It is no secret that the airline business is one of the worlds’ toughest segments to operate. Oscillating fuel prices, floating exchange rates and many other factors make it one of the most competitive sectors in any market. Besides, the “less than ideal” infrastructure in Africa doesn’t make it any easier for airlines operating in the continent.
That’s one of the many reasons I’ve come to appreciate the case of Ethiopian Airlines, Africa’s leading airline. Against all odds, in a difficult and eventful year, Ethiopian managed to grow its business by virtually every metric. FurtherAfrica had the privilege of seating down for a conversation with Mesfin Tasew, Ethiopian airlines’ Chief Operating Officer. With 35 years serving the company, Mesfin is a living part of Ethiopian’s success story having contributed in many different departments as he progressed through the ladder to the airlines’ boardroom.
Fabio Scala: It is a great pleasure to talk about Ethiopian as my first flight with the airline was remarkable – seating next to Haile Gebrselassie onboard one of the very first 787s in Africa. Quite a memory! This was quite a few years ago and you guys came a long way. Can we start by highlighting some of Ethiopians’ latest accomplishments?
Mesfin Tasew: Thanks for the invitation Fabio. We’ve embarked on an ambitious fifteen years strategic roadmap known as “Vision 2025.” The plan was meticulously prepared, and we’ve been implementing it very carefully and aggressively.
Despite daunting challenges that characterize the industry such as volatility in oil price which is the main cost driver in airline business, cut-throat competition, etc. we have successfully achieved most of our targets seven years ahead of the plan. We have registered an average growth of 25% in the past eight consecutive years and a four-fold aggregate growth in the past ten years.
Even in 2018/19 fiscal year which was one of the most challenging years in our operation, we managed to continue our fast, profitable & sustainable growth. Our growth was more than double the global average and more than six-fold of African average in the major parameters of the industry such as Available Seats Kilometre (13%), Passenger Load Factor (74%), Revenue Passenger Kilometre (13%), Available Freight Ton Kilometre (18%), and Freight Load Factor (8%).
The number of passengers we transported during the period increased by 14% to 12.1 million, whereas freight carried increased by 8%. This resulted in a 17% increase on our total operating revenue.
Fabio Scala: That’s remarkable, particularly given such fierce competition. In fact, I am very curious about your formula to stay ahead of the pack. I’m sure that companies like Kenyan Airways, South African Airways and even non-African carriers such as Emirates do not make it easy. What is Ethiopian Airlines’ secret?
Mesfin Tasew: Well, Ethiopian is SKYTRAX certified Four-Star, multi-award-winning Global Airline. Certainly, it’s the largest, fastest growing and most profitable Aviation Group in Africa with seven Business Units, five corporate functions as well as a Customer Services Division which serves as an advocate for our passengers. We serve more international passenger and cargo destinations than any other African carrier (Total 125 destinations in five continents) out of which 62 are in Africa. Our fleet of 121 ultramodern aircraft with average age of less than seven years makes us among a few carriers operating such a young fleet.
Thanks to the expansion of Bole International Airport which increased its capacity to handle 22 million passengers annually and the ever-expanding network of Ethiopian Airlines, Addis Ababa has taken over Dubai as the premier gateway to/from Africa. So, we offer the best global connectivity; connection has been made possible within 10 hours radius from every corner of the world.
The secret to our success mainly lies in our commitment, focus and investment on the four pillars of Vision 2025: Human Resource Development, Fleet, Infrastructure and Systems (IT). We combine this with our Cost Leadership Strategy, enhanced employee engagement and productivity, continuous process improvement and operational excellence, effective & efficient network and connectivity by synergizing multiple hubs, continuous customer service improvement, market diversification, as well as strong and committed management.
Fabio Scala: I see; I’ve actually experienced your connections across the continent and they always proved very convenient. That brings me to my next question, your strategy of expanding by helping other African countries to establish and manage national carriers. I know that in countries like Mozambique this type of venture produced a very positive impact in domestic flights, could you tell us a little more about these operations
Mesfin Tasew: In addition to providing the essential air connectivity, Ethiopian has been supporting the growth of the aviation industry in Africa in multiple fronts. These include providing training to aviation professionals from several African countries at our globally certified and highly rated Aviation Academy and providing Maintenance, Repair & Overhaul (MRO) services to various schedule and non-scheduled carriers such as ASKY Airlines, RwandAir, Malawi Airlines, TAAG Angola Airlines, Ethiopian Mozambique Airlines, Congo Airways, Jambo Jet etc.
Moreover, we have been seriously engaged in partnership with several existing African carriers as well as establishing airlines for African countries with no airline. Accordingly, Ethiopian has invested in and holds shares in ASKY, Malawian Airlines, Zambia Airways, Chad Airlines, and owns 99% of Ethiopian Mozambique Airlines (1% share is owned by Malawi Airlines). We will continue our collaboration with these and other prospective African carriers/countries because we want to share our well recognized expertise in the sector and grow together with our African brothers and sisters.
It’s worth mentioning here that the growth of Ethiopian Airlines has direct and indirect impact on the socio-economic development of Africa as air connectivity promotes tourism, investment and trade whereas effective partnership that is based on mutual benefit ensures sustainable growth.
Fabio Scala: I think that today you are the airline providing what is probably the best coverage to secondary and tertiary destinations in the continent. Through your network, you are connecting cities like Beira in Mozambique to international trade destinations such as Hong Kong and New York. How does that fit on your expansion strategy?
Mesfin Tasew: We’ve been expanding our network not only to major cities but also to secondary and tertiary cities so that our customers in smaller cities could have the opportunity to connect to our global network with direct flights and fewer stops. For example, our service to Beira-Mozambique, which was launched on September 4, 2019, serves as our hub in central Mozambique and directly connects passengers to our global hub in Addis Ababa for further connections to various parts of the world. Currently, Ethiopian Mozambique Airlines serves 8 domestic points in Mozambique from our main hub in Maputo-the capital.
Fabio Scala: Finally, as my last question, what is next for Ethiopian Airlines? Could you share with us some of your future plans?
Mesfin Tasew: We will continue connecting Africa to the World with further expansion into primary and secondary cities of major markets in Africa, China, India, South East Asia, Australia, North America, South America as well as promising Eastern European markets. To this effect, we have launched flights to Marseille-France, New York (JFK), Garowe-Somalia, Bangalore-India, Beira-Mozambique, in the last six months. We have also completed preparations to resume flights to Athens-Greece and to launch a new flight to Houston-USA.
One of our main goals is to enhance our catalytic role in promoting trade and tourism among countries we operate in general and Ethiopia in particular. In line with this, we have invested millions of dollars in a five-star hotel-Ethiopian SkyLight, which we recently opened in Addis Ababa, and established a dedicated tour operator wing-Ethiopian Holidays, to promote and coordinate travel and tour across our network.
We will continue investing in all pillars of our growth strategy. In this regard, we planned to phase-in a record number of aircraft (17 passenger and 8 training aircraft) during 2019/20 budget year out of which we have received 7 passenger and 2 training aircraft so far. The rest are on the pipeline.
Moreover, we have been preparing a new strategic roadmap-Vision 2035. The plan will not have much of strategic or business model change, but it will be by and large scaling-up our fast, profitable and sustainable growth strategy that we have achieved in Vision 2025.
[Article by Fabio Scala]