[Uganda] Vule Airways set to take off at Entebbe International Airport
04-09-2017 11:53:39 | by: Andrea Ayemoba | hits: 3734 | Tags:

A low-cost carrier, Vule Airways, is set to fly out of Entebbe International Airport starting November subject to regulatory approval from the Civil Aviation Authority.

Robert Mwesigwa, the co-founder and managing director of the three-month old carrier, said the announcement of schedules and fares will be coming soon.

"We plan to fly to the East African Community Partner States' major airports, Southern Africa, London, Moscow, Dubai, Mumbai, Guangzhou, and Tel Aviv," he told The Independent in an interview.

He said the carrier, which is currently negotiating codeshare agreements with major carriers, will start its operation with six aircrafts flying passengers to more than 20 destinations across Africa, Europe and Asia.

Mwesigwa, who remained guarded on the initial financial investment, said local investors own 55% of the shares and the rest held by foreign investors.

Incorporated in the United Kingdom in May 2017 and also registered in Uganda, Vule Airways is run by two directors - Mwesigwa and Fred Keays, a British national - and a company secretary.

Margaret Anne Wampamba, the company's director for marketing said their plan to set up a carrier in Uganda using Entebbe as its hub is to fill the vacuum in the country's air transport industry created with the collapse of the national carrier which offered domestic and international passenger as well as cargo services.

"Uganda is among the top five countries in the world when you come to tourism, according to CNN," Wampamba said, "And therefore there is that market to capture and grow."

She said the carrier also plans to tap into the growing cargo segment especially for exports, arguing that it is cheaper for exporters to use the home carrier that flies directly to their markets than depending on foreign carriers that go through their respective hubs.

Uganda's national carrier, Uganda Airlines, which started its operations in 1976 was liquidated by President Yoweri Museveni's government in 2001 as a result of mismanagement and accumulated debt to a tune of US$6million, and its ground handling operations taken over by a private firm.

This prompted Celestair Group owned by the Aga Khan Fund for Economic Development (AKFED) and which still currently controls Air Burkina and Air Mali, the national airlines of Burkina Faso and Mali, respectively, to set up a privately owned carrier in the country known as Air Uganda in 2007.

But the carrier, which had become recognised as Uganda's national airline following the collapse of Uganda Airlines, closed its operations in 2014 when CAA revoked its air operating licence saying it did not meet the air safety standards, the claim the carrier denied.

It remains unclear how Vule will survive in case Uganda government plan of reviving the national carrier are realised.

Growing numbers

Data from CAA shows that international passenger traffic in Uganda has increased from 1.17million in 2011 to 1.5million in 2016, with projections to hit 7.6million by 2033.

On the other hand, cargo volumes consisting mainly of agricultural products have grown from 48,636 tonnes to 59,000 tonnes during the same period under review.

CAA's Public Affairs Officer, Vianney Lugya, confirmed to The Independent that Vule Airways has applied for air operating licence and the approval process is ongoing.

More competitors

Vule comes at the time Kenya Airway's low-cost subsidiary, Jambojet, which posted a US$1.26 million profit in its second year of operation underlining increased use of domestic air travel last year, has set a December target for unveiling international operations on 11 new routes subject to regulatory approvals following acquisition of a new aircraft from a Moscow-based leasing company as part of its expansion.

Jambojet has applied to fly to Dar es Salaam, Zanzibar, and Kilimanjaro in Tanzania, Blantyre and Lilongwe in Malawi as well as to Uganda, Ethiopia, Somalia, and the Democratic Republic of Congo.

The low-cost carrier leased a 78-seater Bombardier Q400 from Ilyushin Finance Co (IFC) to serve its domestic customers and the upcoming routes, with a second aircraft scheduled for delivery in November.

Currently, Jambojet flies to six routes in Kenya; from Nairobi to Mombasa, Eldoret, Kisumu, Lamu, Malindi and Ukunda.

Meanwhile, the first entrant in the low-cost flight business in the region, Fastjet, recorded a net loss of US$48 million for the year ended December 2016, more than doubling the $21.9 million loss recorded the previous year. The Tanzania-based, London-listed low-cost carrier with pan-African ambitions, has air operator's certificates in two countries--Tanzania and Zimbabwe--which are seen to be facing tough economic conditions and increased competition, as the two airlines themselves battle to right-size to the market.

In December last year, the carrier suspended its flights to Jomo Kenyatta International Airport, Nairobi, Kenya and Entebbe in Uganda barely a year after launching the routes.

The low-cost carrier also stopped flights from Johannesburg to Victoria Falls in Zimbabwe citing low passenger numbers as well as inefficient utilization of the carriers existing fleets.

The carrier was said to be only one in the region using the Airbus on domestic routes as its competitors Kenya Airways, Precision Air, Air Tanzania and RwandAir use the Embraer 190, Bombadier, ATR and Dash 8 series respectively.

Vule's aggressive model

Vule Airways officials say they have their own aggressive model and projects to make minimal loses of US$378,000 in 2017/18, US$413,000 in 2018/19 and US$ 652,000 in 2019/20. The company would break-even in 2020/21 with a profit of US$ 810,000, US$1.611million in 2021/22 and US$2.079million in the 2022/23.

Exporters are looking at Vule's model as a blessing to their businesses.

"We believe that the entry of the new carrier will give us some bargaining power leading to a reduction in freight costs," James Kanyije, the chief executive officer of KK foods, a local fresh food company that exports to European markets said.

Kanyije said that current freight costs are very high, accounting for 76% of their total business expenditure.

Stephen Asiimwe, the chief executive officer at the Uganda Tourism Board (UTB) says they will only ascertain the impact of the new carrier once it has been granted operating licence and analysed the planned routes.

Who are the people behind Vule Airways?

Robert Mwesigwa: Is the Chairman and current Managing Director of Vule Airways that was founded in March 2017. He is a Soviet trained Aeronautical Engineer with a Master of Science degree in aeronautical engineering specializing in aircraft construction and exploitation and in unmanned aerial vehicles. His degree thesis was on identifying the most suitable medium range aircraft for Uganda's Entebbe-London route.

He was the Executive Director of the East African Community regional safety oversight organisation (RSOO) - Civil Aviation Safety and Security Oversight Agency (CASSOA) from March 2015 - May 2017, having been one of its pioneer staff in 2007 as the Technical Coordinator.

He has served in different portfolios in the aviation industry since 1994, some of which are Uganda Airlines where he was a planning engineer and East African Airlines, in which he was key in its establishment and operations.

On the social responsibility aspect he is a member of the Buganda Kingdom Parliament, the Great Buganda Lukiiko, and the Treasurer of Namirembe Cathedral, the main Anglican Cathedral in Uganda.

Fred Keays: He is a British national and a director of Vule Airways.

Justice (Rtd) Lameck Nsubuga Mukasa: Justice (Rtd) Lameck Nsubuga Mukasa, the Company Secretary who began his legal career in 1978 retired as a Judge in September 2015 and is now chambering with Central Alternative Dispute Resolution & Advocates as Mediator and Legal Consultant. He served as a Judge of the High Court of Uganda and was deployed to the Criminal Court Division of the High Court as Head of Division and Senior Judge. He also served as Principal Judge in acting capacity whenever the Substantive Principal Judge was absent.