Uganda reboots its Airline Industry


Uganda’s fledgling national airline will be a candidate for an initial public offering and closer cooperation with other carriers if the launch goes as planned.

Uganda Airlines, which last month signed deals for Airbus SE wide-body jets and Bombardier Inc. regional planes, is due to begin operating 19 routes in January, Transport Minister Monica Azuba Ntege said in an interview.

“The first step is to get the airline up and moving,” she said. “It is owned 100 percent by the Ugandan government, but after that the plan is to work with other airlines and in future we will float shares.”

Uganda is working to establish a new flag carrier after the last collapsed amid mounting debts in 2001. Ntege said the chief role for the airline, to be based at Entebbe airport outside Kampala, will be in boosting travel links and introducing competition to bring down fares. It will also have a cargo arm to serve areas of the economy such as flower exports and a growing oil sector.

“Our people have been charged exorbitant prices for tickets because there was no competition,” the minister said. “We’re moving progressively, but we’re getting there. We had a national airline and it went down. We don’t want to make the same mistakes.”

Possible Partners

Prospective partners include airlines already operating to Entebbe, including Dubai-based Emirates, Qatar Airways, the Dutch division of Air France-KLM Group, Deutsche Lufthansa AG’s Brussels Air arm, South African Airways, Kenya Airways and Ethiopian Airways.

Ethiopian, Africa’s only consistently profitable carrier, has emerged as a major consolidator, with units in Malawi and Togo and plans for equity deals or managements contracts with new carriers in Zambia, Chad, Mozambique, Guinea, Eritrea, Nigeria, Equatorial Guinea and Democratic Republic of Congo.

Initial flights at Uganda Air will use four 76-seat Bombardier CRJ900 jets for regional trips. Services to cities such as Dubai and Accra, Ghana, and long-haul destinations including London and Guangzhou, China, will be possible with the delivery of two 261-seat Airbus A330neo jets from the fourth quarter of 2020.

The expansion will coincide with the opening of a new international airport at Kabaale close to the Congolese border in 2021, a hub that will serve Uganda’s expanding oil industry. The carrier will also provide links to four regional airfields that are being expanded to encourage tourist visits.

Further planes could be added every two years depending on the performance of the business, with profitability coming “at a later stage,” Ntege said.

SOURCE: Bloomberg

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