Ethiopian Airlines Dominating the Skies with Zero State Funding
March 9, 2019 (Ezega.com) - On the 15th of February, one of Ethiopian Airlines’ 111 modern aircrafts touched down at Bole International Airport (BIA) in Addis Ababa, from the Jomo Kenyatta International Airport (JKIA) in Nairobi, Kenya.
The average flight duration was about 1 hour 55 minutes, covering 1164 kilometers, at an average speed of 606 kilometers per hour.
Upon touch town at Bole, around 204 passengers alighted the aircraft and were driven to the baggage collection point to collect their luggage, and then proceed to the customs area for clearance. This is the routine procedure at the airport.
Presently, more than 31,000 passengers traveling to and from almost 120 destinations across the globe go through the same routine procedure at BIA. This amounts to about 930,000 monthly travelers, translating to 11 million per annum, marking a tremendous growth from just over three million in 2011.
None of the other African national carriers has experienced the level of success achieved by Ethiopia Airlines. In fact, the major national carriers in the continent have been flying on debts and losses for the last seven years, despite huge financial input from their respective governments.
Contrary to media reports, the national carrier doesn’t receive a penny from the national government.
In an interview with Tuko, the Airlines’ Chief Executive Officer revealed they don’t receive money from the government. “Anyone can verify this from our annual reports which are in the public domain,” said Tewolde GebreMariam, the man at the helm of Ethiopian Airline unmatched momentum.
He further revealed the national carrier is audited by different global and independent auditors who can confirm the government doesn’t contribute a single cent to the carrier.
GebreMariam is a veteran in the aviation industry, who’ve received different accolades for his unrelenting input. Among them is the African CEO of the year award, the Most Influential People of African Descent award, and the Best African Business Leader award.
Before being appointed the CEO, he’d served the national carrier for 26 years, bringing his total years with the airline to 34.
He previously served at the cargo handling division in different capacities, which culminated in him being appointed the regional director for India and South East Asia based in Bombay. He was later transferred to Jeddah as the area manager for Saudi Arabia.
He was transferred to New York as the Area Sales Manager when the airline launched direct flights to the U.S. He came back to Ethiopia in 2004 and joined his predecessor Girma Wake, who was set to retire.
Girma recalled him to head the marketing department and later on, he became the Chief Operating Officer (COO). In his new role, Tewolde was in charge of over 80% of the airlines' operations. This prepared him for the eventual takeover.
Tewolde’s New Vision:
Tewolde took over from Girma on the 1st of January, 2011 and prepared the airline’s 15-year vision 2025 framework. This strategy was informed by the availability of two important future events; the 21st-century airplanes---the Boeing 787 Dreamliner ad A350-900 from the Airbus family---as revealed by the CEO.
“We needed time to understand new technologies in the aviation market,” he said.
Under the vision 2025, Tewolde targeted to grow the carrier’s revenue from US$1 billion in 2009/2010 to US$ 10 billion, increase the fleet size to 112 from 40, increase the number of passengers from 3.8 to 17.8 million, and increase international destinations from 60 to 92 by 2025.
People thought he was overambitious, but eight years later the carrier has exceeded expectations. The airline’s annual revenue has grown from US$ 1 billion in 2010/11 to close to US$4 billion in 2017/18 Financial year.
The number of passengers increased from 3 to 11 million, and freight tonnage shot up to 400,339 tons from 225,897 in 2010/11. Furthermore, Ethiopian airlines now serve 118 international and 21 local destinations.
Ethiopian Airlines has since overtaken Dubai as the main gateway to the continent with a fleet size of 111 modern aircraft with modern technologies.
“In the airline industry, if you make a mistake in fleet decision, it becomes very hard to succeed. So we made the right decision in the fleet. We had to balance…we needed to have all kinds of short and long-range fleet,” said the airline’s Group CEO.
All the aircrafts are serviced and maintained at Bole International Airport, where the carrier also services airplanes from countries like Nigeria, Angola and Equatorial Guinea at a small fee.
Revamped and New Infrastructure:
The carrier’s main hub has undergone major expansion, with a brand new terminal already operational. It has an annual capacity of 22 million passengers, making it the largest in Africa, overtaking Oliver Tambo Airport in South Africa that handles 21 million passengers.
The revamped BIA was constructed with the services and amenities befitting a 21st Century airport, including a 5-star hotel, the largest in the country. The Ethiopian Skylight Hotel is only five minutes from BIA and offers affordable packages.
Diversifying into the hotel business, increasing fleet size, improving infrastructure and human resource development are all included in the airline’s vision 2025 plan. All these successes have been realized without any financial assistance from the government.
Indeed if state input could bring about the successes realized by Ethiopian Airlines, then it would have worked for KQ and SAA, which were owned by their respective governments before slashing majority shares in a public-private partnership. Neither of the two airlines has made profits in the last seven years.
The South African national carrier posted US$ 405.63 million net loss in the 2017/18 financial year, the biggest in a span of seven years. Kenya Airways suffered US$ 39.9 million loss in 2018 half-year results. A drop of 30% compared to a loss of US$ 55.9 it suffered in 2017.
Ethiopian Airlines has more than 16,000 employees, who are trained at the Ethiopian Airlines Aviation Academy. The school has a capacity to train 4,000 students annually and boasts of having seven full-flight simulators for training pilots.
Each of the simulators cost the airline US$ 20 million, totaling US$ 140 million. The school trains pilots, cabin crew and technicians. The airline trains 300 pilots annually, and it has more than 1000 pilots on its payroll according to the CEO.
As other African carriers continue to struggle, perhaps it’s time they studied what Ethiopian Airlines is doing right. Under the leadership of Tewolde GebreMariam, Ethiopian Airlines is set to be a force to reckon with in the world, as Africa doesn’t offer any meaningful competition.
By Solomon O. for Ezega News