{UAH} Air Uganda - Completely Out of Business?

AIR UGANDA - INDEFINITE SUSPENSION OF OPERATIONS

 

On my recent trip to Uganda, the final leg of my journey into the country was from Dar es Salaam to Entebbe.  I had planned with great anticipation to take a direct roughly 1 hour 15 minute flight on Air Uganda.  Instead I was forced to make a 4-1/2 trip on Rwandair via Kigali.  I had the option to make the trip via Kenya Airways which could have taken me as long as 8 hours for about $300 more.

 

Online sources are reporting that Air Uganda has returned the aircraft it had leased for use, laid off all of its operational staff and begun the process of liquidating assets.

 

So once again, Uganda is without an international airline to bear its flag.  Once again, the people are without this significant source of pride.  Once again, the country is loosing out on a significant source of tax revenue.  And once again, the reputation of the country has taken a significant hit with potential investors.

 

Air Uganda and the Uganda Government give very different versions of the cause of this mess - each blaming the other.

 

Why is it that Uganda has such a difficult time maintaining a stable national flag bearing airline.  Indeed, following this latest turn of affairs  will Uganda ever have a stable national air carrier again?

 

Please join us for a continuation of this debate at the upcoming 26th Annual Convention of the Ugandan North American Association (UNAA) in San Diego, CA.

www.unaa.org

 

From Air Uganda Website

Air Uganda was started at the request of the Government of Uganda in 2007 and has a staff complement of 231, the vast majority of whom are Ugandan. Employees in other Eastern African countries and destination cities are drawn from the local labour pool. Air Uganda's normal operations are from Entebbe as its home base to Nairobi, Dar es sallam, Bujumbura, Kigali, Mogadishu, Kilimanjaro, Mombasa and Juba. Since inception, Air Uganda has flow over three quarters of a million passengers, strengthening ties within Eastern Africa and providing direct access for Ugandans to countries in the region, making Entebbe into an aviation hub. Air Uganda has paid over US$23.5 million in fees and taxes to the Ugandan Civil Aviation Authority (CAA), invested US$4 million in staff training, contributed over US$10 million in employment taxes, and injects over US$15 million per annum directly into the Ugandan economy.

Air Uganda prides itself on its excellent safety record. It is certified by the aviation industry's hallmark IATA Operational Safety Audit (IOSA) program which is an internationally recognized and accepted evaluation system designed to assess the operational management and control systems of an airline with specific reference to passenger safety. Air Uganda was IOSA certified after its first audit in 2011 and has had its certificate renewed for a further two years up to 2015. IATA is the international Air Transport Association, and its 240 voluntary members account for 84% of global air traffic. All IATA members are IOSA registered and must remain registered to maintain IATA membership. Air Uganda is a member of IATA.

An audit of the Uganda Civil Aviation Authority's policies and procedures was conducted between 11^th and 17^th June, 2014 by the international regulator ICAO (International Civil Aviation Organisation) based in Montreal. Such audits are aimed at assessing the CAA's capacities rather than the airlines that operate under its supervision. It is now apparent that the audit revealed shortcomings in the CAA'S oversight and regulatory capacities, consequently impacting the CAA's ability to award Air Operators Certificates. The Ugandan CAA regrettably opted on 17^th June to withdraw, without consulting the airlines affected, Air Operator's Certificates (AOC) for all international commercial air operators registered in the country. Air Uganda, which is the only scheduled passenger airline affected, has inevitably suffered the greatest damage. Each carrier was requested to submit a fresh application for an AOC, and in the meantime was required to cease operations, thus forced to incur massive financial losses on a daily basis and suffer reputational damage.

Air Uganda has been working with the Uganda CAA since 17^th June, 2014 to implement revised procedures at the CAA required by ICAO and had expected its AOC to be reinstated in a timely and expeditious manner. Unfortunately, 31 days have elapsed and recertification is still several weeks away.

The result of this prolonged period of grounding has in turn affected key contracts at Air Uganda. In particular, covenants in the aircraft lease agreements require that the aircraft can remain on lease to Air Uganda only as long as the airline continues flying. The extended period of the aircraft remaining grounded has thus, sadly, triggered these covenants and Air Uganda is now contractually obligated to return the aircraft to the lessors' chosen facility abroad. The prolonged inability to generate any revenues has necessitated the airline's Board of Directors to suspend indefinitely Air Uganda's operations. This will unfortunately adversely impact key stakeholders, including the airline's workforce.

Air Uganda is extremely grateful for the patronage and support of its customers and highly regrets the frustration and inevitable inconvenience suffered since the grounding. Air Uganda assures the public that is did everything under its control in the most difficult of circumstances to minimize the impact on its clientele.

From the Uganda Civil Aviation Authority website (as reported from a New Vision article)

New RwandAir and Ethiopian Airlines operations at Entebbe will help fill the gap created by the absence of Air Uganda which is under suspension, the Civil Aviation Authority (CAA) has said.

Government granted the two airlines fifth freedom rights to fly the Entebbe-Nairobi and Entebbe-Juba routes.

Fifth freedom is the right to carry passengers from one's own country to a second country and from that country to a third country.

RwandAir on Monday started new operations between Entebbe and Juba in South Sudan.

Ethiopian Airlines is expected to start new operations between Entebbe-Nairobi routes soon, the CAA spokesperson, Ignie Igundura said.

On June 17, CAA revoked the air operators' certificates for three carriers including Air Uganda, Uganda Air Cargo and Trans-Afrik (U) Ltd, citing their failure to meet standards for operations.

Their suspension of business followed an audit of the policies and procedures of CAA by the International Civil Aviation Organisation (ICAO) between 11th and June 17th.

Some carriers were forced to hike ticket prices after the suspension of Air Uganda which was the main airline plying the routes.

Igundura said the suspended airlines were undergoing a recertification process which will determine whether they will be allowed to resume operations.

The recertification which is supposed to be conducted within 90 days involves examining equipment, human resource capacity and documentation, Igundura explained.

The recertification process is being conducted by a team of seven experts from CAA, ICAO and the East African Community's Civil Aviation Safety and Security Oversight Agency.

Airline flaws

The audit by ICAO, the global aviation oversight agency, discovered flaws in policy and operational procedures of the three suspended airlines, Igundura said.

Some of the flaws included falsification of one airline's operations manual while operations of some carriers were unclear, Igundura stated.

Igundura stressed that it was not government's intention to halt operations of the three airlines and described their grounding as 'unfortunate.'