes and flies to 62 destinations with approx. 5 flights a day to Entebbe. The fare from EBB to Nairobi one-hour   flight is about the same as the fare to Dubai a five-hour flight. Could this be considered predatory pricing?

Nevertheless, KQ posted a financial loss of $560 million last year. It runs a pretty good cargo business but appears to lose money on the passenger side of business. Going by the latest goings on in Kenya, it is clear that for this project to have a better than even chance of success the operations of the new airline and the Entebbe International Airport, at least, have to come under one management. Ethiopian Airlines, Qatar and Emirates Airlines all control their home airports, the handling fees at these airports have proved invaluable to the viability and sustainability of those airlines.


Labels:

Comments

Post a Comment

Popular posts from this blog

CONGRATULATIONS ON YOUR GRADUATION, ITS NOW TIME TO WORK….

Thousands of students will be graduating from their respective universities in coming days and months. Makerere, our country’s oldest university will kick off its ceremonies on January 15th and the other universities will follow. The graduates have already had a taste of the real life, having finished their studies mid last year and tried to get employed. Many know by now that the world can be harsh and unforgiving. I hope many are tightening their belts in readiness for the struggle ahead. Some may have decided to kick the tin down the road by continuing with school. And others may have given up altogether. My prayer is that there are more of the first and less of the last kind. In talking to young people, I find that what is needed is a reorientation of their minds – a mindset change. Let me share with you certain facts to help manage their expectations of the world and how they can fulfil their potential in our context. First of all, the world owes you ...
Post a Comment
Read more

ARE WE HELPLESS TO DO ANYTHING ABOUT THE CARNAGE ON OUR ROADS?

Recently there was a horrific crash between a passenger bus and sand laden Isuzu truck on the Masaka-Kampala highway. To look at the pictures of the aftermath it is a miracle that only two were killed and 20 injured in the accident, which it is reported was a head-on collision between the two vehicles. We don’t go a week without news of a major accident on our trunk roads. I suspect that a combination of poorly maintained vehicles, improperly trained or inexperienced drivers, driving at break neck speeds are to blame. "A few months ago, there was a suggestion that the new paved roads were not properly designed and therefore causing the accidents, but I think that is a case of poor workmen blaming their tools.... If one was to buy this argument, what about the argument that we had fewer accidents when our roads were pot holed and it would take whole days travelling journeys that now take a few hours? So, we should we go back to our potholed roads? "Accord...
Post a Comment
Read more

THE MUKWANO I KNEW

We have lost the greatest Ugandan entrepreneur of our time, Mr Amirali Karmali, more popularly known as Mzee Mukwano. I have known Mzee Mukwano for more than 40 years and most of what I am today is due to him. And I am not alone. "He has helped countless people through school – as he did me. Helped countless more in business – as he did me. And he has been a steadfast friend and source of support to countless more – as he was to me.... I first met Mukwano around about 1977. My mother was the secretary for the chief of operations at Uganda Airlines, a man I knew only as Hamid. Mukwano had come to charter the Uganda Airlines’ Hercules plane and I happened to be around the office then. He was a short man, an unassuming man, but clearly a serious businessman who would charter the plane to bring in goods that were in high demand here. He run a popular whole sale shop in Nakasero – Egesa Commercial Agencies, a beehive of activity and the go-to place for anythin...
Post a Comment
Read more

HOW TO RECOGNISE A PONZI AND NOT FALL VICTIM

Another Ponzi scheme has come crashing down around the ears of hundreds of “investors”. Unsurprisingly. In its recent reincarnation poor Ugandans were lured into a scheme where they bought computer tablets. This entitled them to a monthly pay off, $100, and a Christmas bonus for their children. In this case the unsuspecting investors -cum -victims were being given a share certificate. Meaning you accept to take the part of the risk in this project. Which was inadvertently reducing their burden of risk and liability for the issuing company. I leave that area to smart lawyers to handle.   As is always the case with these things, it’s not quite clear where the pay-out will come from. A common characteristic of these schemes is that you might get initial payments before you starting missing a few and the stories begin. The promoters of these schemes or scams often use the money from the latest entrants to pay the older “investors” until one of two things happen. Either...
Post a Comment
Read more

LOCAL CONTENT IS NOT A DONE DEAL, WE NEED TO DO MORE

This year’s “Oil & Gas Convention & Regional Logistics Expo2017” has just concluded after three days of discussion, exploration and soul searching. First oil in Uganda is expected by 2020 and this Expo among other efforts are targeted at getting our local businessmen ready to take advantage of this historical development. At the risk of sounding like a broken record, the discovery and eventual exploitation of our oil resource is one of those once in a generation events, that can transform this nation, not only on a macro level but also in our individual lives. For starters at least $20b will be spent over the next three years in infrastructure development and other things that will ensure we are ready to pipe and refine our oil. During the exploration phase about $3b was spent by the international oil companies, with on three in every ten dollars being retained here. That was an exploration phase and one hopes that we have learnt enough from that period to ...
Post a Comment
Read more

OUR HISTORICAL SITES SHOULD NOT GO UNATTENDED TO

Recently I was at Makerere University to attend a wedding ceremony. I hadn’t been on the university’s grounds in a while. I was shocked at how run down Mary Stuart and Lumumba Halls were. They are in need of serious work. These thoughts were reawakened with the recent launch of the coffee table book “Beyond the Reeds and Bricks” promoted by the tourism ministry, the cross cultural foundation of Uganda and the European Union Delegation. The book which is aimed at the protection of historical sites and buildings in Kampala, Entebbe and Jinja, is a moving collection of pictures of buildings and sites we know, but probably take for granted when we pass them as we go about our business. "Entebe za Mugula in Entebbe, Mackay’s Cave, the post office in Entebbe, the Stanbic Bank Branch in Jinja, Hamu Mukasa’s house in Mengo, the main building at Makerere , the Bahai Temple, Kibuli mosque and many other sites have pride of place among the 60 pictures in this book, which is ...
Post a Comment
Read more

COME HELP BEAT BACK HIV/AIDS

Uganda has made tremendous strides in containing the AIDS pandemic. For some of us who were around in the 1980s and saw the worst effects of the AIDS pandemic, the way the country has contained the disease is not what we had envisaged back then. Ignorance, stigma and lack of drugs surrounding the disease saw thousands die horrible deaths – wasting away, tortured by opportunistic diseases and being shirked by family and a society out fear.  The doomsayers were projecting a major fall in our population, a collapse of the economy and a total breakdown of social cohesion. That the country is still around and fighting back the disease successfully, could not have been envisaged in those scary days of the 1980s when the disease came into the public conscious. Thankfully rather than sweep the problem under the carpet like many of the neighbouring countries, President Yoweri Museveni led a fight back against AIDS that had at its core widespread dissemination of infor...
Post a Comment
Read more