The International Civil Aviation Organization (ICAO) forecast is that by 2034, the air transport sector will support 99 million jobs globally, contributing 5.9 trillion dollars to global GDP.

NPA forecasts the revived National Carrier to provide direct jobs to 439 employees[10], and 2,195 indirect jobs within the first five years of operation.

In addition, lower operating costs through lower freight charges shall guarantee jobs security to thousands of Ugandans employed in the fish, flower, gold, fruit and vegetable sectors.

Human Resource Development

Revival of the airline will allow locally trained pilots and engineers acquire ratings on aircraft previously not available on the Uganda civil aircraft register. Locally trained pilots mostly limited to fly small non-pressurized aircraft to local destinations, if employed by the airline, will have an opportunity to fly beyond East Africa, and be trained on procedures that allow them to fly in more challenging airspace[11]. Locally trained aircraft maintenance engineers recruited by the airline will have an opportunity to be trained and rated on large gas turbine engines.

Civil Aviation Authority will get its staff trained on certifying large jets not previously registered on the Uganda civil aircraft register. This will boost capacity of the regulator’s examination, inspection and licensing departments.

Tourism

Uganda stands to benefit from increased visibility if it revives the national carrier, establishes offices abroad and chooses its code share partners strategically. This will allow it tap into business and tourist markets. CAA statistics indicate that Uganda received 1.53 million passenger arrivals in 2017, an 8.1 percent increase from 2016[12]. 99 percent of these were international passengers.

Statistics by the Uganda Ministry of Tourism, Wildlife and Antiquities[13] reveal that annual tourist numbers have soared from 650,000 in 2007 to 1.3 million in 2016. 80 percent of these tourists come from Africa followed by Europe, Asia and America[14].

With its own carrier, Uganda will have a tool to market itself as a destination of choice. Tourists will have more options to fly into the country. Keeping other factors constant, tourist numbers could double or quadruple with time. Figures released by the World Travel and Tourism Council[15] (Travel and Tourism Economic Impact Uganda 2018) show the impact of tourism on Uganda’s economy in 2017 as follows;

• The direct contribution of travel and tourism to GDP was US$ 749.9 million (2.9 percent of total GDP in 2017) and is forecast to rise by 6.5 percent in 2018 and by 5.9 percent annually between 2018 and 2028.

• The total contribution of travel and tourism to GPD was US$ 1,913.9 million (7.3 percent of total GDP in 2017) and is forecast to rise by 6.0 percent in 2018 and contribute 7.1 percent of GDP by 2028.

• In 2017, Travel and tourism directly supported 22,000 jobs (2.4 percent of total employment) and indirectly supported 605,000 jobs (6.3 percent of total employment). These figures are forecast to increase by 4.2 percent in 2018 and 3.9 percent by 2028 for direct jobs, while indirect jobs are forecast to increase by 3.8 percent in 2018 and 3.9 percent by 2028.

• Travel and tourism investment was worth US$ 324.6 million (4.9 percent of total investment in 2017), is forecast to rise by 3.6 percent in 2018 and by 4.5 percent over the next ten years reaching a figure of US$ 520.2 million in 2028 – 4.1 percent of total GDP.

The figures above illustrate how tourism is a catalyst for socio-economic development. A national airline with direct flights, or through code-share partners is a good way of marketing Uganda as a tourist destination. An increase in foreign tourists will increase local investment, employment and income.

Cities most visited by international tourists like Bangkok, Paris, London, Amsterdam, Istanbul, Hong Kong, Singapore and Dubai are located in countries that own and operate national carriers. Most of these tourists are flown in directly by the national carriers or in collaboration with their code-share partners. Carriers are used as tools to market the respective countries and cities as destinations of choice. Tourism in those countries supports millions of jobs and investments.

Developing Entebbe International Airport as a hub

The world’s busiest airports listed by internationalairportreview.com are not simply large terminal buildings with multiple runways. They are hubs for one or more local airlines. These airlines transport passengers, who in turn utilize hotels, restaurants, banks, currency exchange centers, hair dressers, shops, taxi and bus services, parking space etc. When provided within the terminal building, such services generate non aeronautical revenue for the airport operator. When provided outside the terminal building, they provide income and growth for the surrounding community. An increase in capacity at the airport raises demand and productivity in other sectors like housing, retail, education and health because of increase in employment.

NPA’s feasibility study forecasts the revived carrier to transport 390,000 passengers in its first year of operation, 856,000 passengers by the tenth year and 924,000 passengers by the fifteenth year. The study further forecasts Uganda Airlines to airlift 169.2 tonnes of cargo weekly from and to Uganda on long haul routes.

An increase in passenger[16] and cargo capacity through Entebbe International Airport will without doubt create demand for more services within the terminal building and surrounding areas which will develop Entebbe as a hub.

Increasing Foreign Direct Investment

Ugandans need their own airline to connect to the globe. International trade and foreign direct investment are responsible for the several multinational corporations in the country – mobile phone companies, banks, beverage companies, supermarkets, insurance firms, hospitals and hotels – which employ several thousand people. This would not be possible without airlines flying into Entebbe International Airport. Uganda’s own carrier will tap into more markets, increase foreign direct investment and the benefits that come along with it.

Justification for Government involvement

Airlines require hundreds of millions of dollars for start-up costs[17]. The private sector in Uganda does not have capacity to venture into such an enterprise. Only Government has the required financial muscle to start an airline and sustain its operations, until it finally breaks even. This is why Government involvement is necessary. Financial muscle alone is not good enough though. Strategic planning for the national carrier is essential to ensure that the investment does not go to waste.

Airline operations are affected by fuel price fluctuation, industrial action, weather, economic depression, disease outbreak, insecurity, terrorism, political instability, natural disasters, management and lastly, accidents and incidents. These have an impact on all airlines around the world, and account for some of the recorded losses.

Kenya Airways, South African Airlines, Egypt Air, TAAG Angola Airlines, Malaysian Airlines, Thai Airways, Philippine Airlines and Qantas are some of the national carriers that have recorded losses – at some point in the last five years – as a result of the above mentioned factors. None of them has ceased operations. Instead, their respective management teams have come up with restructuring plans to help them recover in a bid to end the loss making trend. These carriers are strategic infrastructure critical to other sectors of the economy. Countries like Angola, Kenya, South Africa and the Philippines have many of their citizens living below the poverty line. Healthcare and education are definitely competing priorities in those countries. When national carriers are kept flying, they can stimulate other sectors of the economy to generate income, which can be invested in healthcare and education.

Airlines are not loss making entities by default. The International Air Transport Association (IATA) forecasts the global airline industry net profit to be US$ 35.5 billion in 2019, an increase from US$ 32.3 billion in 2018[18]. Unfortunately due to high tax[19] and fuel costs, Airlines in Africa (with the exception of Ethiopian) consistently post losses.  In addition, Governments have failed to implement the Yamoussoukro decision to liberalize airspace and give airlines more options.

To ensure its survival, Government of Uganda will have to reconsider its tax position, sign up to the Single African Air Transport Market and entrust the airline’s affairs to a professional management team.

Given the immense benefits associated with airlines, Uganda is better off having its own carrier.

[1] The Contribution of Air Transport to Sustainable Development in Africa; Oxford Economic Forecasting (October 2003)

[2] Currently, Uganda loses about USD 540 million annually, in form of higher transport costs to passengers originating and terminating at Entebbe International Airport. (Source: Revival of Uganda’s National Carrier; Feasibility study by the National Planning Authority, October 2016)

[3] https://www.ubos.org/wp-content/uploads/publications/01_2019STATISTICAL_ABSTRACT_2019.pdf

[4] http://www.ugandainvest.go.ug/uia/images/Download_Center/SECTOR_PROFILE/Floriculture_Sector_Profile.pdf

[5] https://www.unbs.go.ug/news-highlights.php?news=52&read

[6] Uganda Revenue Authority annual trade report (2017).

[7] NPA Feasibility study

[8] https://caa.go.ug/index.php/2018/04/06/giant-strides-made-in-entebbe-airport-expansion-and-upgrade/

[9] Aviation Benefits 2017 (https://www.icao.int/sustainability/Documents/AVIATION-BENEFITS-2017-web.pdf)

[10] Pilots, cabin crew, maintenance engineers, dispatchers, ground crew, catering teams, administrators, sales and reservation agents, drivers and other support staff.

[11] CATIII, ETOPS, RVSM, etc.

[12] https://caa.go.ug/index.php/2018/08/13/entebbe-traffic-hit-1-53-million-passengers-in-2017-up-8-1-versus-2016-jambojet-newest-airline-while-heathrow-is-leading-unserved-route/

[13] https://www.tourism.go.ug/statistics1

[14] Tourism Sector Annual Performance Report FY 2017-2018

[15] https://eagle.co.ug/wp-content/uploads/2018/03/Full-report-attached-1.pdf

[16] CAA plans to increase Entebbe Airport’s capacity to handle passenger traffic during peak hours from the current capacity of 410 arrivals and 360 departures to 930 arrivals and 820 departures by the year 2033.

[17] Government of Uganda plans to spend a total of US$ 709.8 million on aircraft purchase alone for two A330-800 and four CRJ 900 aircraft.

[18] https://airlines.iata.org/news/iata-forecasts-355bn-net-profit-for-airlines-in-2019

[19] http://www.traveltowestafrica.com/taxation-in-africa-and-its-effects-on-african-aviation-industry/