Uganda Airlines is targeting annual revenue of between $400 million and $500 million by 2030, but restrictions arising from Uganda’s non-participation in the Single African Air Transport Market (SAATM) are limiting the national carrier’s ability to carry passengers between some foreign destinations.
The airline’s Chief Executive Officer, Girma Wake, said the restrictions are affecting its plans to expand regional traffic, increase passenger numbers and improve the commercial viability of its routes.
Speaking in Accra following the launch of commercial services to the Ghanaian capital, Mr Wake said Ghana had granted Uganda Airlines fifth-freedom rights to carry passengers between Accra and Lagos.
However, the airline has not yet exercised the rights because Nigeria has not approved the arrangement.
“We are negotiating with Nigerians,” Mr Wake said, adding that the airline was working with the Ugandan government to address the wider issue of the country’s participation in SAATM.
Nigeria approval holds back Accra-Lagos opportunity
Uganda Airlines currently operates the Accra service through Lagos, combining passengers from the two West African markets on a four-times-weekly flight.
The arrangement allows the aircraft to operate Entebbe–Lagos–Accra and return to Entebbe through the same route.
Ghana has authorised the airline to sell tickets to passengers travelling between Accra and Lagos. However, the rights require approval from both countries involved in the route.
Mr Wake said Nigeria had not granted the necessary approval, with Uganda’s non-participation in SAATM among the issues raised.
“From Accra, they allowed us to carry passengers to Lagos or from Lagos to Accra. Accra has no problem. They granted us. Nigeria refused,” he said.
The lack of approval means Uganda Airlines is currently unable to fully tap into the passenger traffic between the two major West African cities.
A similar challenge has emerged on the airline’s proposed Harare-Johannesburg service. According to Mr Wake, Zimbabwe approved the arrangement, but South Africa has not given the necessary clearance.
SAATM participation becomes a growth challenge
SAATM was established to liberalise African air transport by giving participating airlines greater access to markets across the continent.
Uganda has remained outside the arrangement, with the decision initially intended to protect the country’s national carrier from increased competition.
Mr Wake, however, said the policy had not provided the anticipated protection because Uganda continued to allow foreign airlines to operate in its market.
“So that protection was artificial. It did not exist. But it is becoming a problem for Uganda Airlines now. It wants to grow because everybody says, since you are not a signatory, we will not give you,” he said.
Uganda Airlines is now working with the Ministry of Works and Transport, Ministry of Finance and other government agencies to find a solution.
For the airline, securing additional traffic rights is important to making international and regional routes more commercially sustainable.
Fifth-freedom rights would enable Uganda Airlines to carry passengers between two foreign countries as part of a flight that originates or ends in Uganda, giving the carrier access to a wider pool of passengers.
Accra-Lagos route designed to build demand
Despite the regulatory challenges, Uganda Airlines sees the combined Lagos-Accra operation as a way of building traffic before committing separate aircraft capacity to the two destinations.
Mr Wake said the Lagos route had initially taken time to grow because of scheduling challenges that limited convenient connections.
“But we said Lagos alone may take time, so let us connect it to Entebbe with Accra. So the flight comes Entebbe, Lagos, Accra and goes back Accra, Lagos, Entebbe,” he said.
The combined operation is expected to run for about one to one-and-a-half years, depending on passenger demand.
The airline’s plan is eventually to separate the two routes and gradually increase frequencies, with the long-term ambition of moving towards daily services.
More frequent flights would provide passengers with greater flexibility while also improving connections between Uganda and the two West African markets.
However, the airline says it will need to develop more destinations beyond Entebbe to generate sufficient connecting traffic and make the routes more sustainable.
Passenger growth and profitability targets
The regional expansion comes as Uganda Airlines seeks to increase passenger traffic by between 12 and 15 per cent annually, while also expanding its cargo business.
The carrier is targeting break-even by 2031, before moving into profitability.
Its longer-term revenue target of between $400 million and $500 million annually by 2030 will depend on expanding its network, increasing passenger numbers, developing cargo operations and gaining greater access to regional markets.
For Uganda Airlines, the challenge is therefore not only adding new destinations, but also securing the traffic rights needed to turn those destinations into commercially viable routes.
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