UGANDA AIRLINES: HOPE IS NOT A STRATEGY

The departure of Jenifer Bamuturaki from the helm of Uganda Airlines was marked with the requisite politeness that defines such announcements in Kampala: gratitude for service, assurances of past effort and a gentle aspiration for smoother skies ahead.

But beyond the press release language and Instagram captions lies an uncomfortable truth: Bamuturaki is not the root cause of Uganda Airlines’ woes. She is a symptom—and in many ways a victim of a project whose foundational assumptions were flawed, whose execution was disorderly, and whose government support was never anchored in fiscal reality. Never mind its has been reported severally that she is not qualified for the position.

When the airline was resurrected in 2018, the business case presented to Cabinet and Parliament came wrapped in patriotic language and future-market optimism. Officials touted job creation, national pride and supposed benefits to tourism and trade. But the underlying feasibility study projected a break-even within two years, a laughable proposition to anyone with even a passing understanding of global aviation economics. Airlines do not make money like supermarkets or telecoms: they bleed before they breathe. Even seasoned carriers with alliances, deep capital, and decades of brand loyalty take five to seven years—sometimes more—to approach profitability.

This column meticulously chronicled this misstep as far back as 2018: industry veterans who reviewed the feasibility plan were astonished by assumptions that ignored basic airline economics—load factors, marketing budgets, competition on key routes, brand loyalty, and the difficulty of entering already saturated markets from Entebbe.

Step back for a moment and consider this: the plan assumed not just early profitability, but that a neutral-balance airline could somehow compete against global carriers on routes to Brussels, Dubai, Doha and Johannesburg without established customer bases or alliances. Those were not business forecasts, they were wish lists.

But the optimism did its work: Parliament green-lit tens of billions in allocations—first an initial $400m package to acquire six aircraft, then

additional budget supplements and deposits for new jets.

Meanwhile, the Auditor General’s successive reports have delivered sobering headlines: billions lost annually, with Shs237-billion in losses revealed as recently as 2025 amidst revenue under-performance, ticket fraud, inflated crew allowances and expensive overseas maintenance.

This should not surprise readers of Shillings & Cents. The project was, from the outset, trying to sprint before it could crawl. There was no honest reassessment at the first sign of trouble—only deeper political commitment and cost escalation. And here is where the fatal flaw becomes clear: the plan assumed government would bankroll the airline indefinitely, not just over the “valley of death,” but through the entire uphill climb that all airlines endure. That assumption was never grounded in Uganda’s fiscal habits.

Uganda’s public finance record is troubled with persistent domestic arrears and payment delays. Contractors, local suppliers and service providers know that government pays on its own schedule. But the international aviation value chain does not. Aircraft lessors, insurers, fuel suppliers, maintenance firms and global partners operate on contracts backed by hard currency and strict timelines. They do not accept bureaucratic payment delays or creative excuses. Meanwhile, an airline that cannot pay on time becomes

uninsurable, untrusted, and ultimately unviable. There is a story of one supplier shutting down the planes engines remotely when they missed a payment deadline.

In this context, Bamuturaki—no matter her qualifications or efforts was handed a plan that expected the impossible: disciplined, predictable government funding where none historically existed, and profitability in a timeline that defies industry data. She was dealing with a bad plan, and the results have been predictable: chronic losses, a brand that struggles to fill seats, and continual injections of capital with little to show for them.

We must now ask the uncomfortable but unavoidable question: what next?

Uganda faces two stark choices.

Option One: Cut Losses and Close Shop

This option requires political courage—acknowledging that the airline, as conceived and executed, will likely never become a sustainable commercial enterprise. Liquidation would allow us to recover at least a portion of the assets and stop the bleeding. Yes, the loss will be politically painful. Yes, there will be finger-pointing. But it would be an honest admission that some national projects—however seductive in rhetoric—are simply beyond our economic reach right now. Accepting the loss would free up trillions of shillings for urgent priorities: roads, schools, health facilities, and critical business infrastructure that yield tangible societal returns. That is the sober choice.

Option Two: Rewrite the Playbook

This is the more expensive, but potentially coherent alternative. It demands a completely new business plan, anchored in realistic timelines (profitability in a decade, not two years), disciplined cost forecasts, and transparent, ring-fenced funding that does not get interrupted by arrears politics. It requires restructuring the governance of the airline, separating day-to-day management from political influence, and potentially bringing in external strategic airline partners who understand the deep economics of global aviation. But this option should not be pursued half-heartedly.

If the state intends to keep a national airline, it must own the fact that it will cost billions of dollars and timescales will be long and unforgiving. Otherwise, the next cycle of losses will look exactly like this one.

To accuse Bamuturaki of personal failure is to miss the forest for the trees. Although one could argue that if she was as seasoned an airline manager as she wanted us to believe, she would know not to clamour for the assignment in the first place.

The real failure lies in policy optimism that ignored economic reality, and in political persistence that treated wishful thinking as strategy. The moment of reckoning is here. Uganda must choose: learn from this, or repeat it. Too much taxpayer money and national ambition deserves better.

 

UGANDA AIRLINES: WHEN WILL PRUDENCE REPLACE HOPE?

Madness, Albert Einstein is often quoted as saying, is doing the same thing over and over again and expecting a different outcome. If that definition holds, then the saga of Uganda Airlines increasingly looks less like a calculated national investment and more like an expensive exercise in institutional denial.

The announcement that the board is advertising for a new chief executive nearly four years after Jennifer Bamuturaki took the reins should therefore come as no shock. It is not a rupture; it is a rhythm. A familiar cycle in which leadership changes are treated as solutions, while the underlying economics of the business remain largely unexamined. Fortunes decline, pressure mounts, a probe is launched, and the organisation responds by changing faces at the top — hoping, once again, for a different result.

The timing of Ms Bamuturaki’s exit is telling. It comes barely weeks after investigators from the Criminal Investigations Directorate, working jointly with the State House Anti-Corruption Unit

, demanded a trove of financial, procurement, and contractual records. These include board-approved business plans, aircraft acquisition documents, and detailed accounts relating to the airline’s most ambitious and capital-intensive venture: the London route. When law-enforcement interest begins to orbit an enterprise so closely, it is rarely about a single individual. It is usually about systems...

The Original Sin: Optimism as Policy

To understand how Uganda Airlines arrived at this juncture, one must return to its revival in 2019. The relaunch was framed as a bold statement of national intent — restoring pride, boosting tourism, and reclaiming airspace surrendered to foreign carriers. 

But beneath the symbolism lay a set of assumptions that Shillings & Cents questioned early on and repeatedly thereafter: unrealistic timelines to profitability, underestimation of operating costs, and overconfidence in the ability of a start-up airline to muscle into fiercely competitive routes...

Aviation is not forgiving. Even globally established airlines with scale, alliances, and deep capital buffers struggle to post consistent profits. New entrants bleed first and ask questions later. Yet Uganda Airlines’ original business plans spoke confidently of early break-even points, as though this were a manufacturing plant rather than a high-risk, low-margin service business. Optimism was not merely cultural; it was embedded as policy.

Follow the Money, Not the Rhetoric

Since revival, government has poured close to Shs1 trillion into the airline through direct capitalisation, guarantees, and supplementary budget allocations. As recently as December, Shs696.5 billion was channelled through the Ministry of Works to bolster fleet acquisition as part of a wider Shs1.6 trillion supplementary request. Officials insist this is a long-term investment in connectivity and trade. In theory, that argument holds water. In practice, it requires discipline.

The numbers tell a sobering story. According to the latest Auditor General’s report, Uganda Airlines reduced its net loss marginally from Shs231.58 billion to Shs230.81 billion year-on-year — an improvement of just 0.33 percent. This narrowing was driven largely by a 19.2 percent increase in revenue, itself a function of route expansion and increased capacity. Progress, yes — but of a fragile kind. When losses still run into hundreds of billions, celebrating incremental improvements risks confusing direction with destination.

Governance Matters — Especially in Aviation

Financial strain alone does not doom an airline. Poor governance does.

In August 2022, Parliament’s Committee on Commissions Statutory and State Enterprises revealed that the CEO did not meet the formal qualifications specified in the job description, notably lacking postgraduate training in administration. The defence offered was that experience compensated for academic requirements. Perhaps. But this episode mattered not because of degrees, but because it signalled a broader disregard for process in a business where process is everything.

Airlines live or die on systems — safety protocols, procurement discipline, route analytics, cost control, and compliance. When governance standards are treated as negotiable, risk multiplies quietly until it erupts loudly, often through losses, audits, or investigations. The current scrutiny by CID and SHACU should therefore be read not as an isolated event, but as a symptom of deeper institutional fragility.

Expansion Is Not the Sin — Unexamined Assumptions Are

It is important to state this clearly: an airline does not need to be profitable before expanding its network. That would be an impossible standard in an industry where even the best operators invest ahead of returns. Expansion can, under the right conditions, be part of the path toward sustainability.

The problem with Uganda Airlines is not expansion itself, but the quality and opacity, of the assumptions used to justify that expansion.

Every route is a bet. A bet on passenger volumes, yields, cargo uplift, and the airline’s ability to attract and retain traffic in the face of formidable competition. Those bets must be grounded in rigorous market data and honest stress-testing. Without that discipline, expansion becomes faith-based economics...

Consider the London route. This is not just another destination; it is the airline’s flagship statement. London is a mature, brutally competitive market dominated by carriers with deep networks, strong brands, and aggressive pricing strategies. Success on this route depends on sustained marketing, corporate travel contracts, diaspora loyalty translated into repeat business, and seamless connectivity.

If an airline struggles to consistently market and fill its London flights, no amount of optimism will magically make the Riyadh route profitable.

This is not cynicism; it is arithmetic. Routes do not become viable because they are announced at press conferences. They become viable because demand exists at the right price and because the airline can capture that demand efficiently. If the most obvious, diaspora-rich route is underperforming, prudence demands a pause — not a sprint into additional long-haul destinations on the assumption that “the next one will work”.

What assumptions underpin Riyadh, Muscat, Accra, or Gwangju? Are we betting on labour traffic, religious travel, cargo contracts, or transit passengers? And are these flows backed by firm data and commercial agreements, or inferred from hopeful correlations? In aviation, scale can lower unit costs — but it can also magnify losses if demand projections disappoint.

The Expansion Trap

Uganda Airlines’ repeated announcements of new aircraft and new routes create the appearance of momentum. But motion is not the same as progress. Adding aircraft increases fixed costs immediately — crew, maintenance, insurance, fuel, and ground handling,  while revenues take time to materialise, if they do at all. Without disciplined sequencing, expansion simply widens the loss profile.

This is where the airline risks falling into a familiar trap: mistaking growth for success. Expanding before optimising existing routes is like building additional lanes on a road whose traffic patterns are poorly understood. More asphalt does not fix congestion if the bottleneck lies elsewhere.

The Hidden Cost: Opportunity Lost

Every shilling invested in Uganda Airlines carries an opportunity cost. Public capital is finite. Close to Shs1 trillion sunk into aviation could have funded agricultural productivity, vocational skills, SME finance, or export-oriented manufacturing, sectors that employ far more Ugandans per shilling spent.

Tourism, often cited as the airline’s justification, does not depend solely on owning aircraft. Tourists arrive because destinations are competitive, safe, affordable, and well-marketed. There are cheaper and often more effective ways to improve connectivity: code-sharing agreements, route incentives for foreign carriers, and rationalisation of aviation taxes that make Entebbe more attractive as a hub.

So What Must Change?

Advertising for a new CEO is the easy part. The harder task is structural reform.

Uganda Airlines needs a brutally honest reset: transparent route-level economics, publicly articulated performance benchmarks, and a governance framework insulated from political interference. Expansion should remain an option but only when justified by clear data and sequenced prudently. Above all, expectations must be recalibrated. Losses are not temporary irritants to be explained away; they are signals to be interrogated.

Conclusion: From Hope to Hard Choices

Uganda Airlines still has potential. It has assets, a growing brand, and a strategic position in a region with rising demand for air travel. But potential is not performance. And national pride, while emotionally resonant, does not pay lease rentals or fuel bills.

Unless prudence replaces hope as the organising principle — unless assumptions are challenged as rigorously as ambitions are proclaimed, the airline risks repeating its cycle: expansion, losses, leadership change, and renewed appeals to the taxpayer. That is not nation-building. It is expensive repetition.

And repetition, as we have been reminded, is only madness when we expect a different result.

UGANDA AIRLINES: POLITICS CANNOT OUTRRUN THE NUMBERS

Every few years in Uganda, a moment arrives that forces us to ask whether we learn from our history or simply enjoy replaying it with new actors and shinier equipment. 

The unfolding saga at Uganda Airlines is one such moment — a national drama that began with the promise of pride in the skies but has ended, for now, in a familiar turbulence of losses, excuses, and rushed decisions. Anyone watching closely knows this storm did not start today. It began on the ground, long before the first cabin crew buckled up passengers on the new Bombardiers.

When government announced the revival of Uganda Airlines, officials spoke with the confidence of people who had cracked the aviation code. 

The business plan, they said, had input from the National Planning Authority (NPA), as if that alone was enough to inoculate the project against failure. But a closer reading of that plan revealed more holes than a kitchen sieve. It projected a break-even in two years — a proposition so detached from aviation reality that even industry veterans chuckled quietly. Airlines, everywhere in the world, bleed before they breathe.

 

Even the most mature carriers take five to seven years before anyone utters the word “profit.” But our business plan seemed less concerned with aeronautics and more with arithmetic designed to loosen the government’s purse strings.

And loosened they were. Long before the first commercial route was opened, the real feast had already taken place. Aircraft had been procured, consultancies paid, systems installed, training contracts awarded, and branding campaigns rolled out. Many of the key beneficiaries of Uganda Airlines’ rebirth vanished as soon as the procurement smoke cleared, satiated and licking their chops while the rest of the country was left to finance the hangover.

In aviation, reality eventually catches up with optimism. Richard Branson captured it best when he said that if you want to be a millionaire, start as a billionaire and open an airline. The industry is a black hole by design: fuel volatility, maintenance complexity, pilot training, aircraft depreciation, seasonal travel trends, global shocks, they all conspire to keep profit a distant dream. Even giants stumble. Kenya Airways bleeds. South African Airways has died and resurrected more times than Lazarus. Etihad burnt through billions chasing global dominance..

If airlines with deep pockets and global alliances struggle, what then of a young carrier in a small market?

Uganda Airlines entered this unforgiving world with enthusiasm but without insulation. Today the numbers are unforgiving. Accumulated losses have surged into the hundreds of billions. Operational costs rise like a jet on takeoff while revenues limp behind. Auditor General reports read like recurring episodes of the same tragedy — ticket fraud here, underutilised aircraft there, bloated staffing everywhere. The Airbus A330s we acquired as symbols of national pride now symbolise something else entirely: long-haul operations that drain more than they deliver. The CRJ900s, meant to anchor regional routes, are from a model already discontinued by the manufacturer. And just when one imagines the bleeding might trigger a sober pause, Parliament has greenlighted an additional sh400 billion as a deposit for new jets — a decision that qualifies as throwing good money after bad. But what does Parliament care? It is not Parliament that must justify this to the taxpayer.

A realistic reevaluation of Uganda Airlines must begin by acknowledging that losses are not an anomaly, they are the default. Even the regional carrier Uganda admires most, RwandAir, has not made a profit in its entire fifteen-year existence — despite disciplined governance, aggressive marketing, global partnerships and a well-aligned tourism strategy. If RwandAir, with all its structural advantages, has never crossed into profitability, on what basis did Uganda Airlines imagine it would break even in twenty-four months?

Yet the question we must confront is not simply whether the airline will ever make money. The deeper issue is the cost of choosing this path. Uganda has sunk trillions into the national carrier — in capitalisation, in procurement, in subsidies, in operational losses, and now in deposits for additional aircraft. 

But what else could that money have achieved? 

It could have transformed our human capital landscape, funding vocational institutes, strengthening teacher training, and scaling STEM programmes that would serve Uganda for generations. It could have repaired the structural cracks in our business environment, smoothing regulatory processes, strengthening SMEs, digitising public services, and lowering the cost of doing business. It could have modernised our creaking infrastructure, from roads and power reliability to turning Entebbe into a true regional aviation hub. And it could have turbocharged our tourism and MICE ambitions, where every shilling invested returns more shillings — unlike the aviation black hole, where every shilling invested demands two more to keep the aircraft in the sky.

Perhaps Uganda Airlines can still be rescued. But only if we stop pretending that politics can outvote economics. Uganda must decide whether it wants a commercial airline or a national symbol kept alive by subsidies and sentiment. It cannot be both. Until we confront the truth, that this project was conceived on flawed assumptions, executed through extractive procurement, and protected by political emotion, we will continue feeding a bottomless pit with no return.

STOP THE UGANDA AIRLINES DELUSION

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.

UGANDA AIRLINES, FLOGGING A DEAD HORSE

This week news came out that the board and the top management of Uganda National Airlines Corporation had taken accumulated leave, been suspended or been sacked, depending on who you speak to.

This came hot on the heels of an Auditor General report that questioned the assumptions made in the business plan that set up the airline, especially since they had failed to meet revenue targets they had overshot their cost budget.

The evidence shows that even in the best of times it takes years for a new airline to break even. RwandaAir was set up in 2001 and todate has not reported a profit, with the government shoveling millions of dollars into the carrier annually. That Uganda Airline was going to make a loss in its first year was not a surprise, except to the people who drew up the airlines’ business plan...

In the business plan they projected that Uganda Airlines would be profitable from their first year in operation. This may have come to bite them in the backside, because the Auditor General commented that it was hard to judge them against their business plan whose, ”timelines with in which certain activities were to be accomplished had not been specified.”

Industry players were highly critical of the initial business plan, smelling a rat when it was based on the assumption of profitability in the first year.

For obvious reasons business plans cannot work to the letter. The people who draw them up are not prophets.

That being said, the quality of a business plan depends on the assumptions made for and against the success of the business and a reliable assessment of whether it will work or not. The business plan is an indicator of how much thought has been put into thinking about the business, speaks to the quality of the promoters and whether it would make sense to back them.

Against this background you can see how the judgement can be made that government has a lot of money lying around. It is amazing that on the strength of this business plan, government committed to release at least $400m -- $330m to buy six planes, startup costs of $20m and $70m for contingency money.

Would we be wrong to assume that the promoters of this project sugar coated the figures so that the “ignorant” people in charge of the treasury can release the money?

This story is sad, even tragic on many levels.

Businessmen with more bankable projects with more immediate impact on the wider society,  are crying daily about the difficulty of accessing patient capital, capital which the owners are willing to wait years for a return or never.

This money being flushed down the toilet represents real opportunity cost.

The sh1.4trillion would have made a real difference in a child’s life whose education would have been enhanced by an extra blackboard or roof over his classroom; it would have meant life or better health for a child born in a rural health center III; at a million dollars a kilometer these monies would have opened up opportunities for a rural community previously unserved by a tarmac road.

Going by past estimates this money would have been good for at least 50,000 primary school classrooms or treating at least a million in patients at Mulago hospital. This is before you factor in the losses the airline is expected to make for years.

Believe it or not I have no problem with a national airline, a state owned one at that. My argument has always been that for what we want to achieve – greater tourism numbers never mind building “national pride”, there must be more efficient, more cost effective ways of doing this....

First of all people do not come to your country because you have an airline, they come because you have something that they want. So for starters can we inform/market  the country better abroad? For a fraction of a fraction of the cost, we can add a few thousand visitors from abroad through a deliberate, systematic and consistent marketing campaign.

For a fraction of the cost we can beef up our civilian policing to ensure the country is safer for visitors. For a fraction of the cost we can set up a hospitality school to improve our waiters and waitresses capacity to ensure our visitors are comfortable.

Once we have these and a few other basics under control, we can then go to the airlines which fly into Entebbe and work at lowering the costs of flying into Uganda, if that is a major impediment to visitors coming here. And I haven’t even begun to eat into the $400m.

But that is all water under the bridge. The challenge for government is how do we make the best of a bad situation.

The smart thing maybe to cut our losses at this point, liquidate the airline and hope we recoup some of our money and pride in the process. That seems unlikely to happen.

The next best thing, maybe to go back to the drawing board – rewrite the business plan, reconstitute the board, hire new management … start all over again.

The third option may be to just flog it off as a going concern – a badly going concern, preferably to another airline who can integrate it into its existing network and make it work. And even in this last scenario, there are no guarantees the thing will not continue to bleed the treasury for years into the future.

In the greater scheme of things Uganda Airlines has hit a speed bump, but given that its set up was so shambolic, it has made it all the more difficult to get up from this mishap...

 

LET US NOT LIE OURSELVES

Lately there has been a gathering momentum for government to restart state enterprises, everything from Uganda Airlines to the Uganda Commercial Bank and everything in between.

I have my own thoughts about the motives around this drive, but I will take its proponents’ reason at face value.

They argue, not necessarily in this order, that this is to curb the outflow of money from the economy, that the government needs to be more involved in directing the private sector, that it will create more jobs for Ugandans and markets for local suppliers among others. I am sure you will remind me if I have missed any.

"It is true of course that foreign investors repatriate their profits to their home bases every so often. First of all why should we be surprised or even offended by this? By definition the investors do not live in Uganda and need to have their returns sent to them where they are...

Secondly, how much they repatriate maybe over exaggerated.

Companies through the course of their business earn money, revenue, from which they meet their expenses – some foreign and hopefully a lot local, the net is profit. His profit in a competitive sector is about 20 percent of total revenues or less. This profit is taxed at a rate of 30 percent by the government. The rest of the money is the owners’ to do as he pleases, his payment for risking his capital. If they are interested in a sustainable business most of this money is ploughed right back into the local business and some of it is repatriated, about five percent or less of total revenues.

So you have to wonder about these massive outflows to themselves that people accuse foreign investors of.

Of course what is true is that there maybe huge payments to foreign suppliers, but that is a genuine cost of doing business. So for instance a bank may spend a lot of money on software or a telecommunications company on hardware or a manufacturer on machinery and chemicals.

The New Vision for instance last year out of revenues of Sh90b spent sh16.8b on raw materials – mostly imported paper, inks and other printing inputs. This is about a fifth of all its revenues. It paid taxes of sh1.8b and total dividend of sh1.9b or about two percent of total revenues. About half of this dividend payout went to the government as the majority shareholder.

And by the way according to the Auditor General’s report, of the twelve profitable state enterprises, only New Vision declared a dividend to its owner.

The point is that if these companies are repatriating funds, on closer scrutiny you may find most of those are costs of doing business than returns to its owners.

By logical extension if you set up local companies in the same industries in order to keep in business they will have to source a lot of their materials abroad until local alternatives are available. So they will send out just as much money as their “evil” foreign counterparts.

If you are in a competitive industry the local alternative to meets your requirements is always the best to ensure you compete favourably. A prudent businessmen would not source abroad what he can get locally.

"It was hilarious recently during an online discussion that someone suggested that the entrance of Uganda Airlines would lower the cost of travel as they will be charging in Uganda shillings. I argued that, that would not be good business sense if most of their inputs from ground fees to accreditation to international regulators to air space rights are charged in hard currency. I never heard back from him....

The argument that government should be more involved in the economy is beyond reproach.

However, they need not do that by going into business themselves. Governments set the environment for business through regulation, fiscal policy and enforcement.

In the case of Uganda Airlines it is probably cheaper for government to go to British Airways or Emirates or Brussels Airlines and negotiate a cheaper rate for people flying to Uganda (because we have it in our heads that people are not coming here because of expensive tickets!) than starting our own airline. It may take reducing taxes of them landing in Uganda, cheaper aviation fuel or giving them tax free status here, if we believe expensive fares are keeping tourists away.

And finally that state enterprises create jobs for locals. Sometimes I don’t know whether to cry or laugh. A cursory look around Uganda’s labour market shows that up to 90 percent or even more, of the workers around are Ugandans – even in the 100 percent foreign companies. So the issue of Ugandans not being employed in foreign companies does not stand up to scrutiny.

And secondly a company’s labour requirements are dictated by the market’s needs. If the market demands more of your product you hire more or if not you cut your labour force. Unless you are suggesting that government will employ or keep people on the payroll when they are doing nothing? 

Wouldn’t it be better if government just used tax payer’s money to pay unemployment benefits than distort markets and doom the economy to certain decline?

"Taking the proponents of this new “Move to the left” at their word, I suspect a lack of understanding of how business works and therefore how to improve the business environment....

The new boss of the Uganda Development Corporation (UIA) a former senior official at the National Planning Authority (NPA) Patrick Birungi was reported to have admitted recently that in the few days he has been at UDC he has learnt that it is much harder to do than plan.

Foreign investors are not angels. It may very well be some of them have devised dodges around our tax system. My feeling is that their greater premium on reputation is such that they are more likely than not to play by the rules than break them. A damaged reputation for them, more than for us, can cost them a lot of money.

And when they do break the rules, its often due to our negligence or in connivance with our own people. Let us fix those loopholes before we throw this baby out with the bath water.

ETHIOPIAN AIRLINES HAS GOT IT RIGHT

This month Ethiopian Airlines announced a profit of $229m (sh800b) for the year that ended in July. They are the only profitable airline on the continent.

But what was making news this week was the news that Ethiopian Airlines is signing up partnerships across the continent to set up or take a stake in existing airlines.

According to the reports Ethiopian Airlines has taken significant stakes in regional airlines, in the case of Mozambique Airlines has full ownership. Chad, Guinea, Malawi, Mozambique and Zambia have already put pen to paper. It is reported that Djibouti and Nigeria are on the verge of signing on.

"As if it was not clear yet what Ethiopian Airlines strategy was, at the beginning of the month they signed up with worldwide courier DHL with a view to making Addis Ababa the main logistics hub on the continent...

Ethiopian Airlines’ ambition is to become one of the biggest airlines in the world and to that end they intend to double their fleet current 108 plane fleet in coming years. The current activity on the continent is aimed at that target. They are off to a good start, last year they flew 10.6 million passengers to 125 destinations around the world.

Started in 1945, the airline, regardless of regime, has been run along strict corporate lines and its expansion through partnerships around the continent is the logical conclusion seeing as the airline covers the most destinations on the continent.

Already Ethiopian Airlines counts in addition to Bole International Airport in Addis Ababa, Malawi’s Lilongwe international airport and Togo’s Lome Airport as its hubs.

They more than any other airline, have reached a stage where the colonial boundaries that balkanise the continent are an inconvenience that can, and must be transcended. But they are also showing that more than high sounding speeches, trade and commerce is what is going to bring the continent together and ensure it takes its rightful place at the high table of world affairs.

In truth a continental or even regional airline will make more economic sense and therefore ensure long term viability.

Their growing capacity also means that they are now developing secondary industries like training, aircraft maintenance, which they have been doing for themselves and other airlines for years and are soon embarking on making parts for airlines. As a spin off they are already considering setting up an aerospace industry.

"Given the history of the airline, run on sound corporate lines and with a long term strategic view of the industry both locally and internationally, it is a safe bet that they will take advantage of this first mover advantage to cement their dominance of the continent’s skies....

Especially as South African Airways and Kenya Airways are floundering under the legacy of previous poor governance set ups as and Egypt Air is failing to get any traction.

Ethiopian Airlines serves many lessons for parastatals – it is 100 percent government owned, across the continent.

One, that the parastatal is created to serve clients, who may not necessarily be nationals and is not set up to serve the interests of a small connected clique.

Secondly, that for long term viability, profit cannot be a by the way. Like any business, cost effective management is critical. As it is now Ethiopia is suffering a foreign exchange crunch because of the huge debt repayments that are coming due, but the airline goes on as usual. It does not rely on the benevolence of the Ethiopian state to stay afloat.

And finally great endeavours take time. Ethiopian Airlines is in its 73^rd year. What we celebrate today has come after years, no decades, of disciplined action anchored by strategic thinking. The airline did not get where it is through wishful thinking but through a brutal and honest assessment of the marketplace at every turn of their history.

Assuming they continue as they are, but most likely they will only get better, it is not a stretch of imagination to foresee that they will be the only airline worth talking about in a decade or two in Africa.

Word on the grapevine is that they had actually offered to help Uganda set up its own operation. But the model they had sold us was one where the CEO and finance manager would be their appointees. Our people did not find palatable, for obvious reasons.

UGANDA AIRLINES WILL BE A POISONED CHALICE

A few weeks ago I put out a public request for the business plan for the revival of Uganda Airlines. Nothing happened until a few days ago, when the full feasibility study that justified the project fell in my laps. So to speak.

According to the writers of the feasibility plan, which was the National Planning Authority (NPA) the justification of the airline is based on the assumptions that it will facilitate tourism, stimulate economic growth, promote exports, improve our widening trade deficit and reduce cost of air transport.

They also added that it will help break foreign dominance of our airspace, help market the country abroad and create employment opportunities for Ugandans in the aviation industry.

The planners set the start-up costs at $400m (sh1.6trillion) which will be spent on buying six planes -- $330m, start-up costs $20m and contingency money of $70m or about three months of expenses assuming no revenues.

The airline will fly seven international routes – London,  Brussels, Dubai, Doha,  Mumbai, Johannesburg and Lagos and 18 regional routes, which would include all capitals of the East African Community as well Kinshasa, Juba, Khartoum, Asmara, Addis Ababa, Lusaka and Harare.

From this point on things begin to get fantastic.

According to the plan the airline will manage a passenger load factor – a measure of how many passengers they will carry per flight compared of available seats, of 49 percent. In other places in the plan they put the load factor in year one at 62 percent.

This is important because the more people you can carry from day one the faster you can become profitable, if your costing is correct.

Industry experts have pointed out two flaws in this scenario. 

One that it is impossible, especially given the anaemic advertising budget of less than $5m per year in the first four years.

Secondly and related to that the airline, business is dependent on reputation and loyalty, neither of which the new Uganda Airlines has. As a new entrant they will be starting from scratch in an extremely competitive market, so to have half a chance of working they need to have a bigger marketing budget.

And the competition is real to Brussels, Dubai, Doha, Johannesburg, Addis Ababa and Nairobi, the new airline will be flying into hubs with established competition on those routes. Even with bilateral flying agreements between the respective points, one should not expect those airlines to roll over and hand over their market.

One aviation veteran pointed out that there can be no Uganda Airlines without an Entebbe-Nairobi route. But that route happens to be one of the most lucrative for Kenya Airways and it will be a fight to the death for them to even give an inch. The failure to gain traction on this single route has been the downfall of all airlines trying to fly out of Entebbe.

"The choice of routes is also curious because the promoters of the airline have consistently argued that the airline would provide non-stop flights from tourist markets that are not currently served. That rationale flies out the window with the plan to compete directly with existing players....

Their argument would have been supported by routes to Frankfurt or Barcelona or Tokyo or any number of other destinations serving potential toursim markets.

Experts are divided on whether buying planes or leasing them is the better option.

One expert said the better deal would be to buy the planes and do away with leasing costs which would come due whether the plane is flying profitably or not, but that is if we can buy them cash down.

The feasibility study does not forsee such a scenario, so have provided for borrowing to finance the $330m plane purchases. They plan for interest and amortisation payments of at least $14m annually from the third year onwards.

Another industry source said  buying the planes is a bad idea because it would be locking all that money in planes with no guarantee of traffic. All the projections in the feasibility study are not realistic, he said and he hoped the planners did not think that because it is Uganda Airlines, Ugandans will be falling over themselves to fly it.

“There is no loyalty in this industry. Passengers are looking for reputation and convenience. We won’t care about Uganda Airlines,” he said.

The money he suggested would be better spent in the first two years code sharing, where an airline sells tickets but passengers fly other airlines, to establish some traffic before you invest in the airplanes. This money would be used to heavily market the airline in the meantime.

"There was unanimity though that there was no way that the airline would attain profitability by the fourth year....

“That would be a world record,” one industry expert said as he all but rolled in the aisles with laughter.

“You are building a reputation, especially reliability. You cannot believe how many empty flights you are going to make to all your destinations before passengers begin to take you seriously. That is all money. But in this industry it’s an understandable cost of business.”

In fact he added, that $70m they have budgeted for contingency will be done in a sooner than three months.

Across the border Rwanda Air, which has been flying since 2001 have never made a profit. A few months ago they gleefully announced that they had cut losses last year to one million dollars.

The supporters of the project however counter that the benefits to the economy in job creation – all of 439 jobs over five years, promotion of exports and lower fairs out of Entebbe will more than make up for the losses the airline will make.

On exports the planners had a curious insertion about exports, 

"It would seem that the limitation to the development of a good export industry has been the lack of regular air services to transport what is produced in Uganda to other markets."

This seems to suggest that if we have our own planes suddenly people will start exporting by air.

Most of our exports – coffee, maize, beans are bulky and more cost effectively shipped by land than air. We have some fish and horticulture products, which can be flown out, but this has been going on for the last two decades without our own airline. Thank you.

Interestingly, despite projecting how profitable the enterprise will be the authors cover themselves by asserting deep in the plan that the airline need not be profitable and should be considered as a piece of infrastructure like a road, which the tax payer finances without caring about the bottom line.

That is not only lazy thinking but encourages moral hazard and corruption. Given a blank check like that to start a business, what incentive would the management have to make it self-sustaining?

Richard Branson, who has started and owned an airline, joked one time that the best way to become a millionaire is to start with a billion dollars and buy an airline. He should know.

"It is an amazing plan with more holes than a kitchen sieve. No wonder it is a closely guarded secret...

We do not need an airline of our own. We have more than a dozen airlines flying into Uganda already. 

There are cheaper ways to get what we want – connectivity to the world, higher tourism numbers and export receipts.

This is particularly true in this time when we are trying hard to raise revenues to finance badly need public goods – education, health and infrastructure.

WHAT IT WOULD TAKE TO MAKE A NATIONAL AIRLINE WORK

If there was any doubt that we are going ahead with a state airline President Yoweri Museveni’s word at the Independence Day celebration last week put them to rest.

My own opposition to the airline revolves around two questions.

What is it that the state airline would do for us that the existing players cannot do for us? Supporters of the project have never come up with a convincing answer for this except for a few vague mumblings about national pride.

"And secondly the issue of opportunity cost. That in spending the hundreds of millions of dollars required to make the project halfway viable, do we realise we will be denying more pressing needs in education, health and infrastructure the badly needed resources they need to deliver adequate service?...

The proponents don t seem to have a comeback for this one. Some have hazarded that we waste money on parliament and in corruption so why not on an airline.

That’s when I switch to another whatsapp conversation.

But since it is a fait accompli what would we really need to do to make this adventure work?

Project supporters point to the increased number flying into Entebbe – 1.5m last year compared to about 350,000 when Uganda Airlines folded, as a sign there is enough business for one more airline. 

The logic of that argument is lost on me. So the extra passengers will stop flying the time tested Emirates, Etihad, KLM, SN Brussels and even Kenya Airways to jump onto the untested new airline?

That being said it should be noted that these airlines feed into their respective hubs where they have onward flights to other destinations. Industry players estimate that only about 15 percent of travellers out of Entebbe are end-end users. This means for example that there are very few users who fly and stop in Addis Ababa or Dubai or Amsterdam or Nairobi for that matter. Most catch onward flights to elsewhere. Who would want to fly to a destination and have to change airlines? It’s a headache we would all rather avoid. Put that way it further narrows the numbers the new airline will be competing for to about 250,000 passengers a year.

Industry experts remember that the reason the initial Uganda Airlines collapsed was because it was undercapitalised and couldn’t take advantage of the lack of competition, then relative to now. Today the competition is much stiffer, with upwards of 15 airlines flying in and out of Entebbe which by extension would mean we would need more money to start-up the airline and keep it afloat.

"They point out that start-up airlines work on a business plan which sees revenues matching expenses after between 18 to 24 months, with break even coming much further down the line. RwandaAir started in 2002 and is still waiting to break even...

What can be expected is that there will be a long period of loss making, which losses, ongoing costs of operations and maintenance and continuous investment will have to be covered by the government.

To buy a brand new Boeing 737, the smallest of the company’s line, will set us back anything from $50 (Sh165b) to $90m (sh300b). To be competitive we will need several so already we can expect that on planes alone we will shell out at least $100m.

We could lease planes but industry experts are against this option as leasing costs will be a loadstone around the airlines neck especially when business is low. But assuming we used the leasing option to lease the same Boeing 737 with crew would cost us about $2500 an hour or $21.9m annually as this figure is regardless of whether the plane is flying or not.

And this is just the planes, we haven’t started talking about fuel, landing fees, staff costs, marketing and branding.

"To cut a long story short industry experts say for the airline to have half a chance of survival the government wold have to buy the planes and to buy back ground handling services from ENHAS....

One of the reasons for Uganda Airlines collapse was that the main cash cow of its operations, ground handling was hived off and sold to private operators. Observers say that a one off sale may mean at least $100m pay-out to the ENHAS owners given their annual revenues estimated in the millions of dollars. With more than 26,000 flights in and out of Entebbe annually and the cost of handling the smallest plane at $500, these cash flows would go a long way to easing the losses of the nascent airline.

Given this out lay one can expect that government would have to indulge in some predatory behaviour favouring the new airline over other airlines. This wouldn’t be bad if quality standards are what passengers have been used to but the flip side is that other airlines may have to start rethinking their investments in Uganda much to the discomfort of the passengers.

The key of course is whether the government will have the stomach to keep pouring money into what can develop quickly into a financial blackhole, as they wait for it to become profitable.

HOW WE SHOULD RUN UGANDA AIRLINES .... IF WE MUST

President Yoweri Museveni has made a revival of a national carrier a major target for his cabinet in the coming five years.
My opposition to this development is well documented.

Going by our history the proposed carrier will end up being a drain on our treasury, shifting valuable resources away from key services and infrastructure development for years into the future. I have argued that the project is unnecessary, asking what can a state owned carrier do for us that other airlines are not already doing for us?

If it is cheaper fares that we want it would be cheaper to give concessions to airlines flying into Uganda – lower fuel taxes, cheaper landing fees etc in exchange for lower fares than to try and set up our own airline.

The $300m we are supposed to have earmarked for the project is a drop in the ocean. Ask our neighbours whose airline’s losses are being carried by the state and which are in hundreds of millions of dollars over the lifespan of the carrier.

But since we are hell bent on going ahead with the project maybe we can still save the project, or at least give it a chance of success.

For starters I am not opposed to a national carrier but I am opposed to a state owned one. If we helped a private sector player set it up with minimum loss to ourselves I have no problem.

In line with that I propose a model for the new Uganda Airlines.
First of all let us recognise that starting up an airline is not like starting up a taxi company. We do not have the expertise and it would cost us hundreds of billions of shillings to bring our skills up to scratch.

Keeping that in mind it would be useful to partner with an established player, who brings the managerial competence and we provide the capital.

This would help smoothen the expected sharp learning curve and also help us feed into that airline’s existing network.

Of course our officials and representatives on the board have to be seasoned businessmen or managers who will ensure we don’t get the short end of the stick. With this model we will ensure our concerns are addressed within reason and our people and institutions will develop the capacity we need to run an airline.
In this way we share the risk with a partner who has a material interest in the airline’s success.

I shudder when I hear comments like, “Parastatals in emerging economies play a bigger, liberating role beyond balance sheet profitability” advanced by the proponents of setting up the state owned airline.

In not so few words such people are saying that the Ugandan tax payer should forgo better health and education services as a minority indulge their egos.

It also suggests that the laws of economics can be suspended because we are a developing nation.

Neither the economics nor the mathematics favour a state owned airline now.

People who have set up airlines – and we have a few in our midst, will tell you that  you would have to brace yourself for losses in the tens of millions of dollars for years before you can have a hope of turning a profit. Particularly with a none air faring population like our own. Of course the proponents argue that the reason we don’t fly more often to our villages is because of the high airfares. They are high for a reason, and a lot of it has to do with our regulatory, legal and tax regimes.

For one thing those with experience will tell you it takes a while before you get the confidence of the flying public. One way to get is to fly the plane as scheduled regardless of whether there are passengers or cargo or not. Veterans of Uganda Airlines, Alliance Air and Africa One will tell you horror stories about the crew flying virtually alone to London, Johannesburg and Nairobi and not for free, as the crew’s salaries, fuel, various fees and the aircraft’s wear and tear have to be catered for.

I would be the first one to be proud that we have a functional airline but not at the cost of more essential services, but if we must have it now let us be prudent about how we set up, if only to minimise the losses to us.

A better use of our hard earned money would be to beef up our aviation infrastructure and afford airlines better concessions to attract more traffic in and out of Uganda.

KENYA AIRWAYS A CAUTIONARY TALE FOR UGANDA AIRLINES CHAMPIONS

Kenya Airways last week announced a horrific $252m (sh882b) loss last year, blaming low tourism numbers and competition, while observers in addition, point to judgmental errors in route expansion and cost indiscipline as key to the airlines’ latest woes.

The airline saw a marginal growth in revenue to Ksh110b (sh3.3trillion) from Ksh106b (sh3trillion) the previous year which was not helped by a near 25 percent jump in costs.

A cursory look at their financial statements shows their fleet ownership costs doubled, as did their finance costs and they took Ksh7b (Sh210b) loss from realised and unrealised losses on their fuel derivatives bets.

Being a huge consumer of aviation fuel Kenya Airways seems to have bet fuel prices would rise last year and took out insurance (derivatives) to guard against that eventuality. However world oil prices have been falling since June, making the airlines’ derivative positions expensive to maintain or dispose of.

As if that is not enough the airline now has a negative net worth, its liabilities exceeding its assets. The company says it will look to borrow $200m and sell off some of its aircraft to raise an additional $100m.

"The aviation business is a volatile one in the best of times. It did not help, that Kenya has had several high profile terrorist attacks in the last two years, keeping tourists away or that the middle east airlines have made aggressive inroads into the continent, but one can bet that if you put the company’s expenses under a microscope you will find a lot of fat, wastage and downright theft embedded in the system...

Rumours of fat deals to favoured contractors, planes leased irregularly from connected individuals and hush money being doled out to people in the know abound.

In an increasingly competitive environment there can be no excess, companies need to be lean and mean so that they can not only fend off competitors’ maneuvers, like price wars but also initiate some aggression themselves.

Except for the Nairobi-Entebbe route where Kenya Airways has a freehand they are most likely taking a beating on all other routes on which they face competition.

With an eroded balance sheet, the pride of Africa is exposed and it maybe that only the Kenya government can fork out some more money to pour down that black hole.

Stripped to the bare essentials business is simple. For long term sustainability you need to make more money than you spend. The difference is profit, which may be parcelled out among the shareholders and ploughed back into the company to drive growth.

In a competitive environment the profit margins can grow increasingly thin, hence calling for increasing levels of efficiency and a healthy pile of retained profits. Companies can either hang in there giving as good as they get and hope to weather the storm or sell out, abandon the business. 

These are strategic decisions, which are not made any easier by the hard facts on display, but can be complicated by sentimentality and misguided loyalty to the business.

Which brings me around nicely to the champions of the revival of Uganda Airlines. The sum total of their argument for the return of the airline, which went under at the start of the century, is that it is an infrastructure such as roads or railways or ferries that government has to put in place regardless of its direct return on investment.

"That there is the fallacy of the argument. If the enterprise is not profitable it will not sustain itself and rely increasingly on the treasury for capital infusions just like Kenya Airways is doing and South African Airways is doing with disturbing regularity.
We are talking hundreds of millions of dollars. Money that would show a better, more sustainable return for this country by educating or treating a few thousand children....

One wonders which market research these people are referring to in pushing for a billion dollar investment on when British Airways with a monopoly over the non-stop Entebbe-London route only last week announced they were pulling out of this market?

It is not a crisis that BA has left our market, there a dozen other airlines flying out of Entebbe. A better way to spend money on the aviation industry would be to upgrade Entebbe airport which barely manages to handle three jumbo jets when they land at the little airport within minutes of each other.

Given what we know about our government’s workings, it is not a stretch to think that a stateowned airline would just increase the surface area for corruption,  especially as such an airline will not breakeven for at least a decade if it does at all. It really has nothing to do with improving access to Uganda for tourists or someone hazarded last week, to make our coffee more marketable.

If it was up to me we would put this “Force Uganda Airlines Back” to bed for at least the next decade or it put it down all together.

IMPROVING UGANDA AVIATION INFRASTRUCTURE MORE COST EFFECTIVE

Regional transport ministers have agreed on a battery of initiatives to slash the price of travelling in the region.

Among the suggestions is to scrap VAT on airlines be scrapped, promoting budget airlines and implement an open air space policy in the region.

Under current regimes countries national airlines or designated carriers are shielded from competition often to the detriment of the customer. Prices are uncompetitive and safety standards are not adhered to.

Transport costs in increasing order are water, rail, road and air. The lower value, bulkier cargo will be shipped by water with the higher valued, least bulky cargo saved for air transport.

The cost of transport is key to a landlocked country like Uganda. So governments like ours have to be bolder in lowering transport costs.

It has been done before. In the 1980s coffee accounted for more than half the tax revenues to the treasury. But in order to make our coffee more competitive on the world market the government removed the export tax on coffee. Three decades later the net effect of this is that we export more coffee than we did in the 1980s but also collect much more than the pittance we used to collect in taxes from taxing the associated industries.

One of the lessons of liberalisation is that we have to lose some to get more. Not always but often enough for it to make sense.

The challenge of course with air travel unfortunately is that we cannot make unilateral decisions on our side of the pond, but countries have to agree for the decisions to be make an impact. Take the issue of open skies, where among other things airlines from other countries, other than national carriers or designated carriers will be able to take on traffic, needs the permission of both countries.

Increased competition would invariably bury the Entebbe-Nairobi route’s reputation as one of the most expensive in the world per kilometre.  

So for instance not having a national carrier to do the Nairobi route would not be a problem because we would allow British Airways or Ethiopian or Emirates to take passengers from Entebbe for Nairobi. That doesn’t happen now hence the spike in prices after the closure of Air Uganda.

Increased competition would invariably bury the Entebbe-Nairobi route’s reputation as one of the most expensive in the world per kilometre.

Observers suggest that an open skies policy and a scrapping of some taxes could lower ticket prices by as much as half.

The challenge of course is whether the Kenya government, which has a stake in Kenya Airways which has benefitted disproportionately from the high cost fares in the region would let its advantage go away like that.

The concern is not unfounded. Whenever there has been a gap on the Entebbe-Nairobi route Kenya Airways has not been averse to hiking its prices. And they have fought tooth and nail to retain the choice time slots in the face of competition. In fact about a decade ago they drove a hard bargain with East African Airlines that was trying to muscle in on their routes on the route, by cancelling their contracts with local ground handlers Entebbe Handling Services (ENHAS), an affiliate of East African Airlines. The airline folded soon after that.

 

However long protracted negotiations may take to eventually bear fruit, it will be a smaller price to pay than trying to revive Uganda Airlines.

Thankfully the sources familiar with last week’s events in the cabinet retreat report that plans for the revival of Uganda Airlines has been put on the backburner for the time being.

"My opposition to a state owned airline is against the background of the inability of the government to run even a kiosk. An airline is an expensive proposition – by the time of the closure of Uganda Airlines it was gobbling sh10b or about $5m a month and it was only flying one route. Such monies would be better spent equipping our health centers and schools and opening up murram roads....

Given the experience of the Air Uganda, private investors are more likely to avoid us like the plague.

The truth is if we are suffering with high fares we brought it upon ourselves and the casualness with which our regulators sunk Air Uganda is proof enough of how they will be even more careless with tax payers money in a state airline.