The Reporter (Addis Ababa)
Kaleyesus Bekele
1 December 2007
interview
Addis Ababa — Emirates airline is one of the fastest growing international airlines in the world. The airline operates in 97 destinations with 110 aircraft.
The airline order list shows that it placed orders for 246 wide body aircraft with a total value of 60 billion dollars. The airline started to fly to Addis Ababa in March 2006. Kaleyesus Bekele of The Reporter spoke to Mr. Sudhir Achipra, manager of Emirates' office in Ethiopia. Excerpts:
Tell us about the establishment of Emirates and its achievements
Emirates was established in 1985 and it is wholly owned by the government of Dubai. We have now grown into an airline which operates 110 aircraft. We fly to 97 cities in 61 countries in six continents. Our growth is very structural and well planned. We have grown slowly but steadily. What is important in our growth is that except in the first three years of our operation every single year after that we have been making profit. It is a profitable company.
Emirates is known for its large number of aircraft. Can you tell us about your fleet acquisition program?
Recently, at the Dubai air show we placed the largest order by any airline. We placed an order for 143 aircraft at a cost of 34.9 billion dollars. As of now the total aircraft that we have in order is 246. All of them are wide body which is worth 60 billion dollars. Such a huge and massive investment is a reflection of our confidence in the future of air transport and, of course, our confidence in our home market, Dubai. In the next five to ten years Dubai will be one of the largest cities in terms of the tourist point of view. Our growth [the company's growth] is the reflection of the growth of Dubai.
How many airbus 380 did you order?
We have ordered 58 A380s.
You are making a huge investment in aircraft. Is the money coming from the company's own source or is the government financing the purchase.
Every cent of the equity investment that we are doing is funded by the airline. It comes from our own financing programs. Emirates is an airline sitting on a net cash of over three billion dollars. Because of our profitability and steady growth we have been able to come up with best financiers available in the world to finance the aircraft purchase. We do not get a single birr from the government.
What about your annual profit?
We have just declared our profit for the first six months of April-September 2007. Our profit for the first six months of this financial year is 643 million dollars, which is an improvement of 99 percent over the same period last year. We actually doubled our profit. This again is the reflection of the demand for our service. Very few airlines in the world operate with a net operating margin of 30 percent. We are at that level.
Can you tell us about your annual passenger traffic?
Our passenger traffic has increased by 30 percent. In the first six months of the current financial year we have transported 10.3 million passengers.
You are expanding your flight routes. Tell us about your route expansion program.
As of today, we operate in 97 cities. I think we are the only airlines which flies to all the six continents. Our route expansion is a very carefully-studied exercise. We study routes based on the fact that brings us immediate revenue. We look at routes, economic growth and booming markets. We study how to connect people. For example this year since April 2007 we launched five new destinations. We will launch a non-stop flight to Huston as of December 3. The new routes we opened in Latin America and North America is important to Ethiopia. We now fly to Sao Paulo and Toronto. If you want to fly to Sao Paulo from Ethiopia you don't have to go to Europe. You can fly to Dubai and then directly to Sao Paulo. Our new route to Toronto is picking up. In the eastern part of Canada there are about 50,000 Ethiopians. All the Ethiopians living there can fly to Addis Ababa via Dubai.
Emirates is increasing its presence in Africa. Tell us about your flight service in Africa.
Last year we started to fly to Abidjan and Addis Ababa. Africa contributes up to eleven percent of the total revenue we make. Africa is a very important market for us. We will open some more destinations in Africa in the near future. But I can't tell you now. At the moment we fly to 12 destinations in Africa.
Emirates began service in Ethiopia in March 2006 with three weekly flights. Soon after the launch, it increased the flights making it daily. Is the market promising?
Definitely. We are very happy with what we are doing in Ethiopia. We do not waste too much time studying competition. We rather study our own services and increase our product. We work to add more value to our product. In Ethiopia, specifically speaking, the market has been growing on a double digit figure every single month that we have been there. There is enough market for all of us to get a handy share. When we came to Ethiopia, Ethiopian Airlines was flying daily to Dubai. Today Ethiopian flys two flights a day to Dubai. It shows that there is enough market for all of us. Otherwise how can Ethiopian double its flights to Dubai.
What is Emirates' contribution to Ethiopia?
Emirates contribution to Ethiopia is long-term. To start with after we came here we created job opportunities for 35 Ethiopians. We offer trainings for our local staff. We offer job opportunities in other countries. Our local staff will have the opportunity to work in other countries. We are contributing to the economic development in Ethiopia by providing cargo services. We are exporting flowers and meat. We are helping the economy to generate more money because we are providing more space. Because of our presence Ethiopian flowers are reaching more destinations like Istanbul, Moscow and Japan. Ethiopian does not fly to those countries. Since we fly to 97 destinations we bring many people to this country. While I was talking to officials of the Sheraton Addis they told me that after Emirates came to Ethiopia, they got customers from 32 new different nationalities. Emirates fly to 97 cities and Ethiopia is one of the destinations that is being promoted in 97 cities. That is a free complementary promotion. Every time we expand our office here the local contractors get contracts. The facilities you look at our office are done by local contractors. Emirates is supporting an orphanage here. We are looking after the Kidane Mihret orphanage. We set up a library for the orphanage. We provided 5000 books, six computers, TV and Video player. We will continue to help the community in various aspects. We recently sponsored a golf tournament. We help NGOs by allowing them excess luggage to bring goods such as blankets to this country. We explore not only business opportunities but also ways to help various communities. I am happy to tell you that 70 percent of our passengers [on our Addis Ababa route] are Ethiopians. This shows the confidence of the people in our service.
Critics say Emirates provides services in Africa with dumping fares to drive African carriers out of the market. What is your response?
This is a common allegation. Because Emirates is not owned by shareholders and it is owned by the nation of Dubai people assume that it is a subsidized airline. As I told you Emirates is a profitable airline and it does not get any subsidy. Take Ethiopian as an example. As I told you earlier, after we came here Ethiopian boosted its service to Dubai. If we were here to drive out African carriers by offering dumping prices, how would that happen. After we came here more airlines are coming. Our strategy, as I told you, is not to look at competition. We have a world class product which has to be sold by price. Our idea is to offer the right price and to ensure the customer gets value for his money. Our intention is not to stir the competition. There is enough market for all of us.
So you are saying Emirates is not a subsidized airline.
We do not have a subsidy. Not even a single cent. Emirates is funded by its own financial resources. In fact we are giving back money to the leadership. Last year we paid back 109 million dollars to the leadership.
Then what is the secret behind Emirates' success?
It is customers confidence. We offer extremely high end service at a very good price. Emirates has got Dubai, a city with high tourist inflow. Many people want to visit and invest in Dubai. And it is easy for us to catch those people.
Do you have final words?
I have to compliment the Ethiopian Airlines, the leadership of this country and the business community who helped us in setting up our office here. I am very confident that the Ethiopian market will be one of the major markets in Africa in the coming years. Because of the stability and business is booming. The Ethiopian market is very important to us and Ethiopian customers know what they want. I have a very good feeling about this country.
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