East Africa bets on air travel expansion

East Africa’s skies are set to become busier after Uganda floated plans to revive its national airline and carriers in Tanzania and Rwanda proceed to expand their fleets. But analysts and economists are sceptical whether demand for air travel in the region is strong enough to justify governments spending scarce funds on what have largely been lossmaking businesses.  Expansion will put pressure on carriers including Ethiopian Airlines, Kenya Airways, South African Airways and Fastjet, a London-listed, Tanzania-based low-cost carrier that was launched in 2012 but has scaled back its growth targets amid lacklustre passenger numbers.  Kenya Airways, where the government is the largest shareholder with a 29% stake, is midway through a restructuring and is expected to embark on a capital raising soon. State-owned South African Airways is dependent on government aid to keep operating. Despite this backdrop, Yoweri Museveni, Uganda’s president, told a cabinet meeting last month that one of his priorities was to revive Uganda Airlines, the state-owned carrier that went bankrupt in 2001 and ceased operations. “Ugandan travellers are suffering because of, apparently, not having a national airline,” he told ministers, arguing that the economy was now in much better shape than 15 years ago. “I thought that our brothers in Ethiopia, Kenya and South Africa would serve all of us. That, however, is apparently not the case.”  In Tanzania, President John Magufuli’s government allocated funds in its first budget last month for state-controlled Air Tanzania, which currently has one aircraft, to acquire at least two more. <br/>