Ethiopian Airlines: Disruptive innovation, piecemeal approach to expansion

This aviation colonialism’ fits in well with Ethiopian Airlines’ 15-year strategic plan dubbed “Vision 2025” and its strategic expansion plans, writes, WOLE SHADARE

Success story

Africa’s biggest and most profitable airline, Ethiopian Airlines has become the biggest airline brand in Africa. Year-on-year, the carrier keeps posting amazing profits and acquiring some of the best and most sophisticated aircraft, especially from the two biggest aircraft makers, Boeing and Airbus. Ethiopian Airlines has an amazing success story that truly shows that Africa can truly get it right when it really puts its house in order.

Tribute should equally be paid to some African airlines that have gone through decades of turbulence but have weathered the storm. Airlines like Kenya Airways, South African Airways, Egypt Air, Air Maroc, and emerging ones like RwandAir, commendation must go to them.

One thing is certain. These airlines are national carriers of their respective countries. It has shown what serious nations have been able to do with their airlines and the incredible benefits it has brought to them despite the harsh realities of today as it concerns air transportation in the continent.

The focus of this article is to examine how Ethiopian Airlines has become a model to so many African countries who are desirous of not only floating their own national carriers but how they have used Ethiopian Airlines to leverage aviation in their nations.

The African air transport market has been a laggard in development, remaining encircled by a plethora of problematic issues that have curtailed its expansion and prosperity for decades.

Regulatory restrictions, protectionism, inadequate infrastructure, and prolonged loss-making periods are regularly correlated with the plights of African carriers.

Disruption

Ethiopian Airlines is disrupting this negative manifestation and is exponentially expanding its African and international network footprint, enshrined in continuous profitability.

The research quantifies that it is Africa’s most successful airline through a POA analysis by aggregating a series of pertinent airline indices to derive its prominence from among its peers.

Three key pillars were deduced that specifically correlated with Ethiopian Airlines continued prosperity and can be used as a template, which included a large intra-African network, a strong hub with multiple wave permutations for onward connecting traffic, and forging deep strategic partnerships with regional-based African carriers.

Africa covers more than 30 million square kilometres and is home to more than a billion people. The continent has the largest number of countries in the world (54 countries) with a considerable proportion of remote communities, indicating a natural need for air transport according to the Secretary-General of the African Airlines Association (AFRAA), Dr. Elijah Chingosho.

In an aging world, Africa has the advantage of a young and growing population and will soon have the fastest urbanisation rate in the world. Half of Africa’s population lives in the continent’s 10 richest countries. The region is expected to have a larger workforce than either China or India by 2034 while spending by consumers and businesses today totals $4 trillion.

The continent has great potential to develop into a rapidly growing air transport market. However, apart from Ethiopian Airlines, the most profitable, largest, and fastest-growing African airline, most carriers on the continent are struggling to survive.

Stakes in other airlines

Ethiopian Airlines has stakes in several African carriers to varying degrees. Here are just a few that we know of

Zambia Airways: According to Southern Times Africa, the Ethiopian Airlines group put forth US$13.5m towards the revival of the long-forgotten airline. Established in 1964 but went under in 1995 following liquidity challenges, Zambia Airways is now 45% owned by Ethiopian.

ASKY Airlines: Largely based in Lomé, Togo, Ethiopian partners with privately-owned ASKY Airlines for various codeshares today. However, it was instrumental in the launch of the West African carrier and currently holds 40% ownership.

Malawian Airlines: Ethiopian Airlines also acquired a 49% stake in Malawi’s flag carrier in southern Africa in 2013. According to Quartz, it also operates the airline.

Ethiopian Airlines has also invested in Mozambique Airlines (also known as Ethiopian Mozambique Airlines) and Tchadia Airlines in Chad. Anna. Aero points out that the Chad Government controls 51 % of Tchadia, while Ethiopian Airlines own the remaining 49%.

Much of Africa has been working towards an African Open Skies agreement – also known as the Single African Air Transport Market (SAATM). This aims to be something similar to the single air transport market we see across the European Union.

Signing up to SAATM

So far, twenty-three African countries have signed up to SAATM. But full liberalization has failed to materialize. According to Reuters, the result is that Ethiopian has been forced to adopt this piecemeal approach to expansion.

To underscore its vision for aviation, the carrier and Boeing announced plans to establish a joint venture for the manufacturing of aircraft parts, marking a significant collaboration between the aviation giant and Africa’s largest state airline.

The initiative comes with an initial investment of $15 million, as revealed by the state investment authority. The partnership will also involve the local state-owned Industrial Parks Development Corporation, according to the Ethiopian Investment Commission.

The venture is set to encompass the production of various aerospace components, including aircraft thermal-acoustic insulation mats, electrical wiring harnesses, and other essential parts. This ambitious project is projected to generate job opportunities for more than 300 Ethiopians, contributing positively to the local workforce and economy.

While the exact commencement date of production remains unspecified, the Ethiopian Investment Commission’s announcement sheds light on the remarkable potential of this collaboration. The joint venture holds promise for enhancing the aviation industry’s capabilities and resources, which is particularly crucial amid the challenges faced by the global aviation sector.

**Two of Africa’s recognisable airlines, Ethiopian Airlines, and Egypt Air**

Last line

At this point, it seems like Ethiopian Airlines is unstoppable as it becomes larger and seemingly more stable and established across the continent. Its method of having significant ownership in various smaller airlines across the continent will give all respective countries involved the pride of having a national airline, without the full risk of funding one from the ground up.

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Ethiopian Airlines: Disruptive innovation, piecemeal approach to expansion

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