East Africa’s state airlines need to co-operate to grow

CRJ900 bombardier jets for Uganda Airlines at the Entebbe International Airport on April 23,2019. PHOTO | MORGAN MBABAZI | NMG 

In Summary

• Experts say that co-operation rather than competition is the key to growth, as the new kids on the block, Uganda Airlines and Air Tanzania prepare to take to the regional skies.
• For the airlines, the competition for routes could mean an oversupply, considering that less than 10 per cent of the population in East Africa use air transport.
• Airport handling costs are also expected to decline as traffic volumes increase, thus enabling airlines to turn a profit.

By IVAN R. MUGISHA
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The entry of Uganda Airlines into the aviation market has the region's national carriers thinking of ways to deal with the competition.

But experts say that co-operation rather than competition is the key to growth, as the new kids on the block, Uganda Airlines and Air Tanzania prepare to take to the regional skies.

“If the airlines in the region work together through commercial co-operation, more new routes will be created in addition to growth in traffic on existing routes,” said Raphael Kuuchi, International Air Transport Association special envoy to Africa on aero-political affairs.

“There should be enough traffic for all to share. What we need is for airlines to talk with each other and enter into commercial arrangements that will make them stronger against competition from elsewhere,” he added.

For the airlines, the competition for routes could mean an oversupply, considering that less than 10 per cent of the population in East Africa use air transport.

But for travellers, it could mean a better deal, with airfares, which are fairly high at the moment, expected to come down while the cumbersome travelling experiences involving connecting flights even for shorter distances could end.

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“The ultimate beneficiary of competition is the consumer. So we should anticipate lower prices, which will further stimulate additional demand for air travel in the region,” said Mr Kuuchi.

The potential for traffic growth is expected to be immense. Therefore four airlines in the region will not necessarily result in overcapacity, especially if the carriers plan their operations well and collaborate, aviation experts say.

Experts say that unless African airlines work together, they cannot benefit from economies of scale, and reduce their operating costs.

Airport handling costs are also expected to decline as traffic volumes increase, thus enabling airlines to turn a profit.

Long periods of losses are what forced Uganda Airlines and Tanzania Air to close shop in 2001 and 2011 respectively.

RwandAir has also been operating for 11 years without profit.

Their fortunes will change if harmonisation of aviation regulations takes shape in the regions to enable free movement of labour and better co-ordination in air traffic management and investments, experts say.