Ethiopian on multi-billion birr investment
The Government of Ethiopia is going to endorse a new air transport policy that governs the country’s aviation industry development.
In the sideline of the 24th African Aviation Maintenance Repair and Overhaul conference held this week at the Sheraton Addis the Minister of Transport Workneh Gebeyehu told The Reporter that his ministry has been working on a draft air transport policy for over a year. Workneh said the new air transport policy will promote the development of the airline industry in Ethiopia. “The policy will address the concerns of private airlines,” Workneh said.
“It comprises how the local private airlines could contribute to the growth of the country’s aviation industry and the list of things that are allowed and prohibited,” he added.
According to Workneh, the ministry will soon table the draft air transport policy for discussion with stakeholders.
After taking inputs and comments from stakeholders the air transport policy will be endorsed by the Council of Ministers before the end of this year. “We already had one discussion with stakeholders. We will soon have the final deliberation with stakeholders and then we will present it to the government for endorsement.”
Executives of Ethiopian Airlines, representatives of domestic private airlines and other stakeholders will participate at the discussion. Officials of the Ethiopian Civil Aviation Authority that drafted the air transport policy and the Ethiopian Airports Enterprise will convene on the draft policy.
In his key note address Workneh said that the African air transport market is fragmented. He underscores the need for African governments to work together for the growth of Africa’s aviation industry. African airline industry contributes around 70 billion dollars to the continent’s GDP and employs seven million citizens.
The establishment of a single air transport market was once again high on the agenda. In 1988 African states agreed to establish a single African air transport market.
In 1999 African Ministers responsible for civil aviation gathered in the Ivorian city of Yamoussoukro and adopted the Yamousoukro Declaration (YD) that calls for the liberalization of African skies for African airlines.
The declaration aimed at establishing a single African air transport market by avoiding market restrictions imposed by bilateral air service agreements. The decision was adopted by African heads of state in 2000 with two years grace period.
However, to date African states have not been able to fully implement the declaration. African skies are not open to African airlines. The African air transport market is still restricted by protectionist bilateral air service agreement.
A representative of the African Union Infrastructure Commission, David Kajange reiterated AU’s commitment towards the establishment of a single air transport market in Africa.
Kajange, who was speaking on behalf of the AU Infrastructure Commissioner, Elham Mahmoud Ahmed Ibrahim (PhD), said that last January 11 African states including Ethiopia declared the full implementation of the YD by 2017.
Kajange said that the renewed impetus to implement the YD was initiated by the Ethiopian government upon a request presented at the AU conference in Malabo, Equatorial Guinea last year.
Kajange who applauded the 11 states for endorsing the YD called up on other African states to follow suit.
CEO of African Aviation Services Limited, organizer of the African MRO conference, Nick Fadugba, said that all African states should fully implement the Yamousoukro Declaration with out further due. “Today it is very painful to hear an African airline CEO complaining about market access in Africa many years after African governments agreed to open up their market,” Fadugba told participants.
“Eleven states have shown commitment to fully implement the YD in 2017. We lauded their effort to the implement the decision. But it is only eleven states out of 54 African countries that have shown firm commitment. The remaining African countries should immediately take the same step,” Fadugba said. “We should not wait for many years to witness similar measure.”
Host of the African MRO conference, Ethiopian Airlines Group CEO, Tewolde Gebremariam, said that some African countries deny passenger traffic right to African airlines and allow non African airlines to freely operate. As a result, Tewolde said, African carriers market share on the intra Africa routes dwindled from 60 percent in the 1980s to 20 percent.
Speaking of Ethiopian Airlines, Tewolde associated his airline growth to the economic boom in Ethiopia and the rest of Africa.
Tewolde boasted that Ethiopia will soon become an economic power. “History repeats itself. Ethiopia was a super power seven hundred years ago during the Axumite Empire. Now Ethiopia is roaring. History repeats itself!”
According to Tewolde, his airline grew five fold in ten years time. The revenue of the airline which was only 0.49 billion dollars in 2004 grew by 500 percent to 2.5 billion dollars last year. The revenue is expected to reach 3 billion dollars this year.
The airline crafted a 15 year development strategy dubbed Vision 2025. Tewolde explained that under this strategy the airline wants to boost its revenue from USD 3 billion to 10 billion, number of international destination from 84 to 120, and number of aircraft from 81 to 140.
The airline is undertaking massive infrastructure development projects. During the two-day conference that drew more than 250 delegates from all over the world, Ethiopian organized a tour to these multi billion birr investment projects.
Delegates visited the Ethiopian Aviation Academy, Flight operation and MRO center. The brand new Boeing 787 flight simulator recently installed was inaugurated.
The airline is also building a flight simulator building for B777 and Airbus 350 aircraft. Ethiopian will begin taking delivery of the 14 A350XWB jetliners it for the first time ordered from the European consortium, Airbus, next year.
A new light aircraft maintenance hangar built at a cost of seven million dollars was inaugurated during the visit. Ethiopian is also building a huge maintenance hangar, cargo terminal and four star hotel with 330 rooms.
With a capacity to handle 1.2 million tons of cargo per annum the cargo terminal will be one of the biggest cargo terminals in the world.
The total cost of the project is estimated at 107 million euro. At the moment Ethiopian Cargo has the capacity to handle 200,000 tons of cargo per annum. With nine dedicated freighter aircraft Ethiopian is the biggest cargo operator in Africa.
Zemene Nega, managing director of Ethiopian MRO Services, told The Reporter that to support the fast growth of the airline ET MRO center is building its capability.
The airline is building a wide body aircraft maintenance and paint hangars at a cost of 94 million dollars. Currently, it has four maintenance hangars. It is also planning to build another wide-body hangar and expand the existing ramp that accommodates the growing fleet.
According to Zemene, the MRO center will also build a new and modern engine maintenance shop. “We have conducted a feasibility study. We may proceed to the tender process next year.”
Under the Vision 2025 growth strategy as one of the seven business units of the airline Ethiopian MRO Center plans to generate 520 million dollars from third party business.
African MRO market is valued at two billion dollars and projected to grow to 4.2 billion dollars by 2023. Ethiopian wants to have 25 percent of the pie.
In 2013-2014, Ethiopian MRO Center generated 483 million birr from third party business. “Due to the fast growth of the airline and accelerated fleet expansion program we are mostly engaged with in house maintenance service,” Zemene explains.
“But as we are now building our maintenance capability we will substantially grow our third party business. We will aggressively work on expanding our third party work.”
Ethiopian is also making a huge investment on Aviation Academy expansion project which includes the construction of dormitories, class rooms and workshops.
Ethiopian is investing 80 million dollars on the aviation academy that trains pilots, technicians, cabin crew and marketing professionals. The cabin crew training center comprises of the construction of auditoriums, swimming pool and installation of mock up plane.
Samuel Assefa, vice president, Aviation Academy, told The Reporter that the mock-up plane was purchased from the UK and will soon be imported and installed at the cabin crew training center. According to Samuel, the Aviation Academy annual intake increased from 200 students to 1000. The plan is to boost the number to 4000 by 2025.
Ethiopian is building a new catering facility which can daily produce 80,000 meals at a cost of 11.5 million dollars.
The two storey building construction was launched in February 2015 and due for completion in February 2016. Ethiopian Catering, one of the seven business units of the Ethiopian Aviation Group, supplies passenger meals for major international airlines that fly to Addis Ababa.
A pilot training building and maintenance hangar is under construction in Dire Dawa. Ethiopian is forced to branch out its pilot training center to Dire Dawa International Airport due to the air traffic congestion at the Addis Ababa Bole International Airport. Most of the construction works are being carried out by an Italian construction firm, Elmi Olindo.
Some of the delegates told The Reporter that they were fascinated by the massive infrastructure development they visited at Ethiopian premise.
Nick Fadugba who has been organizing the two popular African Aviation Conferences – Air Finance and MRO Africa – for the past 25 years said that he was impressed with the ongoing infrastructure development program of the airlines.
“I have been visiting Ethiopian Airlines for more than 25 years and I always appreciate what the management is doing. But the airline’s growth in the past couple of years is dramatic. Every time I come here I see some thing new rising up,” Fadugba said.
Big players of the global aerospace industry including Boeing, Airbus, General Electric, Pratt and Whitney, SNECAMACFM, Turkish Technik and Lufthansa Technik were in attendance.
Leading African MRO centers including Ethiopian MRO, South African Technical and Egypt Air Maintenance and Engineering participated at the two day MRO conference and exhibition.