Revival of Uganda's National Carrier – Feasibility Study

Feasibility Report: National Airline THE REPUBLIC OF UGANDA National Planning Authority DEVELOPING MIDDLE INCOME HOUSING SERVICE AND SERVICE DELIVERY STANDARDS FOR UGANDA National Planning Authority Plot 15B, Clement Hill Road P.O. Box 21434, KampalaNational – Uganda Planning Authority Tel. +256-414- 250214/250229 Plot 15B, Clement Hill Road Fax. +256-414- 250213 REVIVAL OF UGANDA’S NATIONAL Email: [email protected] P.O. Box 21434, Kampala – Uganda Uganda THE REPUBLIC OF UGANDA Website: www.npa.ug Tel. +256-414- 250214/250229 Fax. +256-414- 250213 CARRIER THE REPUBLIC OF UGANDA Email: [email protected] Website: www.npa.ug National Planning Authority FEASIBILITY STUDY DEVELOPING MIDDLE INCOME HOUSING THE REPUBLIC OF UGANDA SERVICE AND SERVICE DELIVERY A PEC PAPER ON THE REVIVAL OF UGANDA’S NATIONAL CARRIER FEASIBILITY STUDY i STANDARDS FOR UGANDA National Planning Authority DEVELOPING MIDDLE INCOME HOUSING SERVICE AND SERVICE DELIVERY STANDARDS FOR UGANDA National Planning Authority Plot 15B, Clement Hill Road P.O. Box 21434, Kampala – Uganda Tel. +256-414- 250214/250229 Fax. +256-414- 250213 Email: [email protected] Uganda THE REPUBLIC OF UGANDA Website: www.npa.ug National Planning Authority Plot 15B, Clement Hill Road P.O. Box 21434, Kampala – Uganda Tel. +256-414- 250214/250229 Fax. +256-414- 250213 Email: [email protected] Uganda THE REPUBLIC OF UGANDA Website: www.npa.ug Feasibility Report: National Airline Table of Contents List of Tables ��iii List of Figures ��v List of Annexes ��vi Foreword��vii Acknowledgement ��viii Executive Summary ��ix 1�0 Background ��1 1.1 The Macroeconomics of Uganda ....................................................................................................1 1.2 Historical overview of aviation in Uganda .......................................................................................2 1.3 History of Airlines in Uganda ...........................................................................................................3 1.4 Historical Overview of Uganda Airlines Corporation .......................................................................4 1.5 Lessons Learned from Successes and Failures .............................................................................5 1.6 Recent Entebbe Airport traffic trends ..............................................................................................7 1.7 The case for the National Carrier ....................................................................................................8 1.8 Purpose and Objectives of the feasibility study ............................................................................10 1.9 Methodology ..................................................................................................................................11 2�0 Project Concept and Structure ��12 2.1 Project Concept .............................................................................................................................12 2.2 Airline Investment options .............................................................................................................13 2.3 Assumptions ..................................................................................................................................15 2.4 Scope ............................................................................................................................................17 2.5 Analysis techniques ......................................................................................................................19 2.6 Data used ......................................................................................................................................20 3�0 Origin Destination Traffic Analysis ��21 3.1 National Air Traffic Analysis ...........................................................................................................21 3.2 Regional Origin Destination Traffic Analysis ..................................................................................22 3.3 International Origin Destination Traffic Analysis ............................................................................23 3.3.1 Passenger Projections ...................................................................................................................23 3.4 Cargo Traffic Analysis ....................................................................................................................24 4�0 Feasibility Evaluations for Aircraft Purchase Option ��26 4.1 Financial Appraisal: Option1 Regional Airline ..............................................................................26 4.2 Financial Appraisal: Option2 International Long Haul Airline ........................................................27 4.3 Financial Appraisal: Option 3 Abridged Income Statements ........................................................29 4.4 Financial Appraisal: Option 3 Balance Sheets 15 Years ...............................................................31 4.5 Financial appraisal: Option 3 Cash Flow Statements 2016-2030 .................................................32 4.6 Financial Appraisal: Option 3 Regional and International Combined ...........................................34 4.7 Economic Benefit Appraisal: Option 3: .........................................................................................34 4.8 Sensitivity Analysis ........................................................................................................................37 4.9 Direct Employment Benefits ..........................................................................................................37 A PEC PAPER ON THE REVIVAL OF UGANDA’S NATIONAL CARRIER FEASIBILITY STUDY i Feasibility Report: National Airline 5�0 Considering the Option of Leasing Aircraft ��39 5.1 Assumptions under the leasing option ..........................................................................................39 5.2 Appraisal of Leasing Option ..........................................................................................................40 5.2.1 Financial Appraisal of the Option to Lease and operate only regional Aircraft .............................41 5.2.2 Financial Appraisal of the Option to Lease and operate only International Aircraft .....................44 5.2.3 Financial Appraisal of the Option to Lease and operate both International Aircraft and regional aircraft: Combined Lease .......................................................................................................................47 6�0 High Level Project Risk Analysis ��51 7�0 Summary of the Feasibility Evaluations ��54 7.1 Aircraft Purchase Scenario ............................................................................................................54 7.2 Aircraft Lease Scenario ................................................................................................................54 7.3 Further Comparative Analysis of Financial and Economic Benefits for the Preferred Option ........ 55 8�0 Conclusions and recommendations ��57 9�0 Annexes ��58 ii A PEC PAPER ON THE REVIVAL OF UGANDA’S NATIONAL CARRIER FEASIBILITY STUDY Feasibility Report: National Airline List of Tables Table 1: Summary History of the National Carrier ........................................................................................3 Table 2: Uganda Airlines Operating Summary 15 Years 2016-2030 ..........................................................14 Table 3: Operating Statistics: Uganda Airlines Plan 2016-2030 ................................................................14 Table 4: Summary of Key assumptions ......................................................................................................15 Table 5: Conversion Factors .......................................................................................................................16

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