EDITORIAL: Ugandan carrier a great idea, but will it actually take off?

Saturday July 21 2018

An artist impression of A330-800neo for Uganda Airlines

An artist impression of A330-800neo for Uganda Airlines. Uganda has signed a memorandum of understanding for two A330-800neo aircrafts. PHOTO | AIRBUS. 

By The EastAfrican
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This past week, Uganda Airlines made its strongest expression of purpose yet, when it signed twin orders for Bombardier and Airbus aircraft during the course of the Farnborough Air Show in the United Kingdom.

The firm order for four regional jets from the Canadian manufacturer sets the stage for the commencement of regional services during the first half of 2019 while the MoU with Airbus for a pair of A330’s, positions the carrier for long haul-operations in three years’ time.

Uganda liquidated its national carrier, Uganda Airlines, in 2001. The rationale back then was to stop the financial haemorrhage a loss-making airline was imposing on scarce resources in favour of a liberalised air transport market that allowed private or foreign carriers to provide transport to the travelling public.

Ever since plans to revive the carrier were announced, public opinion has been divided among those who support the project and those who believe the air transport needs of Uganda can be efficiently and more economically provided by the existing status quo of some 24 foreign airlines that ply the Uganda skies.

The near haphazard manner in which the orders for aircraft were placed suggests that this gulf in opinion has been contagious, extending to decision-makers who are supposed to work as a team. Until the announcements, there was no indication that Uganda would be able to actualise the much-talked-about plans for a national carrier.

A team that went to negotiate finance for the purchases with Canadian financiers returned empty handed in late June because the Finance Ministry would not sign off the credit agreements. In the budget for fiscal 2018/19 that was read just a month ago, there was no provision for the airline either.

It was only under duress that the ministry eventually caved in, to allow the Works Ministry to juggle resources from other programmes in order to make the pre-delivery deposits with the manufacturers.

With the supply chain now triggered, Uganda is now committed to spending at least $326 million, exclusive of the cost of finance, on this project. This is a tidy sum that can do many other things and will only bring a return if Uganda Airlines takes off and actually succeeds.

That means the Ministry of Finance, which has never been sold on this project, will have to become pragmatic and provide timely funding for the future phases of the project.

It is instructive that even a decision to abort the project at this time or sometime before the aircraft are delivered, would come with a substantial financial penalty to the taxpayer.

In the circumstances, there is no looking back; this should be the time to close ranks between those for and against so as to execute the project with unity of purpose.

There is a market opportunity for a Uganda-based airline but this can only be exploited if there is a collective effort to make the carrier work.

The airline will need government support but also a healthy distance from the political mandarins who will want their friends and relatives employed, free travel and one contract or another.