Will new airline survive the highly unpredictable and turbulent market for domestic carriers?
A privately owned carrier, Vule Airways, is set to hit the skies this November, subject to regulatory approvals from Ugandan civil aviation authority, even as the government struggles to revive national carrier, Uganda Airlines.
Vule, which is incorporated in the United Kingdom and registered in Uganda, is expected to enrich regional air transport dominated by Kenya Airways, Ethiopian Airlines and RwandAir.
The new entrant plans to not only cover East Africa but also operate direct flights to London.
According to Robert Mwesigwa, co-founder of the airline, Vule is looking to lease a 40-seater Bombardier Dash B, a 78-seater Bombardier Dash C, three 128-seater Boeing 737-700s and a 300-seater Boeing 777-200.
He said they will fly to Moscow, London, Dubai, and serve East Africa, with direct flights to Tunis and London.
“We are negotiating codeshare agreements with major carriers, and looking at six aircraft once we are approved,” Mr Mwesigwa told The EastAfrican.
Air service licence
According to Vianney Luggya, Uganda Civil Aviation Authority’s public relations officer, Vule Airways appeared before the CAA board on September 8 alongside other airline operators and have secured an air service licence.
“They are now going through a safety assessment and evaluation phase, which would lead to issuance of an Air Operator’s Certificate,” Mr Luggya said.
For such certification, according to the CAA Directorate of Safety, Security and Economic Regulation manual 2007, an operator has to submit a business plan that covers the first two years of operations in order to demonstrate that they are able to cover actual and potential obligations for a period of 24 months from the start of operations.
The operator is also required to provide evidence of ownership of the aircraft or long-term lease agreements whereby the aircraft must be under full control of the applicant and fulfil the flight safety standards of Uganda.
The applicant is further required to submit copies of their aircrafts’ certificates of air worthiness, a copy of a certificate of registration, copies of insurance certificates and evidence of the applicant’s financial capacity to finance the proposed air transport services and meet CAA financial obligations.
The new carrier comes at a time that Kenya’s low-cost airline Jambojet has applied for licence to fly to destinations in at least 11 African countries in renewed efforts to expand operations beyond the country after posting a profit last year boosted by growing passenger numbers.
Some of the destinations Jambojet, whose parent is Kenya Airways, has applied to fly are Dar es Salaam, Zanzibar, Arusha, Lilongwe, Blantyre, Entebbe, Addis Ababa, Mogadishu and Kinshasa.
Vule Airways will join a highly unpredictable and often turbulent market for domestic carriers that seek international routes. Its founders say they are aware of this turbulent history that saw airlines like AfricaOne and Air Uganda fold in a few years.
Mr Mwesigwa said Vule will operate a different model designed not only to keep it afloat but also soar into success.
But industry experts warn that with the government’s plan to revive Uganda Airlines, competition from established regional carriers Kenya Airways, RwandAir, Ethiopian Airlines means Vule must brace itself for stiff competition.
“To operate an airline with any realistic chance of success in this market you must have at least $200 million even before you take off for your first flight,” said one expert in the industry. “Are they willing to spare that kind of money? That might be the difference between their survival and early death.”
Targeting tourists, Vule is being welcomed by tour operators as a value addition to the sector.
Michael Makonzi, chief executive officer of Go Gorilla Trekking, said there can be an increase in the number of tourists from the UK but this means that Vule Airways has to strive to be as, or more efficient than RwandaAir which is making more trips to many destinations around the globe.
“Most clients we will come from the USA, United Kingdom and Australia and prefer direct flights to London which is currently not happening at Entebbe Airport,” he added.
Vule Airways, which has over $40 million invested in the venture, will face competition from RwandAir which recently bought $250 million airbuses, confident that of the aircraft will cater for increased passenger numbers boosted by new routes to India, China and Europe, starting early next year.
In January 2015, RwandAir started direct flights between Entebbe and Nairobi filling the void after the exit of Air Uganda.