Torn seats, worn-out belts, flaked silver paint – the Douglas C-47 Skytrain is not exactly what you would call a promising aircraft. The situation was quite different in April 1946, when the plane made its first flight for Ethiopian Airlines. The route went from Addis Ababa to Cairo. The Skytrains, which were used in particular for (Ethiopian) domestic flights, remained in use until the 1980s.

Today, the aircraft is a relic of the past at Ethiopian Airlines’ headquarters not far from Bole International Airport in the Ethiopian capital. The C-47 symbolizes the beginning of a story marked by rapid growth. Ethiopian Airlines is ahead of pretty much everybody else in African air traffic today. Most recently, the airline carried 11 million passengers per year, and it operates a fleet of 111 passenger and cargo aircraft (including, for example, Boeing B787 and B777). In addition, there are 119 international passenger and freight destinations on five continents, 16,000 employees, and an annual turnover of four billion US-$ as of the 2017/18 financial year. There are four connections to the USA alone, 16 to Europe – including Vienna, Paris and London – and 25 to the Gulf States, the Middle East and Asia, most of them to China. In 2011, the company joined the international aviation association Star Alliance. Ethiopian Airlines has become the largest and most important airline in Africa.

But Tewolde GebreMariam, CEO of the Ethiopian Airlines Group since 2011, goes one step further: “Given the cumulative growth of the past eight years, there is probably no other airline in the world that has grown as fast as we have. Over the past eight years, (that growth, note) has averaged 20 to 30 percent per year.“ We are now sitting in his office, not far from the Douglas C-47 Skytrain. Tewolde is a veteran of Ethiopian Airlines: in 1985, GebreMariam joined the cargo traffic handling department and worked his way up to Regional Manager for India and Southeast Asia before becoming COO in 2006 and CEO in 2011.

Competition with the best airlines in the world

Even if the growth rates speak for themselves, Ethiopian Airlines cannot yet compete with the world’s biggest airlines. According to data provider Statista, American Airlines carried 199.6 million passengers in 2017, Emirates 58 million and Ryanair 130 million in 2018. But if you talk to GebreMariam, you’ll find that he wants to compete with the world’s best. In particular, the current challenge is to break the strong competition from the Gulf States (Emirates) and Turkey (Turkish Airlines) for flights to and from Africa.

The reasons for the rapid rise of Ethiopian Airlines in recent years are many and varied; in particular, the airline has focused on a long-term planning policy. In an industry characterised by volatility and rapid dynamics, experts criticised this as a daring manoeuvre. However, Ethiopian Airlines seems to have silenced them so far. “At the beginning of the millennium, we decided that the airline’s growth had to be faster than before. The core of 'Vision 2010' (which started in 2005) was to generate sales of one billion US-$. That was very successful. At the end of 2010, we achieved $1.3 billion,“ says GebreMariam.

A new 15-year strategic plan called “Vision 2025“ was drawn up to make the airline the leading aviation group in Africa in eight business segments: Regional Services, International Services, Freight Services, MRO Services, Aviation Academy, Board Catering, Ground Services and Airport Enterprise. The targets are set high: ten billion US-$ turnover, 120 aircraft and 90 international destinations by the year 2025. Considering the figures mentioned above, the airline is well on its way.

Airplanes

Passengers

Revenue
(in Bil. US-$)

Employees

(Source: Ethiopian Airlines)

Expanding the hub system

As part of these strategies, Ethiopian Airlines continuously expanded its “hub system“ in particular by investing in newly established airlines across Africa. According to GebreMariam, their model is Deutsche Lufthansa, which is expanding the Frankfurt hub with its subsidiaries – such as Austrian Airlines, Swiss and Brussels Airlines  – to include important geographical hubs. In 2010, Ethiopian Airlines first helped to establish Asky Airlines in Lomé, Togo. In 2013, the airline acquired a 49 percent stake in the newly founded Malawi Airlines based in Lilongwe. Further investments were made in Ethiopian Mozambique Airlines and Tchadia Airlines in Chad, for example, and this type of expansion is to remain an effective instrument in the future. “First, these hubs allow us to get closer to our customers. Second, they expand our intra-African network. And third, they serve as hubs to the rest of the world,“ says the CEO.

On the one hand, Ethiopian Airlines is consolidating its dominant market position through this investment strategy. On the other, it does not exactly fuel the already weak competition between African airlines. Not surprisingly, according to press reports, Air Mauritius, South African Airways, Rwand Air and Kenya Airways are joining forces to break Ethiopian’s dominance.

GebreMariam reacts calmly: “Within Africa, there should be no more competition between airlines. Instead, more cooperation is needed. Eighty percent of all air traffic between Africa and the rest of the world is handled by non-African airlines. The only way to balance this is through collaboration,“ says the CEO.

First flight from East to West Africa

But GebreMariam is not only about strategic timetables with figures. Rather, he describes it as his mission to bring the African states together and create a new sense of optimism on the continent. Seen in this light, the airline also refers to itself as a “Pan-African Airline“ – with the appropriate advertising slogan: “Bringing Africa together.“ This approach is not new – Ethiopian Airlines set an early course in this direction. In 1961, the company guaranteed the first direct flight from East to West Africa, connecting Addis Ababa with Monrovia in Liberia. In 1963, the airline inaugurated its jet service from Bole (Ghana) to Nairobi (Kenya). Today, Ethiopian Airlines flies to over 61 African destinations. And: „We have shown our pan-Africanism by staying in the countries  – in good times and in bad. For example, we flew to the affected African states during wars or major political upheavals,“ says GebreMariam. But the CEO is faced with the challenge of uniting both the company’s own interests – Ethiopian growing as fast as possible – and those of the African airlines (or states). In addition, the question arises as to how long other airlines will continue to accept Ethiopian’s supremacy.

Tewolde GebreMariam
... has been CEO of Ethiopian Airlines, the fastest growing airline in Africa, since 2011. GebreMariam joined the company in 1985, initially working in the cargo traffic handling department. In this context, he was promoted to Regional Manager for India and Southeast Asia. He became COO of Ethiopian Airlines in 2006, then CEO in 2011.

A closer approach between the states would also make sense in view of the figures. According to the International Air Transport Association (IATA), the annual growth of African aviation in the next ten years should account for around six percent. Political agreements are already in place to allow a single sky and unhindered air traffic within Africa. The African Single Air Transport Market (SAATM) was launched in January 2018. In the meantime, while 29 African countries have committed themselves to this, effective implementation is lacking. Aviation experts criticise the slow progress of the agreement and suspect that Africa may not yet be ready to liberalise air transport. For GebreMariam, however, this is indispensable: “The countries have given their approval to the agreement; now, in a second phase, it is a matter of implementing it.“

In any case, the manager also has other, quite unusual ideas as to what an integration of African states – and their inhabitants  – could look like. If other African governments are interested in acquiring a small stake in the company, the company would be open to the idea, says GebreMariam. There is currently only one owner, the Ethiopian government. And so far, there haven’t been any talks. At the international level, however, a partnership was recently established; in cooperation with the European Union, an “Ethio-European International Business School“ is being set up, offering its own MBA programme. The school is intended to complement the management courses offered at the company's own academy and to train as many young Africans as possible.

Next step: Vision 2030

In the future, the aviation company will have to finetune a few things if it really wants to play in the top league. In view of the good progress made within the framework of “Vision 2025,“ however, the next future concept is already in the pipeline: “Vision 2030.“ “There will be new planes and new destinations, and we will increasingly transform the airline into an aviation group. We will introduce further new business areas,“ says GebreMariam. In other words, if synergies arise between business units, investments will be made there. Ethiopian is currently active in the hotel, tourism and travel business as well as in logistics through a partnership with DHL Global Forwarding. For example, Ethiopian Airlines will set up its own aviation production, according to GebreMariam.

Ethiopian Airlines will have no problems finding new employees. The aforementioned Ethiopian Aviation Academy, which trains pilots, technical personnel and cabin crews, is the largest in Africa. It enjoys great popularity, even across national borders. A total of US$ 100 million was invested in it in 2016.

The goals of Ethiopian Airlines are ambitious; in the coming years, it will be particularly important to reconcile various national and international interests. But the African aviation group has already proven in the past that it is capable of mastering major challenges – and growing with them.

Text: Niklas Hintermayer
Photos: Zacharias Abubeker

The article was published in our January 2019 issue "Growth-Innovation-Forschung“.