The fate of RwandAir

1st December 2002 saw Rwanda reach a milestone in aviation. The day when RwandAir started operations in the region, a region that had seen a couple of airlines fall.

Moreover, it was just a year after Uganda Airlines closed shop in May 2001. For Rwanda to take this step, even after Uganda, a much more developed nation then, had failed to handle a 24-year-old franchise, was seen as a gamble by many speculators. Our sources in Rwanda reported that many people were just proud of the fact that it had been launched, but most were pessimistic about its success. Bearing in mind that it’s the second largest airline in the East African community today, they had it all wrong.

The airline has continued to grow across the continent and even beyond the motherland. Located in more than 20 airports across the globe, including Europe, the Middle East and Asia, for RwandAir, the sky is the limit.

During these times where people are preparing for festivities, some have plans of enjoying them with their families from beautiful cities overseas. Their only constraint is the financial aspect involved in these journeys.

But Uganda’s aviation continues to struggle. Yet Uganda Airlines and Kenya Airways were commissioned in the same year, 1977, there are no traces of the former on the aviation market. Debris of the airline can be found in different locations of Entebbe, like Aero beach, a recreational centre. While the latter has been seen to grow into Africa’s biggest Airline of 2017. None of the airlines on Entebbe International Airport, Uganda’s major airport, is Ugandan. We have to go back 16 years to trace the last time Uganda had a Ugandan flag carrier airline, Uganda airlines. Citing issues of mismanagement which had placed the airline in a delicate cash position, the government of Uganda put it up for either privatization or liquidation. Evidently, the latter prevailed as potential bidders withdrew their interest in the debt-ridden airline.

Six years later, a privately owned Ugandan airline was commissioned, that is Air Uganda. It was recognized as the flag carrier of Uganda although it was owned by foreign investors. It consequently ceased operations in 2014 when the Civil Aviation Authority revoked its air operator’s license citing failure in a safety audit by the International Civil Aviation Organization. Thus, Ugandans were left looking at their neighboring countries’ aviation to springboard the region’s aviation industry.

Air transport has been relatively underdeveloped in Uganda ever since Air Uganda was closed in 2014 resulting in a 23% decline from the 2,253 passengers in 2013 to 1,696 passengers that year. This was followed by a massive 31% plummet in 2015, as Ugandans couldn’t handle the costs the carriers were offering them. There was a sign of relief in 2016 with a 15% drop, lower than the drops in previous years but is still a reduction in numbers. Our regional carriers like Kenya Airways and RwandAir are the remaining low cost options Ugandans are looking at.

With Uganda having close ties with Rwanda over the years, it’s of no surprise that RwandAir has quickly gained acknowledgement in the pearl. It’s cost efficiency and quality services have left many in the country, asking for more. But how does it fair against other carriers on Entebbe International Airport considering you are making a choice of travel to either Dubai or Mombasa?

Why Dubai and Mombasa?

Dubai is one of the world’s most gorgeous cities, attracting more than 16 million people from all parts of the world. It’s ranked fourth after Bangkok (20.2m), London (20m) and Paris (16.1m). Moreover, it is a number one destination for Ugandans for work, vacation, trade, the list is endless.

No wonder it attracts so much traffic as it boasts as one of the most beautiful cities in the world. With sites like the Burj Khalifa, Burj Al Arab, The Dunail Mall, Wild Wardi Water, to mention but a few, you wouldn’t fail to meet a quota of at least 10 million visitors every year. But how does a Ugandan get to these places for vacation, work or business?

When making a choice to fly, you always have reasons for the journey. It could be business related, or something like a family vacation. The choice is yours. Like the way you decide to go to the village with either a taxi and/or a bus, or even personal car, to get to Dubai, you will have to choose a carrier. Driving to Dubai or sailing there is also a possibility, but the cost could be exorbitant, not only financially but also time consuming. Rationally, every Ugandan planning on making a trip to Dubai or any other attractive destination that is overseas would require choosing a carrier. The carriers use portals like EBB-DXB, for Entebbe to Dubai, NBO-DXB from Nairobi to Dubai and KGL-DXB, from Kigali to Dubai. These are direct terminals. Depending on the flight, you could even use, EBB-KGL-DXB to reach Dubai, transiting through another airport. Long ones only apply for those flights that will take you overseas.

But this doesn’t apply to regional sites like Mombasa that are close to Uganda and have attracted many a local. Kenya hosts more than 1.4 million tourists annually and Mombasa is one of the reasons. If you take a stroll along Jinja road, asking a random sample of people about their preferred destinations in the region, Mombasa would be one of those topping the list. With sites like the Diani Beach, Haller Park, Shimba Hills National Reserve, Arabuko Sokoke National Park, the sky is the limit. “I go to Mombasa every year with my wife,” said Kebba, one of the passersby on Jinja Road. But how does one get there?

Of course driving to Mombasa is more probable than Dubai, but many a person do not want to take the opportunity cost that still involves time, infrastructural constraints, political instability, the list is endless. So, taking a flight to Mombasa is always the best option. These flights also follow codes like EBB-MBA, from Entebbe to Mombasa. Most of these are very short because the journey is short. From Uganda to Kenya.

Summit Business Research selected a number of airlines offering trips to Dubai and Mombasa for a thorough analysis. It deems this adequate enough to assess the cost of each airline in terms of a trip to Uganda’s darling destinations. Our analysis focused on the lowest cost options for a Uganda businessman with a fixed economy and business class package for Uganda is dominated by low and middle income people. We ignored the first class for it is too extravagant and many an entrepreneur wouldn’t be interested. So which flight should you book if you want to maximize your utility?

The most common option

Almost each and every Ugandan who has boarded a plane started with economy, unless you grew up with a Silver spoon in your mouth. Economy class against business class, is like boarding a 14 seater taxi to ordering an Uber online. Of course, First Class would be renting a limousine to your destination but how many can afford it? This package is rarely used by most of the locals since they prefer going to Mombasa with the cheaper bus.

SB analytics set out to analyze every option from economy to business class offered to these two destinations. Only four airlines offered a trip to Mombasa, that is, Ethiopian Airlines, Kenya Airways, RwandAir and Turkish Airlines. RwandAir offered the cheapest Economy class to Mombasa at only US$147 (Ugx. 529,200). 60% of Uganda’s civil servants can afford this although most would be strained out of their comfort zone. Compared to the others, only Kenya Airways came close to this low with US$ 358 (Ugx. 1,288,800), a net figure only 20% of the civil service earns. Ethiopian Airways followed with US$424 (Ugx. 1,526,400), only Ugx. 237,600 away from Kenya Airways. For Turkish Airlines, their fancy economy class costs as much as US$1,296 (Ugx. 4,665,600), more than most carrier’s business class. This is probably for the well-heeled population. This is evidence enough to show why RwandAir is stealing the hearts of most Ugandans. Some were even considering making it the flag carrier of Uganda way back in 2015, negotiations which have stalled since then.

Nevertheless, for Dubai, bus is not an option. It’s either plane, or sailing across the sea. The only option for a local in a landlocked country is plane. Dubai which has for many a year strengthened its relationship with East African countries had more than six carriers but some do more of transiting. We selected those that have bases in Uganda; EgyptAir, Fly Emirates, Ethiopian Airlines, Kenya Airways, RwandAir and Turkish Airlines. Four of these carriers also offered services to Mombasa, giving travelers flexibility. Another plus for RwandAir which is part of this list.

Again, with just Ugx. 716,400(US$199), a Ugandan can enjoy a flight to Dubai with RwandAir in Economy class. This is the cheapest offer around Entebbe Airport. RwandAir is promoting travel inclusivity in Uganda to fancy places like Dubai. No wonder the number going to Dubai is on a persistent upsurge. Kenya Airways and Fly Emirates followed with prices of Ugx. 954,000 (US$265) and Ugx. 993600 respectively. Although still rational amounts, saving more than Ugx. 200,000 on a flight will continue influencing people’s choices.

For Ethiopian airlines and EgyptAir, the price averaged Ugx. 1,254,600 (US$348.5), significantly high, an amount that strains a civil servant’s pockets to the brim. Turkish Airlines, even though it offered a cheaper journey to Dubai than Mombasa, still remained significantly higher than other carriers for the common man.

Giving Ugandans an option for cheapest business class

Business Class is not something many a Ugandan have enjoyed in the past. Moreover, just 982 Ugandans used air transport as compared to the 136,615 internationals. But the biggest percentage of these Ugandans use economy class due to financial constraints.

For businessmen and top management, economy class is sometimes not something they fancy. They prefer preferential treatment and usually if not always use the business class or first class. But they too have plans of minimizing costs in these comfort zones. That’s why they choose low cost business class options to suit their needs. In SB’s flight analysis to Mombasa, RwandAir offered the cheapest business class at only US$529 (Ugx. 1,904,400), probably an average top management individual salary. Kenya Airways, another guru in the region offered one at US$826 (Ugx. 2,973,600), coming in as second best which was also cheap but significantly more. Ethiopian Airways pushed for almost US$960 (Ugx. 3,456,000) per head while Turkish Airlines, the only global airline to MBA cost as much as US$2,121 (Ugx. 7,635,600), almost triple an average white collar employee’s net salary.

Business class however is overlooked by many a local. Instead the international passengers dominate this option. They however prefer low cost carriers with high quality services. This is why they opt for business class. Carriers are given subsidy to Dubai over that in Mombasa.

Yet it’s of much more quality than economy class, RwandAir offers the lowest cost business class packages on Entebbe International Airport to Dubai. It goes for only US$ 621 (Ugx. 2,235,600). That’s even cheaper than business class offered by either carrier to Mombasa. This definitely gives Ugandans, who are mostly of low income a chance to board a plane and enjoy exclusive business class benefits as compared to other carriers. Kenya Airways follows with US$772 (Ugx. 2,779,200), still slightly higher giving RwandAir, a cutting edge in low cost provision. The rest of the airlines offering business class to Dubai go past the US$ 1,000 mark. That is extremely exorbitant.

Pricewise, RwandAir is miles ahead in promoting inclusivity of Ugandans in the aviation sector. Although numbers continue to drop, at least there is effort to try and tap into the low income groups of the country. Businesses that tap into low income groups consequently rise especially in a country where the numbers are made of low and middle income status.

Destinations

Passengers prefer an airline that will meet all their destination demands. At least most of the African carriers reach Mombasa and Dubai, Uganda’s darling destinations. Only South Africa Airlines and EgyptAir do not fly to Mombasa. However, apart from this advantage, these regional carriers still lack enough destinations to offer their clients.

Turkish Airlines dominates the number of destinations offered with over 300 different locations. So, their clients can pick from about 300 locations to visit. Emirates offers them nearly half the amount Turkish airlines offers. Ethiopian airlines are close to Emirates hence gaining advantage over other African carriers. RwandAir struggles immensely in this department. With only 21 destinations, passengers are left envying clients of other carriers. Even the 40-year-old Kenya airways only carries passengers to 53 locations.

RwandAir scores very poorly in this section of coverage which is attributed to its age in the market. Most of these carriers have been around for more than 20 years and have managed to grow. But considering Kenya Airways has been available for more than 40 years, it’s of much surprise that it still has a low destination coverage. This is something Ugandans cannot depend on. At least for RwandAir, in the few years it has existed, it has managed to grow to half the number of destinations offered by Kenya.

SB ranked seven of these top airlines in Uganda with routes to Dubai and Mombasa. RwandAir topped these charts with a score of 20 beating rivals in both business and economy class to Dubai and Mombasa although performing poorly in fleet size and coverage. Kenya Airways came in second with 19 performing well in the flight prices but still low on size and coverage. The worst performer was South African Airways that doesn’t offer any flights to the preferred Ugandans’ destinations.

These ranks were strictly based on inclusivity of Ugandans in the aviation sector. RwandAir leads the charts in making sure Ugandans receive the lowest cost and yet high quality services in air travel. It’s truly flying the Dream of Uganda.

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