FLUG REVUE May 2005: Ethiopian Airlines

May 2005

ETHIOPIAN SEES GOOD PROSPECTS

By Raimund Stehmann/SST

Girma Wake, CEO of Ethiopian Airlines (ET), describes with relief how after three difficult years global tourism revived with record figures in 2004. “When the dust has settled, the total revenue of the industry should stabilise at around $460 billion world-wide. Africa's share of this is $11 billion, headed by South Africa, Tunisia and Morocco. This share may appear small, but since the 1970s Africa's growth has risen from 1.5 percent to 4 percent. That puts us ahead of many established destinations in Europe. We at Ethiopian Airlines want to further increase Africa's market share and, in collaboration with governments and private organisations, we are planning to carry many more travellers on this wonderful continent.”

Boeing 767

This objective requires above all a high degree of flexibility, accurate analyses of the shifting traffic flows between Africa and the rest of the world and rapid adaptation to constantly changing circumstances. Thus, at Ethiopian Airlines every individual destination and route is reconsidered prior to every change in the flight schedule. For example, before the civil war in Somalia ET flew to Mogadishu from Addis Ababa. When it resumed flights to this destination, analysis of the passenger flows suggested that it would now be more profitable to fly to Hargeisa in the north of Somalia (not least on account of the still tense situation around Mogadishu). Similarly it transpired that many of the passengers who were travelling from Addis Ababa to Beijing or Hong Kong had booked a connecting flight to Guangzhou with another airline. Guangzhou was therefore quickly added to Ethiopian Airlines' route network, making it the third flight destination in China. The airline is also considering flying to Rio de Janeiro and Sao Paulo in the future. For Ethiopians, both cities are actually averagely interesting flight destinations, but not so to Ethiopians Airlines, which is hoping to pick up foreign passengers, especially from Luanda.

Tewolde Gebremariam, Executive Officer Marketing and Sales, stressed in a background interview with FLUG REVUE that in its strategic planning the airline was not allowed to think of itself just as originating in Ethiopia or Addis Ababa, but had to pursue Pan-African objectives.

This coincides, moreover, with the requirements of a customer group with particularly good purchasing power, businesspeople and diplomats. It was back in 1963 that Ethiopia's emperor Haile Selassie founded the Organisation for African Unity (OAU), which is still based in Addis Ababa today. Again, the United Nations Economic Commission for Africa (ECA) founded in 1958 is also situated in Ethiopia's capital city. As a result, a lot of diplomats and ambassadors of the OAU and ECA feature among the customer base of the airline, which has operated for decades under the catchphrase, “Bringing Africa together”.

Since the first jet was acquired in 1962, the huge distances on this vast continent have become faster and easier to overcome. Initially Ethiopia concentrated on building up its African route network. It flies to more destinations on the continent than any other airline, both on the east-west and also the north-south axes.

The second important pillar is the “VFR” traffic. This abbreviation has nothing to do with visual flight rules (VFR), but stands for “visiting friends and relatives”. Here it is a matter of Africans and non-Africans who live outside the continent and come to visit friends or relatives in Africa, or whose friends or relatives leave the continent to visit them. These passengers also make use of the dense route network and the possibility of transferring at Addis Ababa. Again, the shopping tourists and traders who change planes in Addis Ababa for flights to Jeddah and Dubai especially should not be underestimated.

A third, highly profitable sector which also plays an important role is air cargo. It may be surprising to many, but apart from a high volume of transit freight passing through Addis Ababa, the primary commodities traded are agricultural produce such as cut flowers (almost exclusively roses) and pulses that Ethiopia exports mostly via Ostend and Amsterdam, and meat exports from Ethiopia to Jeddah and Dubai. As Ethiopia exports far more goods than its imports, the cargo aircraft are frequently almost empty on the return journey to Addis Ababa.

On the other hand, Ethiopian Cargo no longer flies to Frankfurt. According to Tewolde Gebremariam, it simply became “too expensive”. Since January, the company has been flying to Brussels instead of to Ostend. This has the advantage of not only being a DHL hub, but also it is a possible future passenger destination. The entire freight area is to be further expanded. Only at the beginning of March ET announced plans to connect 15 destinations in Africa with scheduled cargo flights based on a fixed flight schedule. A new cargo terminal that will have an annual capacity of 104,000 tonnes of air freight is currently being built at Addis Ababa airport. Three Boeing 757's from the passenger fleet are to be converted to freighters in parallel.

On 19 March, a 707 cargo plane (9G-IRL) on lease from Cargo Plus Aviation of Ghana, which was flying for Ethiopian Cargo, crashed during its second attempt to land at Entebbe in poor weather. The five-person crew survived uninjured. By contrast, the permanent Ethiopian fleet has a remarkable safety record stretching back for decades. The last total write-off of a DC-3 (also without fatalities) occurred in 1963.

The experienced airline can look back on a particularly long aviation tradition. The first aircraft landed in Addis Ababa in August 1929. Prior to that, the only means of transport had been horses, mules and donkeys and the railway line between Addis Ababa and Djibouti. The aircraft was quickly discovered to be the ideal means of transport for the country.

It was now possible to travel great distances without problems. There was no need to build any bridges across the deep ravines between the extensive high plateaux, and after the heavy rain season it was no longer necessary to repair thousands of kilometres of roads. The development of flying suffered a setback during the years of the Italian occupation, between 1935/36 and 1941. In 1945 the Ethiopian Air Force was founded, and on 30 December of the same year Ethiopian Air Lines, Inc. (EAL), known since August 1965 as Ethiopian Airlines Enterprise, was set up.

To this day the dense domestic flight network is heavily used. Within Ethiopia, services are provided to no fewer than 26 airfields, some of them with unpaved landing areas, others well-equipped, modern airports, some with several flights a day and others with just one service per week. Utilisation on domestic routes is around 90 percent.

In 1946 the first international routes were opened to Cairo, Khartoum, Nairobi, Djibouti and Aden. Ethiopian Air Lines thus performed a pioneering role in Africa, and the present Ethiopian Airlines continues this tradition to this day. The method used to start up the Convair 340 in those days must seem quite spectacular to people today: with high utilisation and a full fuel load, booster rockets (Jato) would sometimes be used to assist the twin-engined piston aircraft in taking off, despite the extremely hot climate. In 1962, ET became the first civil operator to employ a jet, the Boeing 720B, in the entire African continent, in 1985 it was the first to fly the 767 and it now intends to be the first African customer of the future 787.

Boeing unveiled its latest aircraft programme in Addis Ababa (ADD) only in October 2004. The 787 appears to be optimally suited to the altitude of Addis Ababa airport, 2,326 metres above sea level, and the African heat, on account of which long-haul flights currently take place only in the evening or overnight. With the 787, all the ET destinations could be serviced non-stop with a full load. This explains why the airline signed a Memorandum of Understanding for five firm orders and a further five options worth $1.3 billion in February 2005. This would be the biggest order in the company's history.

Its pioneering role within Africa is also paying off in the areas of maintenance and pilot training. Since 1967 it has trained 2,107 mechanics, 1,410 of them Ethiopians, in two-year courses in its own ICAO-licensed training centre. On 18 March, the latest 21 graduates completed their courses. The 12 most recent pilots to qualify, 11 of them required to satisfy the airline's own requirements, finished their 22 months of training at the end of February. A lot of airlines in Africa and the Middle East have their Boeings maintained in Addis Ababa.

Last year ET began an extensive fleet renewal programme, supported by the American Import Export Bank. Four out of six new 737's ordered with blended winglets and two out of six new 767's have now been delivered. – good reason to update the corporate image. The new cabin colours are no longer in earthy tones, but a lot brighter. The new 737's are equipped with in-flight entertainment systems and the 767's even have individual screens on the seatbacks. The external paintwork and the advertising slogan have also been changed. Instead of “Bringing Africa together”, it is now “Africa's link to the world”.

But despite its unique combination of a dense African network and intercontinental routes that connect over 1,000 pairs of cities every week and despite the relatively young fleet, ET is still not a member of any alliance. Preliminary discussions have been conducted with the Star Alliance, but so far they have not produced any tangible results. The airline would also be interested in joining oneworld. Codeshare flights are offered with only SAA. However, SAA suspended its flights to Addis Ababa the last time it updated its flight schedule.

This could change once the management consultants from Ernst & Young and the aviation specialists of SH & E have finished their work. A two-year consultancy project that entails scrutinising the airline is due for completion at the end of the year. As well as medium-term development planning, the consultants are expected to come up with a long-term strategy for the next 15 years.

From page 20 of FLUG REVUE 5/2005

Last updated 14 April 2005

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