19 August 2018

Africa: Ethiopian Airlines Poised to Take Over Africa's Skies

Photo: The Observer
Ethiopian Airlines' Airbus A350XWB (file photo).

Ethiopian Airlines has signed joint venture agreements and business partnerships with at least 14 countries on the continent as part of its Vision 2025 growth plan, under which the carrier hopes to become "the leading aviation group in Africa."

From Zambia and Malawi in the South, Chad and soon the Democratic Republic of Congo in Central Africa and Togo, with a likelihood of Nigeria and Ghana in the West, the carrier is seeking to dominate the continent's aviation space.

The airline bought an average of one plane per month last year. It is expected that the new Bole hub will link Addis Ababa to about 70 cities on the globe, 60 of them African.

The state-owned carrier is also banking on its maintenance, repair and overhaul business to offer auxiliary maintenance services to African airlines that it has taken under its wing.

"We should see more collaborations from African airlines in order to withstand the stiff competition from the non-African carriers that are now carrying more than 75 per cent of the traffic. It is only through such collaborations that we can guarantee the existence of homegrown airlines in the next decade," said group chief executive Tewolde GebreMariam, while announcing the airline's results for the past financial year.

Profits hit $233 million, up from $229 million, with revenue streams growing 46 per cent to $3.2 billion, from the 10.6 million passengers that the airline ferried across the globe.

The airline already has running maintenance work contracts with two Nigeria-based carriers, Arik Air and Medview Airline, which are being undertaken by its maintenance repair and overhaul business unit.

Joint ventures

In June, the airline said it was in talks with Chad, Djibouti, Equatorial Guinea and Guinea to set up carriers through joint ventures.

Ethiopia and Chad have agreed on a 49:50 venture for the national carrier, with Ethiopian getting the minority stake. The announcement is expected in October.

In Southern Africa, ET already has a joint venture with the Malawian national carrier.

In January, it entered into a similar agreement with the Zambian government to relaunch their national carrier with a 45 per cent stake, with a cash injection of $16.5 million expected to see the Lusaka-based carrier take to the skies in October.

"We are also planning to establish a wholly-owned airline in Mozambique, and have signed a contract to start an airline in Guinea. We are also doing business with Congo Airways, through a technical agreement," said Mr Tewolde.

In West Africa, the continent's biggest and most profitable aviation market, ET has been in partnership with Togolese carrier Asky Airlines.

ET is also doing business with Air Cote d'Ivoire.

"We have taken a 49 per cent stake in the national airlines for Guinea and have taken over management of CEIBA International in Equatorial Guinea," said Mr Tewolde.

However, as the airline spreads its wings across Africa, critics say it is pushing a monopolistic agenda, one that will stifle its competitors, who are already struggling to maintain a foothold on the sector.

"African governments need to be careful not to create an aviation monopoly on the continent. Ethiopian Airline has a fantastic growth strategy but risks becoming a continental monopoly, which would be bad for competition," said Nicanor Sabula, chief executive of the Kenya Association of Travel Agents.

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