According to the International Air Transport Association (IATA), it is likely that most African airlines will record losses in 2019 resulting from a weaker global trade marked by a slowed down demand and rising cost. Consequently, the regulator expects the overall aviation costs to grow by 7.4 per cent, a figure higher than the 6.5 per cent rise in revenues anticipated.
The revelation cuts across all the continent’s carriers, including the yet to be re-born Uganda Airlines which only recently landed home two new CRJ900 aircraft – the 5XKOB and 5XEQU. As per the timelines, the arrival of the Bombardier dual marked the start of a 90-day certification process which set the start date of commercial operations of the Airlines to July 2019.
A Uganda National Airlines Company board has already been put in place to see to it that the national carrier kicks off within three weeks, and the panel is chaired by Mr. Godfrey Ahabwe Perez. The other members are Ms Catherine Asinde Poran, Mr Steven Aziku Zoa, Mr Benon Kajuna, Mr Charles Hamya, Mr Godfrey Semugoma, and Ms Rehema Mutanzidwa.
The team, however, faces a bigger task of ensuring that the new Uganda Airlines does not fall victim of the circumstances that drowned the predecessor as per the warning from the Air Transport Authority.
A recent report by IATA states that the return on invested capital earned from African airlines this year is expected to grow 7.4 per cent, which would spell a decline from the 7.9 per cent recorded in 2018. Additionally, the fuel costs are expected to rise in 2019, taking up a quarter of the total operating costs.
An increase in non-fuel unit costs like labour, infrastructure, among others costs is likely to result in a 7.4 per cent hike to $822 billion (over UGX 3 trillion), something that would typically translate into a debt burden for the airlines.
The report points at African airlines delivering a $0.1 billion loss for the fourth year in a row attributed to low demand. Due to the falling demand, every passenger on board an African carrier is expected to cost at least $1.54 (UGX 5,800) – culminating in a negative 1.0 per cent net margin.
Majority of the African airlines have been at loss in the past couple of years with stiff competition from the middle-eastern counterparts. Ethiopian airlines is the only one that has been recording profits in the past years with experts accrediting its impressive performance on the home government’s support.
