Reviving Uganda Airlines: Again?

Information firmed up overnight that another attempt is underway to revive Uganda Airlines, which, stripped of key assets like ground handling and catering was liquidated in 2001. This followed attempts to privatize the airline but with back then the only viable asset being its ownership of money-making Galileo Uganda.

The airline had survived reasonably well as long as it held the monopoly of ground handling in Entebbe but after being deprived of that cash cow following the formation of Entebbe Handling Services, in short ENHAS, the writing was on the wall that the end game had begun.

It is understood that the Uganda Development Corporation was now tasked by government to form a new national airline for Uganda within six months. Given the time needed to get the required licenses; an air operators certificate; route research carried out; traffic right approvals from third countries; aircraft procurement; employment of pilots – when there is a growing global shortage of trained skippers already – and the setting up of a competent administration, sales and marketing organization, achieving this target is highly questionable.

Neighboring Kenya Airways has just recorded a major loss, the second in the past three years, and considering the moribund nature of Air Tanzania, several respected aviation voices in the region have called upon their governments to pool their relevant resources and make Kenya Airways officially a regional carrier, as it already has the route rights, the fleet, and an extensive network of destinations.

With the ongoing squabbles between Kenya and KLM, the second largest shareholder in Kenya Airways, over the present massive distortion of influence and voting rights on the board through the company’s Articles of Association which appear tilted in KLM’s favor, the Kenyan government is now by far the largest shareholder in the company and yet continues to be outvoted on board decisions. It could well be that regional governments might make a case to snap up these shares, which are near record low value, instead of sinking mega bucks into their own airline ventures which are more likely than not failig, given the present market conditions.

In Uganda, voices have emerged condemning the entire privatization process of the 1990s and are advocating a return of government into business, and this probably will not go down well with tax-payer associations and other watch dogs, cognizant of the fact that large state corporations have turned in the past into bottomless pits as far as money was concerned.

This development will be closely monitored and the various steps followed, as it will be parliament which will be required to vote on the appropriation of funds, estimated to be in the US$200 million region to start with and raised to more than twice that should the company indeed take off and then require additional planes.