Africa’s largest airline, Addis Ababa based Ethiopian Airlines, is spreading its wings after entering into a partnership with Ghana’s government to launch a new Accra based airline. The Star Alliance member is due to send several Dash 8-400s aircraft to Accra later in 2019. The as yet unnamed airline will initially focus on domestic routes.
Ethiopian lost a Boeing 737 Max in a crash outside Addis Ababa in March 2019 but the Ghanaian Government remains confident in Ethiopian Airlines and is proceeding with the deal initially inked in 2018.
A new beginning in Ghana
Ghana has been without a national airline since the collapse of Ghana International Airways in 2010.
With over 30 million residents, Ghana is Africa’s tenth biggest country. It has a stable democratic government, a burgeoning economy and abundant resources, making the country a bright spot on the African continent.
There has been significant new infrastructure at Ghana’s airports recently. This includes a new terminal at Accra’s Kotoka International Airport, a new terminal at Kumasi, and expansion and reconstruction at Tamale, Wa and Ho airport’s.
Opportunities lost in Africa
According to the OECD nearly 13% of the world’s population live in Africa, but they make up less than 3% of the world’s airline passengers. There are enormous opportunities in Africa but the African aviation scene is littered with the remains of collapsed airlines.
As we previously reported, Africa’s airlines have often been seen as ramshackle and uncompetitive outfits.
Aviation in Africa has long been curtailed by poor management, inefficient monopolies, high taxes and costly operating costs. The Centre for Aviation summarises the situation succinctly as one of “impotent government strategies and ongoing protectionism.”
The collapse of Ghana Airways in 2004 is an example. The Ghanaian government owned 60% of the airline that was crippled by rampant overstaffing and over USD$160 million of debt. Ghana International Airways was born out of the rubble.
The Ghanaian government now took a 70% stake in the airline and brought in Ralph Atkin, founder of Skywest Airlines, to run the carrier. Not even he couldn’t save the airline from debt and protracted legal disputes between its shareholders. Ghana International Airways ceased operating in March 2010.
But Ghana’s government says it has learned from past mistakes and the country is now ready for a new national carrier.
Ethiopian Airlines expands
Across the continent, Ethiopian Airlines has bucked the African aviation trend and been a sustained success story.
The airline has been operating for over 70 years. In the financial year 2017/18 it made a USD$245 million profit flying 112 aircraft to five continents and 22 domestic destinations. It has been a reliable go to airline for locals and many westerners jetting about Africa and has built a formidable and growing reputation.
A key factor in Ethiopian’s growth is its strategy of entering into strategic alliances with governments to revamp and relaunch their struggling flag carriers.
In 2013, Ethiopian brought a 49% stake in Air Malawi, the national flag carrier of Malawi. It was relaunched as Malawian Airlines. The remaining ownership was split between the Malawian government and local private investors.
Fast forward to 2018 and Ethiopian relaunched Zambia Air, buying a 45% stake in the defunct airline off the Zambian government. Also last year, Ethiopian entered into a three way partnership with Togo based ASKY Airlines and the Guinean government to startup Guinea Airlines.
Seeing a pattern here ? It’s a tried and tested strategy for Ethiopian Airlines that it’s now taking across to Ghana.
Will history repeat in Ghana?
Ghana’s government seems to have taken on-board its sorry history in running airlines.
There are no more majority shareholdings. In it’s deal with Ethiopian Airlines the Ghanaian government is retaining a 10% stake, Ethiopian is taking a 49% controlling stake and Ghanaian investors will have the remaining 31% stake.
Ghana is smart enough to allow Ethiopian Airlines to do what it does best – run an airline while the Ghanaian government concentrates on running the country.
It’s a clever move that should bring benefits for Ghana, its people and aviation in Africa.