Wolfgang East Africa report


Starting in October this year, the daily Emirates flight out of Entebbe to Dubai will allow Ugandan travelers a first chance to fly the fabulous giant aircraft A380 onwards to New York, soon after to be followed by London and Sydney in December 2008 and February 2009 respectively.

Emirates, the award winning airline from the Dubai / United Arab Emirates, has set many first’s for Uganda, since it began daily direct flights between the two countries. Presently travelers can make a brief, or longer if so wanted, stop-over in Dubai before choosing one of now three daily connections between Dubai and New York, currently operated on the B777. However, from end of 2008 onwards at least one of these daily flights will be operated with the double-decker A380, bringing a new dimension to air travel between East Africa and the rest of the world, as long as travelers connect via Dubai. The first airline to receive the new plane was Singapore Airlines, but they are not easily accessible for East African travelers. SIA has however been repeatedly mentioned to be looking at flights between East Africa and Singapore, although no concrete dates have ever been announced. Most recent events in Kenya were also not helpful to attract additional airlines to the route but this is due to change once the tourism and economic recovery has gone underway.

Uganda’s hotel sector has woken up to a stark reality when government sources gave notice to recover at least some 4.1 billion Uganda Shillings (about US Dollars 2.35 million) paid to them as advances for confirmed accommodation of delegates during the Commonwealth Summit last November. Apparently all transactions, where delegations had paid directly, are being audited and scrutinized to ensure that unused and unallocated advance payments are being returned by the hotels.

The Serena Hotel, according to government sources and related press reports, was singled out for a refund of 1.4 billion Uganda Shillings in building advances to prepare the meeting room for the Executive Committee session of the Commonwealth and a further 327 million Uganda Shillings for accommodation advances, while its towering neighbor Imperial Royale Hotel is reportedly due to repay a staggering amount of 2.7 billion Shillings for unused accommodation, when due to the state of readiness of the hotel at the time of the summit start only a few rooms were occupied. Other hotels in Kampala and Entebbe, which housed delegations and the press teams, are also mentioned in the lists now made public, but with lesser amounts claimed from them.
The parliamentary watchdog ‘public accounts committee’ is also chasing the whereabouts of some 2.2 billion funds advanced to the J&M Airport Hotel – which was due to become the Protea Entebbe Hotel until the South African hotel management company pulled out of the deal last year when they finally recognized too that they were engaged with a cuckoo land project – for which government has yet to demonstrate if any guests at all stayed at the then building site (still not completed as of now). The owners of the ‘hotel’ are in any case in deep financial trouble as a leading commercial bank has started foreclosure procedures and taken possession of several of their Kampala properties given as loan security, including a major shopping mall, should loans to the crumbling business empire not be repaid by end of March. Watch this space.

While the rules on price advertising for consumer goods are relatively clear, in that all charges have to be included in the prices publicly advertised, some hotel owners conveniently forget this and add in hard to see little asterix lines ‘plus VAT and service charge’, causing at time embarrassing moments for clients, when they are presented with a bill unexpectedly higher by 18 percent VAT and 5 percent SVC than budgeted for. The Ugandan consumer watchdog has hitherto kept rather quiet on such misleading practices but more and more complaints from the public are bound to change this.
Airlines too have been criticized for publishing fares without clear mention of the regulatory charges to be added for airport taxes and security fees, which completely distorts the final billing for a ticket. This has reportedly resulted in complaints at agent’s offices, when disappointed clients vented their anger over the extra charges after feeling duped and misled by adverts and commercials.

While in Europe the EC has taken harsh measures against offenders, this seems still a long way off here in Eastern Africa but the pressure is said to be building. In fact, exposing the regulatory charges will put the pressure and spotlight equally on the regulators to begin reducing these costs for domestic, regional and international flights to make flying more affordable.

Hence, in particular airlines should review their advertising practices and clearly mention what the asterixed ‘conditions apply’ financially involve, unless they want to stand accused of misleading the consumers on a broad and deliberate basis. Some sections of the civil society have also taken exception to airlines’ statements, calling recently acquired aircraft ‘new’, withholding and muddling information about aircraft age and by doing so misleading the general public. Increased competition however is likely to sort out the black sheep in the industry to the benefit of travelers.

The release of funds for the Uganda Tourist Board to pay for travel and stand cost of this week’s ITB in Berlin took top level intervention and directives to make it happen, after the government bureaucracy had broadly failed to avail the funds to UTB, as it would rightfully be expected of them. Some stakeholders in the tourism industry, clearly at the end of their tether, spoke openly of their disgust with this situation and accused unnamed officials of trying to sabotage their efforts to promote the country, clearly inferring to an opposition sponsored destabilization activity and fifth column within government aimed to embarrass the country and its tourism sector. This could not be independently verified in the short space of time but similar incidents were alleged before and were found to be of some substance and credibility.

Other angry stakeholders however called this correspondent and accused the Minister of Tourism, Trade and Industry for being as they phrased it ‘detached’, ‘uninformed’, ‘never available’ and ‘not fighting for the tourism industry’, before demanding a new minister of Hon Migereko’s calibre (immediate previous Minister of Tourism and now excelling at the Energy portfolio) to be appointed in the next cabinet reshuffle, which is expected soon. Watch this space to see if anything comes out of this and what lessons can be drawn from this heart rending experience. Yet, all is well that ends well and I hope the Ugandan delegation has a successful time in my old country promoting my adopted home.

The rising global energy prices, combined with the shortages of diesel caused by the Kenya crisis over the past two months, has now led to a significant reduction of power generated by thermal plants. This has promptly increased the load-shedding across the country. Power companies were quick to blame the denial of a tariff increase on this situation, leading to less production to minimize their extra cost for diesel, which were not budgeted for and where anticipated price increases exceeded the projections by far. The business community and civil society have already made urgent representations to government to set aside more funds to subsidize diesel importation as well as accelerate any projects for hydroelectric power across the country. This applies in particular to the planned power station at Karuma Falls, but also smaller plants at suitable locations feeding into both national and stand-alone grids. Eastern and also Southern Africa have been hit by persistent power shortages, largely blamed on the failure of the respective governments to plan ahead in good time for increased consumption.

In a parallel development it was also reported that the cost of charcoal has risen too, contributing to climbing inflation, but more importantly causing increased environmental degradation and deforestation, which in years to come may inflict a heavy price on the developing countries of Africa.

The Ugandan government has recently pledged to build additional fuel storage facilities catering for another 150 million liters of various fuels in four strategic locations across the country to be better prepared in coming years for any potential disruption in fuel supplies, until Uganda’s own domestic crude oil reserves can come on line late this decade.

Peak demand in Uganda is estimated to now stand near 400 MW with the combined hydro production and reduced thermal production now only catering for about half of this demand.

With the sad events in Kenya now hopefully over and never to be repeated again following a landmark political power sharing deal between the leading parties, it is probably the right time for at least some Kenyan tourism business leaders to take a hard look in the mirror and ask themselves some pertinent questions. Prior to the political crisis, up to December 2007, nothing seemed to go wrong for them and the figures for the past years constantly went in one direction only, upwards. This however also led to some complacency concerning product quality and innovations as well as at times almost personal arrogance, when dealing with legitimate issues raised with them from a ‘high horse’ position. The sharp reminders over the past two months should be taken to heart by those concerned to revise their positions. Instead of allocating and distributing accommodation in ‘hot properties’ and seats in eternally full aircraft they will now have to start ‘hard sell’ once again to fill those rooms and seats, and a little humility will come in handy when dealing with clients, who up to December got more than a little stick. Scorn, contempt and attitude are no acceptable tools when dealing with a client and the past two months have hopefully taught that lessen too. Just as the estranged and politically divided communities in Kenya now need to rebuild trust and confidence, the same ought to apply to tourism business leaders and their clientele.

Further to this, regional tourism administrators and industry gurus would do well to firmly remember how the crisis in one country affected all the other countries in the region immediately to a greater or lesser degree. Interdependence has grown and regional integration is becoming a fact of life. Fast tracking regional tourism integration, including full cross border operations for tour/safari and air operators, joint promotion and marketing of the entire region as ‘one destination with many attractions’ would be helpful towards the success of making tourism the number one economic sector in the region. Regulatory measures are also most urgently required, like lowering airport taxes, introducing a common East African Visa for visitors from abroad, rapidly rolling out the EAC protocols on freedom of movement of labour, joint monetary markets and a common open sky policy for all East African nations would be just a few areas, where progress towards Kenya’s recovery can be cemented across the region. Watch this space in coming weeks as we evaluate and assess the recovery process.

Hot on the heels of Air Tanzania’s emerging fleet renewal did Tanzania’s leading privately owned airline Precision Air take delivery of a brand new ATR 72-500, which will be used to operate routes with larger traffic volumes and help expand the destination network. The airline, 49 percent owned by regional aviation giant Kenya Airways, has several more such aircraft on order and expects them delivered between now and 2010. The deal between the French manufacturer and Precision is said to be worth more than 100 million US Dollars and is a sign of confidence that the market will continue to expand and offer opportunities for at least two mainstream airlines in Tanzania in coming years. It is also an appropriate moment to congratulate airlines like Kenya Airways, Air Tanzania, Precision Air, Fly 540 and Jetlink for their commitment to employ new aircraft unlike other aviation pretenders and upstarts, who continue to dupe the public through their use of very old and old aircraft, which would not be flying in much of the rest of the world but seem good enough for the owners of such companies to pollute the East African environment with noise and fumes while squeezing every last penny of revenue out of their obsolete fleets.

In spite of the upheavals over the past two months in Kenya, the Rezidor Hotel Group is on course with the progress on its new Radisson Nairobi Hotel, due to open in early 2010. Construction of the 244 suites and rooms 5 star hotel is on course, conveniently located in the newly emerging business district on ‘Upper Hill’. The development will eventually feature almost a dozen meeting and conference rooms, serving notice on the hotel trade of the new player meaning business. Other international companies, not yet represented in Kenya, have also expressed ongoing interest in either taking over or developing a top notch city hotel in Nairobi, the most immediate candidate being Kempinski Hotels. The international top star management company already manages properties in Tanzania (Dar es Salaam and Zanzibar) and Djibouti and is also reportedly interested to develop a safari and resort circuit across Eastern Africa. This will undoubtedly inject some new ideas and concepts into the otherwise a little stale city hotel market in Nairobi, where the only international entry in recent years was the buyout by Kingdom Hotels of Lonrho’s hotel interests. Subsequently, the Norfolk Hotel, the Mount Kenya Safari Club and the group’s safari properties like the Ark, the Aberdare Country Club and the Mara Safari Club all benefited from a major rehabilitation and modernization package injected by Kingdom Hotels.

However, Kingdom’s Kampala project has not shown any signs as yet of going ahead, as the free prime city plot given to them two years ago is still lying idle, after displacing a key city primary school and teachers training college in a hurry.

Inspite of the political upheavals in Kenya over the past two months, largely centred at the opposition strongholds in Western Kenya and around Kisumu, election loser Odinga’s political stomping ground, the Kenya Airports Authority has now confirmed that the long planned re-development of Kisumu’s domestic airport will go underway at a projected cost of about 2.6 billion Kenya Shillings. Amongst the work to be done will be a runway and taxiway resealing and upgrade, a substantial runway extension and an enlargement of passengers facilities for both check in and arrivals. The works, expected to take about 2 years, will then allow regional and even international flights in and out of Kisumu.
Several airlines, often led by Kenya Airways on safety grounds, have in the past halted operations due to the poor state of the runway, forcing emergency repairs at the time, but only a full rehabilitation will ensure the long term safety of air operations in Kisumu according to internationally accepted standards.