The world of airline carrier companies is a complicated one; it involved expensive capex investments as well as operational strategies calculating into the system airport fees, high-cost maintenance, fuel and international route authorizations. It also has to provide a comfortable flying environment and is manpower heavy. Airline operations are a supply chain nightmare, that starts from the booking stage, through queue management at airports, security control and conformity and lease arrangements carrying interest fees for most of the aircraft used.
With all of these issues, demanding deep pockets to start off with, Ethiopian Airlines is taking the AirAsia route and conquering its airspace. Just like AirAsia started out small, and slowly built up one of Asia’s largest and most profitable fleets, so too is Ethiopian Airlines building up an African juggernaut of air transportation.
Africa is not so dissimilar to Asia in demographics; there is a large percentage of very poor mixed with a growing middle class and a minority of affluent rich. This might sound similar to most countries around the world, but in Africa poor means living without clean water or even a water source, living off food levels that would make an anorexic pray for more, and apart from walking, riding a bus that holds 45 passengers when over 300 crowd its interior and exterior is the only mode of transport. The concept of flying around the continent is far from most of these people minds. However, Ethiopian Airlines (EA) is building up a complex category of services that will meet every budget, which is its secret to success.
EA has bought 45% of Zambia Airways, operating Malawi Airlines, and operating privately owned ASKY Airlines are just three of the joint ventures that EA has developed over the last few years. It is concentrating on expansion, where most airlines are fighting against bankruptcy, EA is fighting for expansion. EA intends to provide a number of key services; these include cheap travel across the nation and continent for migrant workers. Comfortable yet cheap inter-continental tourism and international travel services. This expansion has led EA to run 97 passenger and freight airlines and operates over 120 flights including international, domestic and cargo.
The African ‘Vision 2025’ where the continent is connected by modern airports and a wide web of routes is well entrenched in the EA corporate vision. In fact, EA intends to become Africa’s largest airline and one of the world’s leading airlines, leading air transportation for Africa.
A number of initiatives are already coming out of EA’s determination, and these include an ever-expanding aviation academy, training a variety of professions to support EA’s ever-growing fleet. They are also investing in infrastructure, helping to revamp old and dilapidated airports and airstrips as well as invest in airport services. These actions, born out of Vision 2025, are intended to give EA control over the whole air transport supply chain process, where the aircraft is the main feature, they will control and own (many) of the support services that surround the aircraft, similar to how a hospital supports the operations of its physicians.
The ultimate goal of EA is that every African capital, as well as many African cities, will have at least one flight connected to Ethiopia as well as EA. Where EA will deliver international flights as well as national ones in frequencies that outstrip all their competitors.
EA’s investment in infrastructure and support services will make it a corporate giant that provides competitive services for other airlines, bolstering its capex anchor and making it more than just an airline, it will become the worlds first comprehensive Air Supply Chain Company, providing an end to end solution that does not just rely on income generated from flights.
The main issues facing Ethiopian Airlines are the political climates in each African nation, as well as the anti-monopoly issues that would face the growth of an all-powerful airline company spreading onto support services. Having stated this, since Africa is a continent of controversial regulations, the psychology of EA is not lost on any entrepreneur. If the market will let you grow, and you can provide growth to others that will benefit from your own initiatives, then the path to EA domination is set. This means that everyone in Africa wants the continent to grow in strength, it is sick of being the worlds “third world” continent and realizes that foreign investment will only serve foreign designs, not the requirements of the African peoples.
