STATEMENT OF THE MINISTER OF WORKS AND TRANSPORT ON

THE STEPS TAKEN TO REVIVE THE NATIONAL AIRLINE;

DELIVERED AT THE MEDIA CENTRE ON 24/07/2018

1.0 Introduction

After the collapse of the East African Community in 1977 and the
subsequent dissolution of the EA Airways, the Government of Uganda
established Uganda Airlines as its National Carrier.
The Airlines was initially ran as a profitable and viable undertaking
but towards the mid- 1990’s it ran into severe problems which forced
Government to wind up its operations.

As a result of the airline liquidation in 2001, Uganda was left without

a National Airline, hence leaving the services and fares of air travel at
the mercy of foreign airlines who in most cases took advantage to
overcharge and at times mishandle Ugandan travellers. The absence
of a National Airline has also adversely affected foreign visitors and
tourists traveling to and from Uganda.

The Government therefore has taken a decision to revive the National

Airline as announced by H.E. The President in January 2017. The
effort to revive the national Airline is premised on the desire to
improve the overall growth of Uganda’s air transport sector, by
enhancing its competitiveness and turning its International Airport
into a Regional transport hub.

2.0 JUSTIFICATION

Revival of the National Airline is based on;

1) The need to enhance the country’s competitiveness by reducing
the cost of air transport and easing connectivity to and from
Uganda.

2) To support faster harnessing of opportunities in the economy to

promote tourism, agriculture, minerals, oil and gas.
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 3) To meet the growing demand for air transport(passenger and
cargo)

3.0 IMPLEMENTATION STRATEGY

In order to move forward the process of reviving the airline, H.E. The
President on 01/08/2017 appointed a Task Force of Pilots and
Aviation experts to support the Ministry of Works and Transport to
develop a Business Plan and road map to ensure that the airline starts
operations within a defied time frame. The Task Force was also
required to undertake economic and risk assessment of the Project,
identify a strategic business model and carry out financial projections,
capital structure and operational data, among others.

The Task Force prepared a detailed Business and Implementation Plan

which was discussed and approved by Cabinet on 22/12/2017.
Cabinet also gave a go ahead to the Task Force to undertake activities
geared towards actualizing the Business/Implementation Plan.

On the basis of the Cabinet approval the Task Force undertook

detailed engagements with various aircraft manufacturers, including
M/s Boeing, who submitted that their proposals for technical analysis
to come up with the best choice. Thereafter submissions were made
to the Contracts Committee for approval of the MoU’s/orders
developed after the engagements. The approvals were granted in late
March, 2018 paving way for signing of the MoU’s with the suppliers
and payment commitment fees of USD 400,000 and USD 800,000 to
M/s Bombardier and Airbus, respectively, to facilitate start of the
aircraft manufacture.

Payment of the commitment fees was followed by preparation of

detailed bid documents which were shared with the two firms.
Negotiation of purchase agreement for (4) Regional Aircrafts with
Bombardier has been concluded and the agreement signed thus
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paving way for payment of the pre-delivery money. The one with
Airbus is yet to be concluded.

On 14/05/2018, I presented an information paper to Cabinet to brief

members on the progress made to revive the airline. Cabinet tasked
me to provide more information on the following issues:

- The Choice of Airbus plan over Boeing

- The reasons for opting for Aircraft purchase, instead of leasing
- Why the Airbus A330-800 neo series was chosen.

A comprehensive explanation on the above issues was presented to

Cabinet on 09/07/2018 and exhaustively discussed.

4.0 CLARIFICATION ON THE ARTICLE RUN BY THE EAST

AFRICAN NEWSPAPER OF 21ST – 27TH JULY WITH
REGARD TO THE REVIVED AIRLINE COMPANY

a) The Headline of the Newspaper “Uganda Airlines to fly the

unwanted Airbus 300 neo” (by Mr. Wakabi). This statement is
misleading as it seems to suggest that the A330neo is an
unwanted aircraft while the opposite is in fact true. Industry
figures show that the A330 family of aircraft is the most popular
aircraft in its class and is preferred by the majority of airlines
worldwide. The A330 family of aircraft has the largest customer
base in its class with 105 customers worldwide compared with
only 41 customers for its direct competitor the B787.

b) Misrepresentation of the order cancellation by Hawaiian

Airline as an example: There are many reasons why an airline
may cancel an aircraft order and Hawaiian has not disclosed its
reasons. However what is clear is that Hawaiian Airlines had
performed an aircraft evaluation, similar to what Uganda Airlines
has done, and had initially also selected the A330-800neo for the
same good reasons which include, its range payload advantage,
its fuel efficient new engine, revamped cabin and other
enhancements in comparison with other aircraft types including
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 the B787 which they have now reverted to. This example
reinforces the advantage of the A330 neo. The change of order by
the Airline was mainly on Political grounds according to our
sources.

c) Lack of understanding of the aircraft “family concept”.

Aircrafts are manufactured on a “family basis concept (Airbus,
Boeing, etc with similar commonality in terms of fuselage,
technology and operational features. The A330 neo therefore is
essentially the same aircraft as the previous version namely the
A330 ceo (common engine option which was the A330-200 and
the A330-300) for which Airbus has more than 1,700 orders. The
new engine option (neo) brings additional operating efficiencies to
this aircraft family and uses a better more technologically
advanced engine and that is why it is called the “neo”. The A330-
800 is therefore not a new aircraft but an enhancement of the
existing variant.

d) Similarly the airbus 330 800 neo is not “in development” as

alleged in the article: this is a misunderstanding of family
concept. The A330neo (A330-900 variant) is already delivered to
other customers such as TAP Portugal and is flying today. This is
the bigger version of the neo series and has the same new
engines and improved technologies as the 800 version selected
by Uganda Airlines. The A330-800 variant will have a shorter
fuselage allowing it to fly longer and further than the current 900
version. This range payload performance is what is required for
Uganda Airlines to operate non-stop flights on long routes to
China and the Far East. It is important therefore to understand
that the A330-800neo is not an aircraft being designed from
scratch but is already within the family as the A330-200 version.

In addition, the A330 has a large operator base with 99% spares
commonality across the fleets making it easy to maintain: a key
component in aircraft selection is the availability of spares and
support arrangements for the aircraft across the intended
network. The 99% commonality across the A330 family (from the
A330-200/300 up to the A330-800/900) in terms of spares and
components lowers the potential cost of maintenance for this
aircraft compered to others. This enables maintenance services
to be shared across airlines with spares being available in many
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 places worldwide and reduces inventory levels and operating
costs for the airline.

In conclusion, the A330 was found to be the best entry level wide
body aircraft in its class: in the past 5 years, 2014-2018, a total
of 30 airlines started long haul flights for the first time with new
technology aircraft around the world. Out of these 26 airlines
chose the A330 as their start up aircraft while only 4 airlines
chose the competitor Boeing 787 as their first wide-body. This is
an 87% confidence verdict in favour of the A330 for long-haul
operation start-up, compared to the 787 on account of the A330
good performance and lower financial cost.

In yesterday’s daily Monitor it was alleged that Uganda hurriedly

firmed up plans to revamp the defunct airline and that the Project is
being operated in such an adhoc manner. It is important to note that
the process to revive the airline was stared in 2013 on the basis of an
analysis and recommendation made by the Presidential Economic
Commission (PEC). This was followed by a study carried out by the
Uganda Development Corporation (UDC) and another study conducted
by Ernest and Young (EY) on instructions of the Civil Aviation
Authority. In 2015 the National Planning Authority undertook an in-
house study and developed a Feasibility Study which formed a basis
for further analysis.

Monica Azuba Ntege

MINISTER OF WORKS AND TRANSPORT

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