Aviation – Uganda Airlines is just a scheme to steal your money…

Americans have a colourful word – boondoggle – for a wasteful, pointless, unnecessary tax-funded scheme undertaken for selfish, often personal, political or economic gain. The attempted revival of Uganda Airlines is increasingly looking like one such giant boondoggle.

Those who understand the airline business have cast doubt on the economic viability of Uganda Airlines. Better funded, even state-funded airlines, with much larger markets and a historical track record, such as Alitalia of Italy, Etihad of oil-rich Abu Dhabi, and, closer to home, South African Airways and Kenyan Airways are losing big money, some of them barely staying afloat.

South African airways, one of the highest-rated airlines in the world in terms of quality of service, backed by Africa’s most advanced economy, has not made a profit since 2010. In fact, the country’s Finance Minister has called for it to be shut down. Last year, it made a loss of about 390 million dollars.

After coming close to collapse in 2017, Kenya Airways, partly owned by the Kenyan government and Dutch airline KLM, made a loss of “only” 40 million dollars in the first half of last year. Figures for the full year are not readily available, but it can be assumed reasonably that it made losses in the millions of dollars again.

Those clomouring for the revival of Uganda Airlines usually point to Rwandair, with much envy it must be said. Despite government donations (grants) and loans amounting to more than 400 million dollars, Rwandair had accumulated losses of more than 200 million dollars between 2013 and 2016, according to a well-considered analysis of the airline’s accounts.

So what magic has Uganda Airlines got up its wing that other airlines cannot use?

Let’s not forget that since the collapse of the original Uganda Airlines, there have been a couple of attempts to revive some sort of national or at least regional airline, which suffered inevitable demise.

There was Alliance Airlines, later Alliance Air, that was established jointly in 1995 by South African Airways, Uganda and Tanzania. By the time it collapsed just five years later, it had made losses of more than 50 million dollars.

Then there was Air Uganda, promoted as a national carrier but in reality owned by the Aga Khan. Established in 2007, it only lasted seven years. The fact that it was owned and run by a group of people with deep pockets and a very long history of running business in Africa successfully did not save it.

Uganda has no record of running any public enterprise successfully, especially under Museveni’s government. People often point to Uganda Revenue Authority, Uganda National Roads Authority, to a lesser extent, and, more questionably, the Uganda Peoples Defense Forces, as examples of well-managed institutions.

Assuming, for argument’s sake, that these institutions are indeed run properly, we have to remember that they are not in the business of making money. If they were, they would, most likely, have become bankrupt ages ago.

Aggregate figures show that African Airlines don’t make money. According to business data website statista.com, African Airlines have made a profit only once in the last 10 years (100 million dollars in 2010). They made a loss of 400 million dollars last year and are expected to lose 300 million dollars this year.

The only African Airline reported to return a profit consistently is Ethiopian. According to most industry reports, it is heavily subsidised by the state. And unlike Ugandans, Ethiopians know a thing or two about managing big public projects.

There might be some plausible arguments for reviving Uganda Airlines, such as blind national pride, but let us not pretend that it is going to make us money, promote tourism, or promote investment. There are thousands of ways to do any of these things without throwing away public money. You can bet your house that Uganda Airlines will be running to Parliament for money each year to remain flying.

To be fair, a national carrier can be used to sell a country’s image, but only if it is a great airline, such as Singapore, Qantas of Australia or indeed Ethiopian. And you must have a product to sell in the first place.

If your country best known for routinely clobbering political opponents, lack of basic emergency services, stinking corruption and bodaboda madness, owning a billboard in the sky is not going to do much for you.

Uganda Airlines only makes sense as an elaborate scheme to steal public money. From the very little we know about airline – from the name, to allocation of shares and personnel matters, the whole thing smells funny.

It is still unclear who owns the name “Uganda Airlines”. Our bureaucrats couldn’t even get the paperwork for the establishment of the airline properly filed. Whether it is a case of deliberate obfuscation or incompetence, it doesn’t bode well for our money.

According to Works and Transport minister Monica Ntege Azuba, the airline has already recruited pilots, who will earn Shs 42 million per month (about $137,704 per year) not including allowances. This would make the fledging airline’s pilots some of the most highly paid in the world.

According to various industry sources, the average U.S. airline pilot earns $113,709 a year. Delta Airlines, one of the largest and most prestigious airlines in the world, reportedly pays its pilots about $137,500 annually.

So-called regional airlines, most of them much larger and more established than Uganda Airlines, pay $50000 – $80000 per year.

With just two to six small to medium-sized passenger planes, Uganda Airlines will pay its pilots more than some of the largest airlines in the world.

It would perhaps make sense if these pilots were expatriates, but the minister assured the country they are Ugandan “patriots”. You can imagine how much the managers will be earning. If ever there was a Ugandan boondoggle, this Uganda Airlines thing is it.

Source: observer.ug

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