- Title: Resurrected Uganda Airlines flies into crowded African skies
- Date: 30th August 2019
- Summary: NAIROBI, KENYA (FILE) (REUTERS) VARIOUS OF KENYA AIRWAYS PLANES ON RUNWAY ADDIS ABABA, ETHIOPIA (FILE) (REUTERS) ETHIOPIAN AIRLINES PLANE TAKING OFF
- Embargoed: 13th September 2019 08:50
- Keywords: Uganda airlines relaunches East African aviation business state-owned flag carriers
- Location: NAIROBI, KENYA/ MOGADISHU, SOMALIA/ ADDIS ABABA, ETHIOPIA
- City: NAIROBI, KENYA/ MOGADISHU, SOMALIA/ ADDIS ABABA, ETHIOPIA
- Country: Kenya
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA002AUETXEF
- Aspect Ratio: 16:9
- Story Text: Uganda Airlines has taken to the skies once more after almost two decades out of action, but flies into a crowded aviation market in Africa where carriers have the weakest finances and emptiest planes of any region in the world.
The state carrier launched commercial flights on Wednesday (August 28), its first since it was liquidated in 2001, aiming to take a slice of the East African aviation business that is dominated by Ethiopian Airlines, the continent's success story.
Uganda is the latest African government to pour money into national flag carriers; Tanzania and Senegal are also resurrecting their airlines, while the likes of Rwanda, Ivory Coast and Togo are expanding theirs.
But such efforts have been hampered by high business costs as well as protectionism, which has impeded a continental open-skies agreement - something industry experts say is vital for the success of African carriers in a tough market.
The African market is forecast to grow almost 5% a year over the next two decades in terms of passengers, faster than mature markets, according to the International Air Transport Association (IATA). However, this is from a low base and most state-owned flag carriers in the region are losing money.
While the global aviation industry is on track to make a profit of $28 billion, African airlines are projected to make combined losses of $100 million this year, IATA said in June.
African aviation accounted for only 2.1% of the global market in 2018, with 92 million passenger journeys flown, and non-African airlines including Emirates and Turkish Airlines account for around 80% of traffic in and out of the continent, IATA said.
Uganda Airlines, like some of its rivals, aims to attract more domestic travelers to help it buck the gloomy continental trend.
"The number of passengers travelling into Entebbe Airport, in and out of Entebbe Airport is approaching 2 million. 70 percent of those are Ugandans. All those currently travel on foreign airlines, so we want part of that cake and that is quite a substantial number of people," said Ugandan Airlines CEO Ephraim Bagenda said after the airline's first flight from Entebbe to Nairobi.
The airline will initially fly to seven regional destinations in Kenya, Tanzania, Somalia, South Sudan, and Burundi, the CEO said.
In November, the airline would launch flights to destinations in south and central Africa, he added.
"This is a market which is sensitive to price, which is sensitive to quality of service. If you get those two right, you can surely compete very favorably with these players who are already in the market," said Bagenda.
Another rival regional carrier Kenya Airways has also faced challenges in its efforts to expand. It became loss-making in 2014 after buying a number of aircraft which coincided with a slump in tourist and business travel to Kenya blamed on a spate of attacks by Somalia-based Islamist militants.
The airline has not recovered and was renationalized in July in what analysts said was a last-ditch effort to save it.
Uganda Airlines, founded by the country's former dictator Idi Amin in 1976, was liquidated in 2001 during a push to privatize state firms.
Other African state carriers have been crippled by government interference, such as insisting on routes to unprofitable but politically important destinations.
"This is a historic event for one reason, I am sure you all know we used to have Uganda Airlines flying but for twenty years or more Uganda Airlines stopped flying for various reasons. But our government saw it fit that we need to revive the national airline," said Prime Minister, Ruhakana Rugunda.
Ugandans spend about $450 million annually on foreign travel and the state-owned airline would help keep some of this cash within the national economy, Rugunda said.
Citizens would also benefit from direct flights from their capital over expensive, indirect routes on rival airlines, the prime minister said.
The airline received its first two CRJ900 planes from Canadian aircraft manufacturer Bombardier in April.
Two more of those planes are expected next month, according to the airline.
It expects to receive an Airbus A330 Neo in late 2020, then a second in early 2021, the CEO told Reuters in July, adding that the two wide-body planes will enable the airline to expand to destinations in the Gulf and China.
The airline is wholly publicly funded and forecasts that it will be self-financing after two years, the CEO told Reuters in July.
(Production: Jackson Njehia, Donna Omulo)
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