Competition hots up as Uganda receives passenger planes

Uganda has received two passenger planes, a key step in the country’s efforts to relaunch its defunct national carrier and share in the region’s aviation business, which is dominated by Ethiopian Airlines and Kenyan Airways.

Founded by Uganda’s former dictator Idi Amin in 1976, Uganda Airlines was liquidated in the 1990s by President Yoweri Museveni under a broader programme to privatise troubled state firms and open up the economy to private enterprise.

But last year officials started pursuing plans to relaunch the airline to share in East Africa’s growing aviation business.

The CRJ900 planes from Canadian aircraft manufacturer Bombardier landed at Entebbe, the country’s sole international airport located south of the capital Kampala early on Tuesday, to a gathering of dignitaries including Museveni.

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The Ugandan government paid 280 billion shillings ($74.8 million) for the two planes through a supplementary budget approval by parliament, The East African newspaper reported. Government officials were not available for comment.

Initial plans are to eventually acquire six planes. Uganda Airlines is expected to commence commercial flights in July, Works and Transport Minister Monica Azuba Ntege said at the function.

It will start with flights to regional capitals but eventually plans to launch direct long-haul routes to China and other Asian countries, whose tourists Uganda is keen to attract.

Museveni said the domestic airline would also soak up a chunk of the estimated $400 million he said Ugandans spend on international travel annually, keeping it in the economy.

“By starting an airline we are going to reduce on the foreign exchange expenditure. Ugandans will be spending money but spending it on our airline,” he said.

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Ugandan travellers have long complained about high-ticket costs they say stem from the limited competition in a market dominated by Kenyan Airways and Ethiopian Airlines.

Ramathan Ggoobi, an economics lecturer at a university in Kampala told Reuters the revival of the airline would boost competition and likely lower costs for Ugandan travellers.

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“Even if they are returning zero profit the economic benefits will be quite high,” he said, referring to the re-launched carrier.

The country expects to start pumping crude oil in 2022 and the government hopes the oil-related activity will boost the volume of its international travel business.

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Ongoing construction at Entebbe, financed by a Chinese loan, is expected to sharply increase the airports passenger and cargo handling capacity, while a new international airport is being constructed near the country’s oilfields in the west.

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