Parliament’s Budget Committee concerned over proposed budget increase for Uganda Airlines

By URN

Legislators on the Budget Committee of Parliament have expressed concern over the Government’s proposal to increase the budget for the Uganda National Airlines Company Limited in the upcoming Financial Year 2024/2025.

Tony Awany, the Chairperson of Parliament’s Committee on Physical Infrastructure and Member of Parliament for Nwoya County, presented the proposal in the National Budget Framework Paper before the Budget Committee.

He clarified that the Government aims to augment the Airline’s subsidy by 34.9 billion Shillings, elevating the entity’s budget to 120.9 billion Shillings in the FY 2024/2025. According to Awany, these funds will cover expenses such as payments to the Uganda Civil Aviation Authority – CAA, wages, staff training, procurement of aviation fuel, insurance cover for aircraft, and inflight catering services.

Dickson Kateshumbwa, the Representative for Sheema Municipality, objected to the proposal, urging MPs to delve into the Government’s investment in the airline. He emphasized the need for understanding aspects like the Government’s ownership of shares in the national flag carrier and funds earmarked for short-term, mid-term, and long-term investments.

The Committee’s report in the Budget Framework Paper for the Ministry of Works and Transport raised additional concerns among lawmakers regarding the airline’s profitability, citing operational incompetence.

Citing the airline’s inefficiencies, Members of Parliament demanded that the Government must assess the airline’s probability of breaking even to justify continued capital infusion.

In an interview with URN, Jennifer Bamuturaki, the Chief Executive Officer of Uganda Airlines, disclosed that the flag carrier currently covers 85 percent of its operational expenses. She stated that the airline requires at least three more years to break even, as it generates up to 85 percent of revenue to meet direct operation costs like maintenance, crew expenses, landing fees, and navigation charges.

The Auditor General’s reports for the past three financial years highlighted poor financial performance for Uganda Airlines, with significant losses of 104 billion Shillings in FY 2020/21, 164 billion in FY 2021/22, and 234 billion in 2022/23 – totaling 502 billion Shillings.

These audit reports prompted further scrutiny of the airline’s operations by the Public Accounts Committee on Commission, Statutory Authorities, and State Enterprises (COSASE) to contribute to shaping the entity’s strategic plan.

Abderahmane Berthé, the General Secretary of the African Airlines Association – AFRAA, of which Uganda is a member, expressed optimism about the future of Uganda Airlines since its revival in 2019 after an 18-year hiatus.

Currently, Uganda Airlines operates a fleet of six aircraft, flying to 12 destinations as of 2023, including Nairobi, Dar-es-Salaam, Bujumbura, Mogadishu, Zanzibar, Mombasa, Kinshasa, Juba, Lagos, and South Africa. The airline also conducts intercontinental flights to Dubai, Mumbai, London, and Guangzhou, among other destinations.