In recent weeks the management of Uganda Airlines have been subjected to a slow roast by parliament’s committee on commissions, sate authorities & state enterprises (COSASE).
While revelations about the
payroll, the controversy around CEO Jennifer Bamuturaki’s appointment and the
billions lost to date, made for good drama the issue about the long-term future
of the airline was not touched.
This column has been opposed to the resuscitation of Uganda Airlines for almost a decade now. The main argument against it was that government is not geared towards running business. This is because the government –any government’s main preoccupation is with retaining power, which is more often than not, detrimental to business success...
Governments hang on to power,
among other ways by dishing out patronage, rewarding their supporters either
with plum jobs or lucrative contracts. This is not the criteria to run a
successful business.
Uganda Airlines was doomed from
its inception. A business plan was drawn up which promised that the airline
would be profitable in under five years. A laughable promise for the industry,
but one which was bound to convince government to turn on the treasury’s taps.
Secondly, several members of the
task force set up to advise on the set up of the airline then assumed
managerial positions in the new airline, including former CEO Cornwell Muleya. There
is wisdom in the principle of checks and balances, a wisdom that was clearly
ignored in the setup of the airline.
Airlines are notoriously bad at
being profitable. The huge initial outlay, the even bigger fixed costs coupled
with the slow buildup of customer loyalty all conspire to ensure that it takes
ages for an airline to break even, if at all.
RwandaAir, which has been flying
since the beginning of the century, has not yet broken even. And this
despite their less corrupt public officials and a less competitive market. So,
from the start Uganda Airlines’ success was far from guaranteed.
It was always worrying that from
the beginning, the promoters of the project sought to explain away the huge
anticipated losses as the cost of infrastructure, a red flag that cost
discipline was not going to be a priority. Revelations from COSASE show that
this has been the case.
Its hard enough to run an airline
with out office politics, runaway corruption, external interference and a lack
of strategic focus.
It is clear that with everyday
that we do not face up to the core issues of the airline, we stand to lose
billions of shillings and the hope of a turnaround of the airline recedes into
the distance. This is ironic because the airlines precursor, the original
Uganda Airlines was shut down because President Yoweri Museveni said the government
could not afford to keep throwing good money after bad. By the time of its
demise in May 2001, the single airplane airline had running costs of sh10b a month
about $5.6m at the time.
Madness has been defined as doing
the same thing over and over again and hoping for a different result.
To continue on the current path makes failure a mathematical certainty. The government urgently has to return to the drawing board. A new strategy has to be drawn up, that questions all assumptions including whether we should have a state-owned airline at all.
The promoters of the project
argued that we need an airline to bring tourists to this country, that the
airline would be a marketing tool for Uganda abroad and that it would bring
down fares to Uganda. There are more cost-effective ways to achieve all these
without committing hundreds of billions of dollars to setting up an airline.
To begin people don’t come to
Uganda because we have an airline, they come to Uganda because they is
something to do or see. In the era of pervasive online activity marketing the
country can be done for a few thousand dollars. And finally brining down fares
to Uganda can a be a negotiation between the industry and government, where
concessions, for much cheaper than the billions of shillings going down the
toilet with the airline, can be traded.
This project was not about a
national airline, If it has not occurred to you by now.
A friend drew an analogy between
Uganda Airlines and the terrorists who hijacked flights and flew them into the
twin towers on 9th September 2011.
In the post mortem of the attack,
it was discovered that the terrorists had gone to flying school in Florida.
Curiously they showed a pointed disinterest in the classes about landing
planes. For their deadly final intent, that part of the course was irrelevant.
Similarly, it seems, the
promoters of the Uganda Airlines project did not see beyond the startup of the
airline.
