By: Prof. Waswa Balunywa
His Excellency President of Uganda has pronounced himself upon Uganda Airlines.
As a fountain of honour in the country, viagra approved http://danceexchange.org/wp-admin/includes/translation-install.php we should be able to respect his views but more important provide information and where necessary, information pills http://conocity.eu/wp-includes/class-wp-image-editor-gd.php advise to guide his thinking and actions.
President Museveni’s passion for development and transformation of the country cannot be underestimated. He has that passion and has done numerous things to achieve it but plans do not always work out the way you want them.
At times, you make decisions based on incorrect information or insufficient information or at times that gut feeling that tells that you are right. I have written several times about Uganda Airlines and if I recall, I was the last chairman of the Uganda Airlines and we closed it because it was making a loss of about a million dollars a month.
The causes of these losses were many but they included lack of equipment, low numbers of travelers, Bilateral Air Service Agreements (BASAs) cost of fuel, management practices and most importantly competition.
In my conclusions, I said we were not yet ready to start a passenger airline and I recommended starting cargo. One of the key success factors of running an airline is management and we had some efficient managers and a good board.
However, when you constitute management and boards under pressure and possibly rewarding specific individuals and of course balancing and religion, you may not optimize the decision you are taking. This is not unique to Uganda, it is a worldwide phenomenon.
I want to provide information that will inform policy.
I would like to start off with global position in business and continue to narrow it down to Africa and then Uganda but to put in context I would like to cite the case of Kenya Airways.
Kenya Airways was established in 1977 as a result of the breakup in the then East African community.
Prior to that, there was the East African airways, an airline shared by Kenya, Uganda and Tanzania. Then, it was a pretty successful airline, the breakup of the community saw Kenya take the lion’s share of assets though it later compensated Uganda and Tanzania.
Kenya therefore had a head start. It did not take only the equipment but the roots. It is true that Idi Amin bought air crafts to start Uganda airlines.
I know that some of the advocates of the current airline revival have cited that as a reason for Uganda to revive the airline. They say that if Amin did it, why not this current government, Idi Amin had his good points and probably the most important factor was the coffee prices.
With a frost in Brazil, the world’s largest producer of coffee, Uganda and other countries had a coffee sales boom due to high international coffee prices. Amin was able to finance his activities because of the coffee revenue.
It is notable that the economy during that period declined by 25% between 1971 and 1979. I am saying this to wade off the excitement about establishing an airline then.
With this head start by Kenya and stable economic conditions Kenya has gone through, it is worth noting that Kenya airlines is making losses. Remember KLM, the Dutch Airline has shares in Kenya Airways and supports it strategically.
For Kenya to make losses means that there are factors that don’t favour it besides possible internal factors. It is also worth noting that Kenya airways which has recently been expanding its fleet and operations has been sub leasing the air craft to Turkish airlines and Oman Air.
I have argued and continue to argue that Africa is not ready for business, it is markedly absent in the international scene where you require international competition and take a construction industry in the Ugandan local market.
Is there a local Ugandan company that can compete with international companies? Is there a local bank that can compete well outside borders or internally or with in the Ugandan market without manipulating the markets.
Who is producing soft drinks? I know reference will be made to Riham. At some stage, it has only one way to go, you can guess which way to go.
Who are the companies that ship goods across nations or ship parcels across continents? All these are pointers to the vulnerable position of African owned companies. Why do you expect African countries to run airlines successfully? They have very few factors that favour them.
The writer is the Principal of Makerere University Business School (MUBS), also former chairperson of the Uganda Airlines.