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Gov’t ignores caution, buys six new planes to revive Uganda Airlines

Business

Gov’t ignores caution, buys six new planes to revive Uganda Airlines

The Airbus A330 neo

The Airbus A330-800

Uganda government has decided that the national airline – Uganda Airlines will be back in the skies as early as before the end of 2018, sooner than most people expected, despite many voices urging  caution for a more carefully thought out strategy.

The hasty preparations for the revival of the national carrier are captured by the way the government has signed up deals with aircraft manufacturers to purchase six brand new aircrafts as well as plans to plan routes for international travel.

Ephraim Bagenda, the CEO of the revived Uganda Airlines met with Airbus’s  Chief Commercial Officer  Eric Schulz

This week  Ephraim Bagenda, the CEO of the revived Uganda Airlines met with Airbus’s  Chief Commercial Officer  Eric Schulz at the Farnborough airshow in the UK, where both men signed an MOU for airbus to supply two A330-800neo aircrafts. Airbus markets the airplane as the new version of the best-selling A330 widebody airliner, featuring new wings new Rolls-Royce’s latest-generation Trent 7000 engines, new systems and a new Airspace cabin interior.

Uganda Airlines plans to use the A330-800neos to build its international long-haul network with the aircraft offering cutting-edge technologies along with most efficient operations. The aircraft will feature a three-class cabin layout comprising 20 Business, 28 Premium Economy and 213 Economy seats.

“This agreement demonstrates our ambition for economic growth supported by a robust aviation industry. The A330-800neo combines low operating costs, long range flying capability and high levels of comfort. We are looking forward to launch operations and offer our customers best-in-class service”, said Ephraim Bagenda, CEO of Uganda Airlines.

The Airbus announcement came just a day after the Canadian aircraft maker Bombadier anounced that it had signed a firm order with Uganda Airlines to supply four new CRJ900 regional jets

The planned revival of Uganda airlines has faced criticism on many fronts including the prevailing conditions in the aviation industry, the country’s poor economic environment, the lack of dedicated routes, fierce competition in the sector and corruption in the public sector.

Renowned business critic Paul Busharizi headlined his article of July 16, 2018 thus; Uganda Airlines will be a poisoned chalice.”

Busharizi argued that the decision to start with seven international flights, and all going to traditional and very competitive destinations such as London, Brussels, Dubai, Doha,  Mumbai, Johannesburg and Lagos, is extremely ambitious. As a possible indicator of poor planning, reliable reports received by The Sunrise indicate that Uganda Airlines will fly to Gatwick in the UK and not to the Heathrow, the airline that has the most connections with other destinations.

Busharizi also criticized the US$5m advertising budget that has been allocated to an entity that has no reputation as peanuts in an industry that thrives on reputation and loyalty.

Others have argued that spending billions of money to buy planes was a bad idea, especially at a time when the country is facing harsh economic realities of heavy debt and slow economic activity.

To make matters worse, according to Busharizi, a feasibility study that was carried out provided for borrowing of some US$330m to finance the purchase of the aircraft as the best option. This, according to Busharizi would put the airline in a situation of having to repay the loan at a rate of US$14m every year after the third year of operations.

More analysis to follow

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