WHY UGANDA SHOULD STICK TO THE PLANE WHICH “NO OTHER AIRLINE WANTS”

By Kyetume Kasanga

The revival of Uganda Airlines has raised stakes for the 24 foreign airlines that ply our national skies. Kenya Airways and its subsidiary, JamboJet, have been enjoying a sumptuous presence courtesy of lack of a national airline, and are working to maintain dominance over the region’s routes. Rwanda is heavily investing in a new airport and improving old facilities as well as fleet expansion and improvement. Tanzania has purchased more American Boeings and Canadian Bombardiers for her fleet. Air Burundi has undergone a restructuring process, as South Sudan eyes domestic development and international air connectivity.

Biased media reports accuse Uganda of becoming the sole customer for the Airbus A330-800Neo (New Engine Option) plane which has seen near-zero demand from airlines across the world. This is after Uganda signed a Memorandum of Understanding with the Netherlands-registered Airbus SE Corporation for purchase of two A330-800Neo planesin the course of the recent Farnborough Air Show in the United Kingdom.

True, Airbus lost Hawaiian Airlines orders for six such planes in March this year when the carrier ditched them for 20 Boeing 787-9s. It also lost other orders from the TransAsia Airlines for four when the Taiwanese liner collapsed in November, 2016. Airbus has, thus had no orders until Uganda’s. Meantime, the Airbus A330-900Neo series has had over 250 orders from 15 airlines in the United States, Malaysia, Ireland, Portugal, Indonesia, Israel, New Caledonia, Iran, Iceland, Senegal and Singapore. Yet, the two variants have been under development together since 2014.  

The natural question is: why should Uganda opt for the plane that “nobody wants” rather than the “preferred” A330-900Neo? In starting to render a service, there really is no conventional or right way. It is what and how one is serving/selling that makes the difference. All successful business ventures have one thing in common: they start just as a great idea, with some small funding and a whole lot of dedication, determination, resilience, prudence and humility.

Before his death in 2011, American entrepreneur and business magnate Steve Jobs of the Apple fame, said when you go outside of the mainstream, you take a risk with ample rewards expected. Uganda does not have to follow what others are doing in order to do the “right” thing. By buying the A330-800Neo she took a deserved risk.

Aviation experts believe in the 90% rule: some people shop for an airplane that fits their hoped-for mission, not their real mission. They find out only too late that they “overbought” an airplane that will be undersubscribed on new routes. According to the rule, it is prudent to shop an airplane that meets your needs 90% of the time. The savings you make by purchasing the right avion will be used for other things. That is what exactly Uganda did by booking the two European-built A330-800Neos.

What is the A330-800Neo?

The Airbus A330-800Neo is one of the two versions of the A330Neo (the other is the A330-900Neo), which were launched simultaneously as an improvement on the hugely successful Airbus A330 series. Neo stands for New Engine Option. The A330-800Neo is slightly smaller than the A330-900Neo, carrying about 30 fewer passengers. It typically seats 257 passengers in three classes of service, while offering capacity for up to 406 travellers in a high-density configuration.

It is also more fuel and cost efficient than its sister, according to the Future Aircraft Fuel Efficiencies Study sponsored by the UK Department for Transport. The A330-800Neo is a sleek and beautiful airplane. With its better operational versatility, cozy cabin comfort and low capital costs, it is one of the most efficient airliners on the market. It also boasts of a longer range (distance it can cover) of up to 7,500 nautical miles (13,890km) nonstop and excellent for long haul. Targeting 15 routes, Uganda intends to use it for such missions.

With analysis by the Washington-based Leeham Company which monitors key developments in the aerospace industry, there is no reason to believe the A330-800Neo will not succeed. As a result, United Airlines, the world's third-largest airline, after American Airlines and Delta Airlines, is considering the type that Uganda booked among options to replace its fleet of aging Boeing 757s and 767sin the short term, according to its Senior Vice-President of Finance, Procurement and Treasurer, Gerry Laderman. The development was also confirmed by the Airbus Vice President of Strategy and Marketing, Kiran Rao in press quotes. The Chicago-based carrier has 77 757-200s and 757-300s, and 51 767-300ERs (Extended Range). It is well-known that the A330-800Neo is cheaper in cost per unit than the A330-900Neo by at least US$40 million (Sh149 billion).

So why is it that no other airline has it on their fleet?

The aircraft faces dog-eat-dog competition from the A330-900Neo’s due to its 30-seat disadvantage. Established airlines are going for its sister because they can always attain full flight bookings and spread out the unit costs per seat.The two variants have the same Max Take-Off Weights (the maximum weight at which the pilot is allowed to attempt to take off) and, therefore, same engines. The same goes for navigation, landing and handling costs. In aviation, the lack of immediate acceptance of the industry can seriously harm an aircraft mark, and this seems to be the case with the A330-800Neo. When no airlines buy a particular plane, others will not touch it regardless of its effectiveness. This is the explanation that was given by Hawaiian Airlines when they gave up A330-800 orders in March, after realizing that they were the only customers.

Uganda’s option

There are key factors that breathe new life into the A330-800Neo. The first is risk, both at micro and macro level. The A330-800Neo is a low-risk option; a lower trip cost involves less risk when adding a new airline destination or route as it minimizes capital outlay. On the macro level, smaller airplanes are cheaper and require generally less funding outlays. The two A330-800Neos are costing Uganda US$586 million (UGX2,192 billion), while the A330-900Neos would drain the taxpayer by US$666 (UGX2,491 billion). In the process, the country is saving US$80 million (UGX299 billion). The A330-800Neo, therefore, becomes a natural choice for starters.

For now, Uganda cannot brush shoulders with established airlines such as the United States’ Delta Air or the Malaysian AirAsia X which enjoy overbooked routes and lavish economies of scale. The Atlanta-based Delta operates over 5,400 flights to 314 destinations in 54 countries daily, while AirAsia X operates 32 aircrafts and has placed an order for 34 morewith the total number of aircraft ordered by the airline increasing to 100. It is obtusely misplaced for both traditional and new media, therefore, to bash Uganda Airlines for picking on a cheaper but quality product detested by established entities for their own reasons. Just wishing Uganda well would be a more liberal idea.

The writer is a Principal Information Officer at the Ministry of ICT & National Guidance