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Uganda Airlines liquidation clears way for start-ups

Michael Wakabi/KAMPALA

Uganda Airlines has been told to give codeshare partners notice of withdrawal, as the government prepares to wind up the country's national airline. Kenya Airways, Emirates and Air Tanzania have been the carrier's major codeshare partners on routes to Nairobi, Dubai, Dar es Salaam and Johannesburg.

Analysts say the carrier's liquidation, which has been on the cards since its failed privatisation last April, is intended to open the way for two Ugandan start-up carriers to launch services. Dairo Air Services and Air Africa were granted passenger services licences by Uganda's Civil Aviation Authority last November, but they have not launched yet because they need regional feed to break even on their long-haul operations. The continued existence of Uganda Airlines restricted access to regional routes.

In proposals to the finance ministry last November, Dairo said it would need routes to west Africa and the Gulf to help sustain weak earnings on European services.

Air Africa, which applied for a licence in anticipation of a business boom under Africa's Comesa open skies agreement, also wants to fly to Nairobi and Johannesburg, routes dominated by Kenya Airways and South African Airways (SAA).

Dairo, a cargo operator since 1984, made a successful bid for Uganda's 30% holding in SA Alliance, which ceased operations last October. Sources said a deal has been concluded under which Dairo will take over the Ugandan shares in SA Alliance and liabilities totalling $14 million.

Both Dairo and Air Africa have sought access to Nairobi, Lagos, Dar es Salaam, Johannesburg, Dubai and London although only Dairo can now be sure of slots in London by virtue of inheriting SA Alliance. The take-over has been executed in a partnership between Dairo and Tanzanian private sector interests but it is not clear whether Transnet, SAA owner and former SA Alliance shareholder, would remain a partner.

Following Alliance's demise, partners Uganda, Tanzania and South Africa squabbled over management control and mounting debts of over $50 million. SAA has since launched a twice weekly service to Entebbe while Kenya Airways and Airkenya spin-off Regional Air has also increased frequencies into Entebbe to parcel out Uganda's air travel market.

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