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Management Frantic To Find Solutions Over Loss-Making Route

Air Uganda halts morning flights to Nairobi

Wolfgang H. Thome, eTN Africa  Jul 15, 2008

In a half-cooked measure taken by Uganda’s upstart airline to stop their financial bleed, they now ceased morning flight operations to Nairobi effective immediately. The news, which just broke, finally confirms rumors which had swept the industry in Kampala for a while now - that their management was frantic to find solutions over the loss making route.

The airline which started with full-mouthed statements less than a year ago, failed to break the Kenya Airways (KQ) market standing in spite of intense campaigns in sections of the media to paint Kenya Airways in less than favorable colors, and when low-cost carrier Fly540 appeared on the scene, also with a convenient morning and evening connection between the two countries and more affordable rates, it was only a matter of time before something had to give.

Air Uganda had commenced the Nairobi flights under the premise of bringing fares down, but today, after regulatory charges and fuel supplements are added, they appear even more expensive than Kenya Airways. This development disappointed many travel agents with predictable results of switching traffic back to KQ or using Fly540.

Several years ago, AfricaOne also tried their hand with two flights to Nairobi and equally failed to carve out enough market share to sustain these flights. By the time they stopped operations they had burned their capital and the modest profits they had made from other routes at the time and folded. The same then happened to successor East African Airlines, which could also not stand the heat of competition and, again after burning their working capital on the Nairobi route, had to pull out and then folded, too.

Airline analysts as well as regulatory staff preferring anonymity already confirmed that a one flight a day operation between Nairobi and Entebbe is not likely to solve the financial bleed, as passengers generally demand two flights a day. Potentially passenger-rich interline agreements also largely insist on at least two flights per day, and as a result the market share may yet fall further with only one flight to the point of having to drop the most important destination in the region altogether.

Air Uganda sources blame the large aircraft they operate and high fuel cost, both of which however are home-made problems. The airline initially had lined up two economical CRJ regional jets with a 50 seater economy configuration or a 44 seat dual class configuration but then got diverted from the track of sound conventional wisdom, probably overcome by wishful thinking and grandeur. Short lived managers from Italy and the main promoters suddenly dumped the CRJs in favor of MDs. According to a reliable source, "because they were more used to these models from their home airline in Italy."

The ageing Air Uganda MD’s operate with 99 seats in a dual class operation and are considered to be too large to break into the Nairobi market with viable load factors and also consume too much fuel, compared to Fly540’s ATR’s or Kenya Airways’ B737NG’s regularly operated on the Nairobi – Entebbe route. The only route Air Uganda is said to be doing well are flights from Entebbe to Juba, Southern Sudan’s capital, while on their Tanzanian routes load factors continue to be of very much concern to them.

Air Uganda halts morning flights to Nairobi

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