The fastest-growing airline in Africa, Ethiopian Airlines, is extending its market reach in West Africa and South America.
The national flag carrier a few years ago established its second hub in Lomé, the capital of Togo, which will enable it to strengthen its market share in West and Central Africa. Ethiopian bought a 40 percent stake in the Lomé based private airline, ASKY Airlines, that became operational in 2010. Kaleyesus Bekele traveled to Lomé and observed the airline business in the region.
African skies are dominated by non-African airlines. Eighty percent of the African passenger traffic is carried by non-African carriers. Mega-gulf-carriers are flexing their muscles and whipping out African carriers out of the market. The carriers from the Middle East are offering low fares that African airlines can not afford. Backed by petro-dollars the middle east carriers are making huge investment in their fleet and they are dumping capacity in Africa.
They are also investing in African airlines which feed their national airlines. Gulf carries are buying stakes in cash strapped African airlines that serve as feeder regional airlines. They are also siphoning off trained manpower from African carriers. Emirates, Qatar Air, Gulf Air and Etihad serve many destinations in Africa with low fares. The Dubai-based low-cost carrier, Fly Dubai, is offering minimal fares that lure away customers from traditional airlines. Gulf carriers are not the only ones but other mega carriers from Turkey and Europe are stifling African carriers. Turkish Airlines flies to almost all major cities in Africa. Air France, Brussels Airlines, British Airways and Lufthansa have a strong presence in Africa.
Etihad has bought 40 percent stake on Air Seychelles. KLM has a 29 percent stake in Kenya Airways. Turkish Airlines is holding talks with Uganda authorities to establishing a regional airline in Kampala. The European budget airline, Easy Jet, recently established a low-cost regional airline in Tanzania. Ethiopian's arch rival, Kenya Airways, has invested in Precision Air of Tanzania. Unable to withstand the stiff competition many African airlines have been liquidated in the past few years.
In order to cope with the dynamic aviation industry Ethiopian Airlines is expediting its growth. Currently, the airline is growing at a rate of 25 percent. The national flag carrier is acquiring new fleet, opening new routes and making a huge investment in its aviation academy. Recently, it transformed itself into an aviation group comprising seven profit units. As part of its multi-hub strategy, in 2010 it established the second hub in Lomé. Recently, it bought a 49 percent stake in Malawi Airlines and it is in the process to open the third hub in Blantyre. The management of Ethiopian is also in talks with the Democratic Republic of Congo government officials to invest in a regional carrier in that country and establish the fourth hub in Central Africa. West Africa is a stronghold of Ethiopian Airlines. For over 30 years, Ethiopian has been serving a number of West African destinations.
Ethiopian launched its first flight to Lomé in October 1989. Seblewongel Azene, area manager in Togo, told The Reporter that Ethiopian Airlines has changed a lot in the past 25 years. "Especially since 2004-2005 the airline has expedited its growth. The airline currently has 78 destinations. This has an impact on every regional office. We used to operate twice-weekly flights between Addis Ababa and Lomé. Now we have a daily flight between Addis Ababa and Lomé." Seblewongel said that West and Central Africa are under-served markets. Many state-owned and private airlines in West Africa have been liquidated for various reasons. Following the liquidation of Air Afrique, a pan-African airline established by 11 West and Central African countries, a serious gap was created in the air transport service in the region.
"In order to fly from one West African country to another one has to transit in a European destination. Ethiopian Airlines has been trying its best to fill in this gap," Seblewongel said. The area manager says following the establishment of ASKY, Ethiopian has increased its presence in West and Central Africa. "ASKY is operating as a regional carrier in West and Central Africa. Ethiopian is its strategic partner. Today, in partnership with ASKY, we serve every city in West and Central Africa. We are connecting East and West Africa. We are accessing every small market in the region through ASKY. ASKY feeds Ethiopian long haul flights."
According to Seblewongel establishing hubs in different regions enable Ethiopian to access small markets. "It helps us to develop regional markets." In addition to establishing the Lomé hub last July Ethiopian opened a new flight service to Brazil and extended its market reach to further West to South America. The flight to Sao Paolo and Rio de Janeiro is operated with Boeing B787-8 Dreamliner aircraft with a stopover in Lomé. Brazil, a member of the BRICS, is a strong emerging economy. The Brazilian government has shown a keen interest to trade with African countries. Brazil is opening embassies in different African cities including in Addis Ababa.
The government of Brazil recently signed a loan agreement amounting to 1.6 billion dollars for the Ethiopian national railway project. Brazil's leading mining company, Vale, has ventured into gold exploration project in Ethiopia. More Brazilian investment is coming to Africa. African countries, too, want to trade with Brazil. According to Seblewongel, Ethiopian is trying to assist this growing trade between Brazil and Africa. Ethiopian Airlines wants to tap into the South American market through Brazil. "We have flights to Asia. We have 40 destinations in Africa.
Now we are flying to Brazil. So we are connecting Asia, Africa and South America. And if you see a map it is a straight line all the way from Asia to South America," she said. Brazil has a historical link with West African countries. "A large number of the Brazilian population traces their roots to West Africa. They were taken to South America during the slave trade. So now these Brazilians are tracing their roots to West African countries.
There is an annual festive season in Brazil as well as in West African countries. The Brazilians are trying to reinstate this missing link with West Africa. So Ethiopian, in partnership with ASKY, is linking West Africa with Brazil. ASKY collects passengers from different West African countries to Lomé and Ethiopian takes this traffic to Brazil. Again from Brazil Ethiopian bring, ,passengers to Lomé and ASKY takes these passengers to different West African destinations." ASKY collects passengers from different West African countries that want to travel to Asia and bring them to Lomé. Passengers going to Singapore, China, Thailand, India, Malaysia etc will take ASKY to Lomé and from Lomé Ethiopian will take them to Asia via Addis Ababa.
According to Seblewongel, Ethiopian and ASKY hold joint promotion campaign throughout West Africa. "This helps both airlines to save resource. The partnership is fruitful." Speaking of competition Seblewongel said Ethiopian does not have a strong competition on the Lomé route. "We have a very strong network. We have the largest number of destinations in Africa. We connect Asia, Africa, South America and Europe. We have the best connecting flights from east to west. So we do not have a strong competition on this route."
But in close proximity to Lomé major Middle East carriers like Emirates and Etihad serve Accra, Lagos and other major destinations. All major airlines are expanding their market reach. Ethiopian Airlines, too, is expanding its route network in all directions. "To cope with the stiff competition coming from mega international airlines we are renewing our fleet and expanding our market reach," Seblewongel said. "There is always competition. There is a global and regional competition. But when it comes to the Lomé route we are the strongest operator. ASKY helped us a lot to be successful on this route. We have the right business strategy that enables us to withstand the stiff competition coming from mega international carriers. The competition motivates us to work even harder."
The Lomé airport, Gnassingbé Eyadéma International Airport, is a small airport. However, the Togolese Airport Authority is now building a new passenger terminal, additional aprons and cargo warehouse. Primarily, Ethiopian established its second hub in Lomé with the view of strengthening its passenger flight service. However, recently, Ethiopian established a cargo hub in Lomé. It has deployed a dedicated Boeing B737-400 freighter aircraft. "We are developing the cargo market," Seblewongel said.
Ethiopian has 24 scheduled international cargo destinations. The airline currently operates six dedicated freighter aircraft. "We have a strong cargo network. We bring cargo from all over the world and distribute them to different West and Central Africa," Seblewongel said. "The region has a big cargo market potential." Ethiopian wants to further strengthen its regional hub in Lomé and serve the region in a much better manner. The airline hopes to boost the cargo service as well as the passenger flight service in the region. Once the Lomé airport is approved by the US Federal Aviation Administration Ethiopian wants to launch direct flights to the US from Lomé.