When we say the phrase ‘African airlines’ you might conjure up some images of a ramshackle group of ex-Russian planes or some obscure middle eastern carrier that couldn’t make it in the Gulf states. However, this preconceived notion is not only incredibly archaic, it could not be further from the truth when considering Ethiopian airlines (Called just Ethiopian locally).
They are a powerhouse of the African airline scene and the flag carrier for their named nation. They have been running since the end of the second world war, they fly to 125 destinations (20 of which are domestic and the furthest international being Chicago, Jakarta and Geneva) and are Africa’s largest airline. Last year they carried over 10.6 million passengers (a 21% increase over last year) and that is set to continue.
Ethiopian currently has a fleet of 108 planes (A favourite being the single-aisle Boeing 737), with another 65 planes on order. They are also the third African airline to become a Star Alliance member, being invited and mentored by Lufthansa in 2011.
Their expansion knows no bounds, planning to launch four new airlines (yes, four (4)) across Africa before the end of this year. They are to be launching and operating in Chad, Guinea, Mozambique and Zambia (Ethiopia is working with the Zambian government to relaunch their national carrier with a 45% stake).
Financially they are a safe bet, earning 6.8 billion Ethiopian BIRR ($245 million UD), while operating revenue jumped by 43% over the previous fiscal year to 89.1 billion BIRR ($3.23 Billion USD).
“It was an exceptional year for Ethiopian with record performance in financial, operational, commercial and customer service areas,” Ethiopian CEO Tewolde Gebremariam
How are they doing it?
The key reason for their impressive growth is their 15-year roadmap that strategically plans their growth. This includes an expanded fleet and upgrading their hub airport for an improved capacity (cargo and passenger) and improved customer experience. It has been said that some of this funding is from China. Additionally, they are wholly owned by the Ethiopian state, affording them flexibility and expansion not seen outside the Gulf airlines. This starts by being based in the hub of Bole International Airport in Addis Ababa, which, the city, is one of the world’s fastest-growing economies.
They also have been implementing a “very heavy cost-cutting program,” targeting an annual cost savings of 10%-20%, without sacrificing jobs or growth. A goal to become leaner and meaner.
They have attributed their success to running the state-owned airline like a private-public business, with profit and loss, rather than African competitors who see their airlines as a personal airline fleet they can play with at their tax-payers expense.
They are also betting heavy on the African Union Single Air Airline Initiative, multiple countries plan to streamline the process for airline firms in Africa to operate without too much bureaucracy (much like how the USA has one certificate for the whole country). They have the most to gain and have been a vocal member (with their government’s support).
We also need to look at Africa itself; Unlike the USA with its extensive highway interstate system, or Europe with its network of rail, Africa lacks a robust ground-based logistics network. It contains 54 fully recognised sovereign states (countries), nine territories and two de facto independent states with limited or no recognition. They also have the worlds 2ndlargest population and 2ndlargest continent. These factors make Africa the perfect region for air travel and the ultimate growth area for aspiring airlines.
“This performance is all the more exceptional given the very tough operating and competitive environment in Africa, where jet fuel price, our main cost driver, has soared during the year and is on average 30% more expensive in Africa, our home market, than in the rest of the world, putting the continent’s carriers at a severe competitive disadvantage.” Ethiopian CEO Tewolde Gebremariam