The end to SWISSAIR is a lesson to us all
When SWISSAIR failed some years ago, largely as a result of over ambition on the part of their corporate management, German carrier Lufthansa was prompt in attempting a takeover.
Wolfgang Thome
When SWISSAIR failed some years ago, largely as a result of over ambition on the part of their corporate management, German carrier Lufthansa was prompt in attempting a takeover.
While the other Swiss airline CROSSAIR offered a feasible alternative to retain some indigenous alternative to be put into the frame, this was ruled out by the desire to retain a global Swiss airline offering competition to the major European mega carriers like Lufthansa, British Airways and Air France.
When failure first became a distinct possibility SWISS negotiated for a while with British Airways, before talks were abandoned.
Two years later, and an estimated 2 billion Swiss Francs poorer – some analysts talk of an even greater loss of money – the end for SWISS has now come nevertheless and subject to formalising the approvals from the owners and regulators, Lufthansa is now again at the verge of taking over SWISS after its second financial failure.
Aviation has largely moved into a global scale, with mega carriers dominating the world traffic through their hub and spoke systems, while low cost carriers have made progress in carving out their market niches for regional and continental routes.
In East Africa, we saw the emergence of Kenya Airways as a credible African aviation force in recent years, thanks to their strategic alliance with KLM, which in turn is now part of the AIR FRANCE group.
This was achieved through tough restructuring, a near total fleet renewal, careful route expansion and creating the Nairobi hub, from where travellers can seamlessly connect into the world as well as into the region and across the African continent. KQ is now listed on all three East African stock exchanges and has shareholders throughout East Africa. For all practical purposes it has become ‘THE’ East African lead carrier, connecting Uganda to the region and the world.
The wrangles over their flights to and from Entebbe are unfortunate and generally uncalled for. The financial downfall of SWISS should teach us all a lesson, that while it is a noble ideal to maintain indigenous aviation, this must be matched by feasible market performance. We in Uganda have lost our chance for that when Uganda Airlines was put into liquidation after their takeover by South African Airways was scuttled. Instead, SAA acquired shares in Air Tanzania, which is now undergoing restructuring to meet the competitive challenges posed by the market.
Let us look at the larger picture here and share our skies with a carrier which has the capacity to provide us with lasting and growing airlinks from Entebbe to the world and not try to do, where much richer countries elsewhere have failed. If a Ugandan carrier can come onboard through a strategic alliance or an equity stake, that would be desirable, but mere political pressure cannot assure that the financial equation is also working out. Aviation today requires a strong capital base as well as a strong traffic potential to ensure good loads on the flights.
Point to point traffic between Entebbe and Nairobi only accounts for about 20 percent of all traffic, while the balance moves on to connecting flights. Kenya Airways offers these connections and their present flights do feed into their network out of Nairobi.
In fact, just over a decade ago, KQ even offered a flight from Entebbe to London and besides the British raising the issue of traffic rights, something which surely can be dealt with, we should look at the possibility to restoring this connection as a solution to the growing shortage of air seats in and out of Uganda, which can seriously impact our ability to maintain the 20+ percent annual growth in arrivals achieved over the past years.
If East Africa is to become a political and economic union in the next few years, we can well start with aviation and take advantage of the competitive strength in the sector by one of our sister states. It will be good for us all in the long run and set the way forward for other sectors too.
The writer is the chairman, Uganda Tourism Association
When SWISSAIR failed some years ago, largely as a result of over ambition on the part of their corporate management, German carrier Lufthansa was prompt in attempting a takeover.
While the other Swiss airline CROSSAIR offered a feasible alternative to retain some indigenous alternative to be put into the frame, this was ruled out by the desire to retain a global Swiss airline offering competition to the major European mega carriers like Lufthansa, British Airways and Air France.
When failure first became a distinct possibility SWISS negotiated for a while with British Airways, before talks were abandoned.
Two years later, and an estimated 2 billion Swiss Francs poorer – some analysts talk of an even greater loss of money – the end for SWISS has now come nevertheless and subject to formalising the approvals from the owners and regulators, Lufthansa is now again at the verge of taking over SWISS after its second financial failure.
Aviation has largely moved into a global scale, with mega carriers dominating the world traffic through their hub and spoke systems, while low cost carriers have made progress in carving out their market niches for regional and continental routes.
In East Africa, we saw the emergence of Kenya Airways as a credible African aviation force in recent years, thanks to their strategic alliance with KLM, which in turn is now part of the AIR FRANCE group.
This was achieved through tough restructuring, a near total fleet renewal, careful route expansion and creating the Nairobi hub, from where travellers can seamlessly connect into the world as well as into the region and across the African continent. KQ is now listed on all three East African stock exchanges and has shareholders throughout East Africa. For all practical purposes it has become ‘THE’ East African lead carrier, connecting Uganda to the region and the world.
The wrangles over their flights to and from Entebbe are unfortunate and generally uncalled for. The financial downfall of SWISS should teach us all a lesson, that while it is a noble ideal to maintain indigenous aviation, this must be matched by feasible market performance. We in Uganda have lost our chance for that when Uganda Airlines was put into liquidation after their takeover by South African Airways was scuttled. Instead, SAA acquired shares in Air Tanzania, which is now undergoing restructuring to meet the competitive challenges posed by the market.
Let us look at the larger picture here and share our skies with a carrier which has the capacity to provide us with lasting and growing airlinks from Entebbe to the world and not try to do, where much richer countries elsewhere have failed. If a Ugandan carrier can come onboard through a strategic alliance or an equity stake, that would be desirable, but mere political pressure cannot assure that the financial equation is also working out. Aviation today requires a strong capital base as well as a strong traffic potential to ensure good loads on the flights.
Point to point traffic between Entebbe and Nairobi only accounts for about 20 percent of all traffic, while the balance moves on to connecting flights. Kenya Airways offers these connections and their present flights do feed into their network out of Nairobi.
In fact, just over a decade ago, KQ even offered a flight from Entebbe to London and besides the British raising the issue of traffic rights, something which surely can be dealt with, we should look at the possibility to restoring this connection as a solution to the growing shortage of air seats in and out of Uganda, which can seriously impact our ability to maintain the 20+ percent annual growth in arrivals achieved over the past years.
If East Africa is to become a political and economic union in the next few years, we can well start with aviation and take advantage of the competitive strength in the sector by one of our sister states. It will be good for us all in the long run and set the way forward for other sectors too.
The writer is the chairman, Uganda Tourism Association