Ethiopian wants Addis Ababa to be Africa’s Dubai

by Andreas Spaeth
17603
February 16, 2018
Boeing congressional hearings
Photo: Andreas Spaeth

Ethiopian Airlines, one of the oldest airlines in Africa, is now the continent’s biggest carrier.

Ethiopian has surpassed former market leaders South African Airways, Egypt Air and Kenya Airways in areas such as passengers carried, fleet size, route network and profit.

But this is a relative achievement from a global perspective.

“Africa is the second biggest continent, but only generates less than 3 percent of worldwide air traffic. That’s mostly due to the lack of liberalised transport markets,” Tewolde Gebremariam, the CEO of Ethiopian Airlines since 2011, tells AirlineRatings in an interview in Addis Ababa.

Ethiopian Airlines has long embraced the fact that it is not enough to serve 54 destinations in Africa alone.

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Thanks to massive help from China,  a huge new terminal building is currently going up at Bole Airport in Addis Ababa. This will more than double capacity at the airport to 22m passengers annually when the terminal opens later this year.

It was also the Chinese who built huge new maintenance hangars for Ethiopia at Bole and who are now constructing the airline’s new 700-room hotel.

Ethiopian Airlines Africa biggest
Ethiopian’s maintenance hangar. Photo: Andreas Spaeth.

With support from the People’s Republic, Ethiopia and its airline are aspiring to become global players.

“We are doing this for the whole world, we are developing Addis Ababa as the Dubai of Africa,” Gebremariam says of the ambitious goals.

He has already proven that these are not empty promises. When he took office in 2011, while Ethiopian Airlines was still number four in Africa, he crafted “Vision 2025” and set out to double passenger numbers to 18m customers and the fleet to 140 aircraft by 2025.

In the six years to 2017,  Ethiopian had already doubled its capacity and surpassed all African competitors.

“In Vision 2025 we had set out plans for every year, until then it was for example the goal to serve 90 international destinations. Now we already have over 100 in our network,” Gebremariam says.

Furthermore every year of the plan so far proved to be profitable:  Ethiopia has been constantly in the black for a decade, a rare exception in Africa.

“As we are fully government-owned we don’t have any other way to raise money, we can’t go to the stock exchange for example, so we have to make sure to be profitable,” the  CEO says.

One reason for that profitability, however, is the very low level of salaries in Ethiopia. Analysts have warned the opening up of the Ethiopian economy will put pressure on wages to rise to international levels, which might be a challenge for the airline.

At the end of January,  the African Union launched a new attempt in Addis Ababa to launch Open Sky for Africa and 23 states have signed up, among them those  generating the most traffic. Implementation may take years as every country has to ratify it first.

“As Africa’s biggest airline we have to lead the integration and liberalisation of Africa,” says  Gebremariam.

For this, Ethiopian cleverly takes advantage of the fact that many African states can no longer afford their own national airlines and turn to it  support.

“We have created other hubs in Western Africa, besides Addis. That has enabled us to get around some of this protectionism,” notes the  CEO. “We also have an affiliated airline in Togo, ASKY, that flies now to 22 destinations in Western and Central Africa.”

Ethaopian Airlines Africa biggest
Tewolde Gebremariam has been CEO of Ethiopian Airlines since 2011. Photo: Andreas Spaeth.

Currently Ethiopian is establishing a presence through cooperation with or partial ownership in airlines of nations as diverse as Malawi, Zambia, Mozambique, Democratic Republic of Congo (DRC), Equatorial Guinea, Chad and Djibouti and even more.

But routes outside the home continent are increasingly playing a bigger role, Dublin is a good example. Since June, 2015 an Ethiopian Boeing 787 flies four times weekly from Addis Ababa via the Irish capital to Los Angeles in both directions  with full traffic rights.

By the end of 2017,  Ethiopian had gained an additional one million passengers to and from Dublin in this way. Westbound flights from Addis Ababa to Washington-Dulles and Toronto also stop in Dublin to refuel.

“But now we have found means to fly non-stop with both the 777 and 787 between Addis and Washington, at least during some months,’’ Gebremariam says. “This saves customers about two hours of travel time and imposes only a small weight penalty on us, meaning we can’t sell all seats,”

An important part of Vision 2025 for the airline is to establish an axis of traffic from South America via Africa to Asia and Ethopian will add Buenos Aires to its network from March.

Other new international new destinations this year will be Chicago  in the uS as well as Geneva and Lisbon in Europe.

Also high on the priority list is Munich, hub of Star Alliance partner Lufthansa. Frankfurt is already one of Ethiopian’s main European gateways, having been served continuously for 60 years.

“We only want to go to Munich in cooperation with Lufthansa, but currently we are working to form a joint venture first on the Frankfurt to Addis route,” says Gebremariam.

Ethiopian has always been at the forefront of fleet modernization and the Vision 2025 goal of 140 aircraft has already been raised to 160 aircraft, with equal shares of wide-bodies and narrow-bodies.

Ethiopian is habitually the first airline in Africa to introduce the newest-generation jets on the continent.

This was the case with the Boeing 777-200LR (November 2010), 787-8 (August 2012), 777-300ER (November 2013) and most recently the A350 (September 2016).

With an average fleet age of less than six years, the airline also ranks in the top tier on a global level.

And modernization continues. A factor here is the elevation of the Ethiopian capital’s airport, 2,334 metres above sea level, which limits aircraft operations.

“We will order ten to 20 Boeing 777Xs until the end of 2018, a mix of -8s and -9s,” states Gebremariam.

“We delayed the 777X order because Airbus promised us the A350-1000, but then we saw the figures and it was clear the -1000 will not perform well out of Addis.

“The Boeing 777-300ERs will be replaced by the 777-9 with about 50 seats more, while the 777-8 will replace our 777-200LRs.”