Ethiopian Airlines Aim to Be Africa’s Dominant Carrier by 2025

Ethiopian Airlines Dreamliner
Ethiopian Airlines’ new dreamliner

AFRICANGLOBE – Ethiopian airlines the state-owned carrier, founded 67 years ago, has come to symbolise a modernising African country that is still among the poorest in the world but is nonetheless its third-fastest-growing economy.

With average growth of 25-30% over the past seven years, Ethiopian Airlines has emerged as the fastest-growing carrier in Africa.

It is consolidating its position as the flagship carrier of a continent that is witnessing a renaissance after years of political instability, civil wars, famine and economic hardship in the post-colonial era.

The airline is betting heavily on Africa, as vividly demonstrated by the goals and dreams of the Vision 2025 plan, now in its third year of vigorous implementation.

By 2025, the carrier aims to fly 18 million passengers, carry 820,000 tonnes of cargo and serve 90 international destinations and 26 domestic cities using a modern fleet of 120 aircraft such as the Boeing 787 Dreamliner and the future Airbus 350, with manpower growing to 17,000.

This means that by 2025, the airline will generate US$10 billion in revenue and nearly $1 billion in profit.

That would be a leap from its 2012 rundown: 5.1 million passengers carried on 57 aircraft to 72 international and 17 domestic cities, $1.8 billion in revenue, $39.02 million in net profit and 7,000 employees.

Chief executive Tewolde Gebremariam reckons that Vision 2025 is ambitious but certainly achievable, thanks to the huge air transport needs resulting from the surging economies of the African continent.

“We have sound and solid assumptions for growth, so it is a matter of us positioning ourselves properly for such growth,” he said in an interview.

The backdrop of the airline’s bullish growth plan includes Africa’s more than 1 billion (mostly young) people, land mass larger than China, India, Europe, the US and Mexico combined, and wealth of natural resources (e.g. 10% of the world’s oil reserves, 40% of its gold and 80-90% of its chromium and platinum).

Good governance, peace and democracy have contributed to Africa’s dynamism, with continental GDP expected to reach $2.6 trillion by 2020.

Instrumental to the airline’s lofty goals is the geographic location of its main hub in Addis Ababa, the capital city located at the intersection of the fast-growing trade lanes between Africa and the BRIC countries (Brazil, Russia, India and China).

African vibrancy has attracted attention. Foreign direct investment in the continent is expected to reach $56 billion in 2015, up from $38 billion last year.

The airline’s CEO envisages that at least half of air travel to and from Africa will be served by indigenous African airlines, up from a meagre 18% slice at present.

Pillars of Growth

Mr Gebremariam says the carrier’s Vision 2025 is based on four pillars.

The first pillar involves a fleet expansion and modernisation, highlighted by the introduction of the A350, the next-generation wide-body commercial jet now in flight testing, with an order of 14 scheduled for delivery starting in 2016.

Ethiopian Airlines was also the first African carrier to deploy the Dreamliner in 2012 and is now flying four out of the 13 it ordered, with the last one due for delivery in 2016-17.

The second pillar is infrastructure: expanding its hub at Addis Ababa Bole International Airport, where additional parking space for aircraft has recently been made available and the next phase is to expand the terminal by 2015.

Looking ahead to 2025, there will be a completely new airport about 60 kilometres south of the current facility.

A new cargo terminal will also be built to expand capacity to 1.2 million tonnes a year from 250,000 tonnes now, plus maintenance hangars in the next few years to improve aircraft utilisation.

The third pillar is human resources, which saw the airline spend about $50 million in the last few years to expand its Aviation Academy enrolment from 200 trainees a year to 1,000 (with an ultimate goal of 4,000).

The fourth pillar involves best practices, processes and systems that tie the other pillars together and ensure productivity and efficiency.

African Hub

While Gulf carriers like Emirates Airline are successfully developing the Middle East as a new global hub, Ethiopian Airlines believes Addis Ababa has competitive advantages in its own right to be an air hub for the African continent.

Ethiopia’s geographical position allows Ethiopian Airlines to better connect Africa with Asia, North and South America, Europe and the rest of the African states, says Mr Gebremariam.

The carrier is stepping up its global reach, and the immediate plan calls for flights from Addis Ababa to Manila, Ho Chi Minh City and Sao Paulo, with Jakarta, Tokyo and Australia on the horizon.

As of last month, the airline served nine cities in Europe and North America, in addition to 18 destinations in the Middle East and Asia, including Bangkok.

With the influx of Chinese investment and business activity in Africa, it sees the China-Africa connection as the strongest market both now and in future.

The carrier serves three Chinese destinations _ Hangzhou, Guangzhou and Hong Kong _ and is keen to add Beijing, Shanghai and Chongqing to its network as soon as next year, said Mr Gebremariam.