Ethiopian Airlines – Carrying the Flag

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For almost 70 years Ethiopian Airlines has been the country’s national flag carrier. The airline flies to 113 passenger destinations, 19 of them domestic, and more African destinations than any other flag carrier. EBM spoke to Tewolde GebreMariam, the Ethiopia Group’s CEO.

Ethiopian Airlines’ name is one of the best-known in Africa’s aviation industry, something that CEO Tewolde GebreMariam puts down to something more important than planes or technologies: its employees.

“Ethiopian Airlines currently serves more than 100 international passenger and cargo networks, operated using the youngest and most modern fleet the industry has to offer. However, in today’s hyper-competitive airline industry, our seasoned management and strong employees have provided the resilient competitive edge, allowing Ethiopian Airlines to continue flying at the heights of success.”

African aviation is a growth area, but many airlines have struggled to reach a truly international audience, especially in sub-Saharan countries. GebreMariam acknowledges that there’s still a way to go.

“African aviation has a very strong future with the vigorous fundamentals in place for aviation to thrive in the continent, but the conditions are not there. That is why over 80% of the African travel market is dominated by non-African carriers, leaving a 20% share for home-grown indigenous African airlines.

“Consequently, governments need to understand that aviation is not a luxury business, and they must ensure aviation in this region is supported. If it flourishes it will push other sectors to grow as well, because aviation is an enabler for tourism, trade, investment and economic integration.”

African aviation obstacles

GebreMariam identifies four areas holding African aviation back:IT, Open Skies Agreements (or lack thereof), high taxes and charges, and limited market access within the continent. African countries often lack international infrastructure standards, and the potential for ICT enhancement of this infrastructure has not yet been fully harnessed. This restrains domestic productivity and presents a critical bottleneck in the growth of regional integration.

Open Sky Agreements have been a bugbear for pan-African legislature for decades, with liberalising requiring political commitment and cooperation from dozens of leaders. It’s a key component of the African Union Agenda 2063, and there’s a long way to go before the African Union Commission can meet its goal of creating a single African air space. Once this is done, however, domestic carriers like Ethiopian Airlines will have a vast potential market to grow into.

Part of the problem with the current system is the extremely high charges levied against African airlines and the high taxation placed on assets as basic as jet fuel. This forces airlines to charge high prices: not exactly a world-beating way to attract customers. It also makes competition unfair against international carriers, particularly Gulf-based airlines which dominate the African markets with the help of cheap, government-subsidised fuel.

It’s for this reason that many African carriers find it difficult to get access to African airports, as airport operators and governments prefer a more convenient service even if it’s a foreign corporation. Some of these factors have been improving. GebreMariam specifically mentions the new cargo terminal planned at Bole, which is being built to exploit the rising profitability and demand for air cargo in Africa:

“The new Cargo Terminal II combined with the existing Terminal I will scale up the total tonnage capacity to around 1 million per annum, which is the largest trans-shipment terminal in Africa. Preparations are also well underway to commence construction of the second phase, Terminal III, which upon completion adds 600,000 tonnes annual uplift capacity. By then, Ethiopian Cargo & Logistics Services will have one of the world’s largest cargo terminals.”

Vision 2010 plan

Ethiopian Airlines’ drive and strategic development has been driven by its Vision 2010 plan. Now that most of the conditions have been met, there’s a new, more ambitious plan in the works, as GebreMariam explains:

“Back in 2011, after the successful completion of Vision 2010, we came up with Vision 2025, an even more aggressive plan designed to transform the airline into a leading aviation group in Africa, with seven strategic business units operating as autonomous profit centres under one umbrella. We have structured a consolidated group of companies, the Ethiopian Group, with a view to ensure seamless customer service on board our flight and the provisions at our main hub, Addis Ababa Bole International Airport.

“Through Vision 2025, we envision to see Ethiopian become a world class African airline with fleet size of more than 140, flying 22 million passengers, uplifting 820,000 tons of cargo flying to more than 146 destinations, generating $10 billion in revenue and $1 billion dollars in profit.”

Despite the intrinsic difficulties of working within the African aviation market, it seems likely that Ethiopian Airlines’ ambition will be rewarded.