African governments are not in it for the money. The International Air Transport Association (IATA), a trade group, forecasts that carriers on the continent will lose $300m this year, or $3.51 per passenger. Planes fly with more empty seats than in any other region of the world. High taxes, expensive fuel and old aircraft add to costs. South African Airways survives on government bail-outs. In July Kenya’s parliament voted to fully nationalise Kenya Airways as part of a plan to rescue it from debt.
Joseph Muvawala, who heads the National Planning Authority in Uganda, says that governments see airlines as an investment in infrastructure. Technocrats hope that Uganda’s new airline will boost exports of fish and cut flowers, while pulling in tourist dollars, and will drive down high ticket prices on routes served by established carriers. Even if the airlines are unprofitable, the argument goes, the economy will gain.
Vir: The Economist