Ugandans Pay Dearly for Liberalised Airspace
 

Apart from Emirates, Kenya Airways and Ethiopian Airlines, which fly daily into Entebbe, the large European airlines prefer to operate a small number of frequencies

By MICHAEL WAKABI
SPECIAL CORRESPONDENT

ALTHOUGH UGANDA’S liberal air transport policy has been a boon to foreign operators, it has spelt doom for local airlines. Recognising the role of air transport in sustaining economic growth, Uganda chose to liberalise its air transport in the early 1990s.

The rationale behind this approach was that the market would determine which operators survived and competition would result in improved services for consumers.

While this has been realised to some extent, resulting in the most open skies in Africa, passengers are paying the price of not having a strong national airline. Eleven international airlines serve Entebbe using some of the most modern aircraft, but this does not come cheap. On average, Ugandans pay as much as 25 per cent more to travel to any destination compared with departures from Nairobi.

The country’s dream of building a hub at Entebbe has come to naught as Uganda has become just a spoke in the networks of well established carriers. The irony of Uganda’s policy is that while foreign operators find it good enough to feed their international networks, it is not big enough for them to offer regular services.

Apart from Emirates, Kenya Airways and Ethiopian Airlines which fly daily into Entebbe, the large European airlines, prefer to operate a small number of frequencies, that most of the time transit through Nairobi. Ugandan passengers are suffering from a shortage of flights to Europe during the current high season because the only operator of direct flights between Entebbe and London, British Airways, has not increased frequency.

The Ministry of Transport says Uganda’s aviation policy has created a conducive environment for investment in the air transport industry, but local operators think it has simply opened the floodgates, making it difficult to start and sustain a local airline.

At least three attempts at starting a viable local airline have failed in the past 10 years. Under the auspices of the African Joint Air Services (AJAS), Uganda along with Tanzania teamed up with South Africa’s Transnet in 1995 to create Alliance Air, a long-haul carrier to serve the region. Five years later, the carrier collapsed under a mountain of debt as shareholders squabbled over route rights and management control.

Alliance Air was buying all services – aircraft, crew, maintenance, insurance and management – from South African Airways at prices the shareholders had no control over. "Even the price at which we were buying fuel was a secret only known to the South African-appointed MD," said one source who sat on the defunct airline's board.

The emergence of Alliance Air was nevertheless a blow to the Ugandan and Tanzanian national carriers. All long haul routes were ceded to AJAS and even though it did not grow fast enough to develop all of them, the national airlines were not allowed to step in. Its existence also gave the governments an excuse to avoid investing in their own national airlines.

The result is that the national carriers grew weaker, losing out to competition. As Alliance Air’s woes increased in 1999, Uganda tried to salvage the situation by surrendering its flag carrier to South African Airlines virtually for free. The deal met with stiff opposition, and both carriers collapsed.

In 2002, two start-ups – one in April and the other in December – took to the skies. Owned by the Ugandan Capt Joseph Roy, who runs one of Africa’s most successful cargo airlines, and DAS Air and Ireland-based Charles Heather, Africa One began operating first, followed by East African Airlines in December. Conceived as a pan-African carrier with hubs in East, West and Southern Africa, Africa One started operations with services to Dubai, Nairobi and Dar es Salaam.

However, the start-up soon ran into trouble after it failed to get Nigerian accreditation, its planned Lagos-Entebbe-Dubai route. A combination of inappropriate equipment and inadequate financing brought Africa One to its knees in February 2003, leaving yet another vacuum. Although still around, East African Airlines has found it difficult to compete with more established carriers such as Kenya Airways.

After a promising start, the airline was forced to withdraw from the Nairobi route, opting for a code-share arrangement with its erstwhile rival. Flights to Bujumbura and Kigali were also withdrawn as they were burning money faster than it was coming in. The airline, which now flies twice a week to Johannesburg, has not been able to grow its route network in the recent past amid capital constraints and difficult political relations between Uganda and planned destinations.

Industry players blame Uganda’s unbridled aviation policy for the failure to nurture a strong national airline. Air transport is one of the most regulated industries worldwide but Uganda has chosen to open her doors even when this is not in national interest.

The result they say is a situation that favours established carriers against startups. East African Airways presents a pertinent case. Just before the collapse of Uganda Airlines, the national airline entered a code share agreement with Kenya Airways under which the six daily flights were merged into a single schedule and either carrier operated an optimum number of flights between the two destinations.

After the death of Uganda Airlines, Kenya Airways became the de-facto Ugandan carrier. East African Airlines has not managed to have this arrangement renegotiated and earlier attempts to operate an independent flight simply resulted in overcapacity on the route with EAA as the loser.

Pointing to Rwanda whose 20 month old carrier has grown promising regional network, industry players say the government should create a conducive operating environment through financial arrangements and negotiation of bilateral air service agreements that favour the growth of indigenous.

Rwanda has been successful where Uganda has failed because the government has been supportive, capitalizing its two carriers - Rwandair for passenger services and Silverback Arlines for cargo haulage- in the context of a policy that aims at eventual divestiture.

Another problem for Ugandan carriers is the absence of north bound frequencies. With 75 percent of passengers out of Entebbe going onward to other destinations, startups with a purely regional focus find it hard to compete unless they enter meaningful interline agreements with the big players. Typically, these take too long to come to the detriment of the newcomers.

To survive, an indigenous airline must have sufficient capital to burn in the development phase and must operate a short and long haul route combination.

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