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Grounded Air Uganda returns leased aircraft

Passengers board an Air Uganda Airline at the Jomo Kenyatta International Airport in Nairobi. PHOTO | FILE | NATION
Passengers board an Air Uganda Airline at the Jomo Kenyatta International Airport in Nairobi. PHOTO | FILE | NATION 

Air Uganda has been forced to return its leased aircraft following the withdrawal of its license last month by national aviation regulators.

The airline’s chief executive told journalists the suspension of operations left them no choice but to return the planes to GECAS, a global conglomerate that leases out aircraft and related equipment to airlines.

The airline operated a fleet of three Bombardier CRJ200 long range aircraft and a McDonnell Douglas MD87 as a back-up plane.

CEO Cornwell Muleya said that although Air Uganda immediately started the process of applying for recertification, the grounding had gone on longer than expected. Recovering, he said, would take a toll on the company given the airline’s fixed costs, which run into millions of dollars per month.
The delay is expected to benefit regional airlines like Kenya Airways and Ethiopian Airlines, which compete with Air Uganda on some of their routes.

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The airline’s suspension came after an audit of Ugandan Civil Aviation Authority policies and procedures by the International Civil Aviation Organisation (ICAO). Air Uganda claims ICAO found CAA’s procedures wanting, leading to the suspension of air operator certificates for airlines it had registered. CAA, however, says ICAO found fault with the airline.

Mr Muleya said the airline must return its aircraft to their lessor in line with lease agreement provisions for craft that have not flown for 31 days.
“The aircraft are meant to fly. The suppliers put covenants in the contracts that demand that the aircraft has to be relocated to a facility of their choice for the period of (any) grounding,” he said.

READ: (Press release) Air Uganda suspends operations indefinitely.
The suspension has had serious cost implications for Air Uganda both in incurred expenses, foregone revenue and brand erosion. Apart from being forced to return aircraft to the lessor, Air Uganda has had to refund passengers that had pre-booked from the United States, Europe and Asia or find airlines that are willing to accommodate them.

Muleya said Air Uganda has paid over $23.5 million in fees and taxes to CAA, invested $4 million in staff training, contributed $10 million in employment taxes and injected over $15 million a year into Uganda’s economy.

The regional carrier started operations in 2007, has 231 employees and flew about 750,000 passengers annually from Uganda’s Entebbe airport to Nairobi, Dar es Salaam, Bujumbura, Kigali, Mogadishu, Kilimanjaro, Mombasa and Juba. Mr Muleya says the company will require new investments in aircraft and other assets to recover from the period of inactivity.

Additional reporting by BDAfrica.com and The East African.

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