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Ethiopian Airlines to become the largest Airline in Africa by 2025
Posted: December 18, 2011, 6:31 am by nero
Ethiopian Airlines is one of the largest and most profitable carriers in Africa. It has 34 aircraft on order, including 10 B787-8s with a network of 56 international destinations and 17 codeshare partners.
It's a Star Alliance member and in 2010 had an operating profit of ETB1.6 billion (USD92 million). Ethiopian has forged a successful path for its expansion plans and has come a long way since its beginnings as a joint venture between the Ethiopian Government and Trans World Airlines.
The carrier has set an ambitious, but realistic, 15-year strategic plan that includes becoming the single largest airline in Africa. It intends to generate revenues of ETB171 billion (USD10 billion) per year, acquire a fleet of 70 aircraft and improve its Skytrax customer service ranking from three to four stars.
If successful, the plan would make Ethiopian Airlines the largest and most profitable carrier in Africa.Ethiopian Airlines’ 15-year strategic plan
Source: CAPA – Centre for Aviation and Ethiopian AirlinesThe largest on-order fleet in Africa, both passenger and freighterThe African launch customer for the B787-8 made its order in 2006 and originally planned to have the aircraft in service by Jun-2010 on the Guangzhou route. However, like many of Boeing’s B787 customers, the Dreamliner delays have left Ethiopian behind on expansion plans. The carrier currently has 36 aircraft on order, the most of any African carrier.Measure Current Goal Revenue USD1.6 billion p/a USD10 billion p/a In service fleet 47 70 “modern” aircraft SkyTrax Customer service rating 3 4
In 2010, Ethiopian placed its largest order to date – 12 A350-900s, due for delivery between 2016 and 2019. The order was designed to give Boeing a wake-up call – implying that its long-time African operator was unhappy with the delays, and that it was prepared to look elsewhere for new aircraft. Despite the apparent threat, Ethiopian Airlines reaffirmed its Boeing order and is expecting its first B787-8 between 12-Mar-2012 and 15-Jun-2014, not Jan-2012 as originally thought. Ethiopian stated the new aircraft, both the B787-8s and the A350-900s, would be used to complement and replace its existing fleet, with the A350s to be deployed on services to the Far East and the Americas, and the B787-8s likely to replace B767s and B757s.
Ethiopian’s freight network supports the country’s trade relationsA strong point in Ethiopian Airlines’ portfolio is its substantial freight operation, with a dedicated cargo fleet of five aircraft and four B777-200LRFs on order. Cargo and freight services accounted for 17% of its total 2010 revenue. The carrier serves more than 40 destinations in its freight network through dedicated freighters and belly space on passenger aircraft.
Ethiopian Airlines’ dedicated freight networkSource: Ethiopian Airlines
Ethiopia’s largest trade partners are the European Union, China, the US, Saudi Arabia and India. Ethiopian Airlines operates a dedicated cargo network to all those countries bar China and the US, although belly capacity, codeshare partners and sea links enable trade to these countries to remain strong. Ethiopia’s trade with other African countries is relatively weak, with Sudan, Tunisia and South Africa the only countries being a top 20 trading partner.
Ethiopia’s major trade partners: 2010Source: IMF (DoTS)Ethiopian will give Star Alliance three main bases in AfricaEthiopian recently joined the Star Alliance, an event that coincided with the B787 Dream Tour of Ethiopia. Ethiopian, mentored by Lufthansa, joined fellow African Star Alliance members South African Airways and EgyptAir, as the alliance extends its coverage to all but the west and centre of the continent. In the lead-up to the approval, Ethiopian Airlines established codeshare agreements with several key Star Alliance members, the latest being Singapore Airlines, and the most important being founding members SAS and Lufthansa.
Ethiopian Airlines’ codeshare partners: 2011
Bold= Non-Star Alliance memberAirline Since Region Air China Dec-2007 Asia Pacific Air India n/a Asia Pacific Air Nigeria n/a West Africa Asiana Airlines Mar-2003 Asia Pacific bmi Jul-2000 Europe Brussels Airlines Dec-2009 Europe Egypt Air Jul-2008 North Africa Gulf Air n/a Middle East Kuwait Airways n/a Middle East LAM n/a East Africa Lufthansa May-1997 F Europe RwandAir n/a Central Africa SAS May-1997 F Europe Saudi Arabian Airlines n/a Middle East Singapore Airlines 01-Apr-2000 Asia Pacific South African Airways Apr-2006 Southern Africa Turkish Airlines Apr-2008 Europe
Source: CAPA – Centre for Aviation and Star Alliance
Ethiopian’s entry into Star Alliance means the global airline group will have three main bases in Africa – Addis Ababa, Johannesburg and Cairo. Ethiopian hopes Star Alliance membership will significantly boost Addis Ababa International Airport’s role as a prominent African gateway, boosting revenues, reputation and presence.
Most seats in Africa are unaligned, Star next bestSkyTeam occupies a relatively strong presence in Africa through Air France-KLM and Kenya Airways. Air France and KLM have each built networks on the continent based around their longstanding colonial linkages. While leading Star member Lufthansa does not have the same historical ties as Air France and KLM, it does have fellow alliance members in the north, south and now the east of the country. Star made a point of recruiting strategic partners that spread across the continent, to complement the more than 50% of Star members that operate to Africa.
Africa seats capacity by alliance (before Ethiopian Airlines’ official joining of Star Alliance): 31-Oct-2011 to 06-Nov-2011Source: CAPA – Centre for AviationWithin Star, EgyptAir provides a most challenging partner for Ethiopian Airlines. Both EgyptAir and Ethiopian serve a handful of destinations in the Asia Pacific including Beijing, Guangzhou, Bangkok and Mumbai, aiming to feed in traffic from the African continent. Star will benefit from Ethiopian’s African network as it is more established than the Egyptian flag carrier, particularly in West Africa, while EgyptAir is much stronger in North Africa. Each carrier serves points in the Middle East – Kuwait, Bahrain, Riyadh, Beirut, Tel Aviv, Jeddah, Sana’a and Muscat – creating considerable overlap in Star’s Middle Eastern network and, again, in their respective goals for feeding beyond traffic from Africa.
Limitations and benefits in Ethiopian’s networkEthiopian serves many of the mineral-rich African countries, offering valuable additions to Star’s network. These include the Democratic Republic of the Congo (gold and diamonds), Namibia (via codeshare – lead, zinc, diamonds), Botswana (diamonds) and South Africa (iron, oil). Ethiopian also serves fast growing African economies, such as Rwanda, Ghana, Angola, Kenya and Nigeria.
A sub-region missing from Ethiopian’s network is northern Africa, where it offers service only to Cairo – already well covered by EgyptAir. Important gaps in its network include the oil- and iron-rich countries of Libya and Morocco in North Africa, each better covered by EgyptAir – which serves one destination each in Morocco, Tunisia, Algeria and two in Libya – with the natural advantage of serving multiple destinations within Egypt. But together Ethiopian and EgyptAir have Africa covered for Star.
Ethiopian competes with Middle Eastern carriers on air link to ChinaEthiopian was the first foreign airline to operate into China more than 30 years ago. At that time a political link, it has proven a valuable and longstanding connection into the Asian powerhouse. Times have changed however; though Ethiopian may have been safe from competition 30 years ago, this is no longer the case and Middle Eastern carriers are rapidly expanding alternative links between the region’s oil- and mineral-rich countries and China. Eight Middle Eastern carriers now operate between China and the Middle East including Emirates, Qatar Airways, Etihad, El Al, Mahan Airlines, Saudi Arabian Airlines, Yemen Airways and Iran Air.
Top 12 carriers operating between the Middle East and China
by seats per week: 31-Oct-2011 to 06-Nov-2011Source: CAPA – Centre for Aviation
Only two airlines operate third and fourth freedom services between Eastern Africa and China – Ethiopian Airlines and Air Mauritius – offering approximately 9500 seats per week combined. Emirates, however, offers considerably more than 12,000 seats per week from Dubai to China, with numerous connections on to the Middle Kingdom, which is three times more than Ethiopian’s offering to China. Middle Eastern carriers provide a convenient, one-stop link between multiple points in both Africa and China that rivals the offering of many African carriers, with their multiple stops and limited capacity and frequency.
The Gulf airlines are also achieving major capacity share on routes to Europe. While a similar number of airlines operate Middle East-China and East Africa-China, the importance lies in the number of seats on offer. Emirates, the second largest carrier to operate between Africa and Europe, offers more than 88,000 seats per week, while Air France, the largest carrier to operate between Europe and East Africa, offers just 7,000.
Neighbouring Kenya Airways is a strong competitorDespite the competition coming from the northeast, Ethiopian Airlines’ most direct source of competition is found closer to home, by way of SkyTeam member Kenya Airways. Kenya’s flag carrier is another leading African carrier with aggressive expansion plans. The airline aims to serve “every African country by 2013” and is making steady progress towards that goal, including a rights issue scheduled for Nov-2011 designed to give the carrier a major cash injection. Kenya Airways’ operating profit surged in FY2011, up 73.9% from a dismal 2010 result, suggesting the carrier is back on track to achieve profitability. Kenya Airways is expected to report its 1H2011 financial results on 03-Nov-2011.
Ethiopian Airlines v Kenya Airways: Nov-2011
Source: CAPA – Centre for Aviation and InnovataEthiopian Airlines benefits from government protectionismOne significant factor that contributes to Ethiopian Airlines’ success is its major capacity share at Addis Ababa is due to the Ethiopian Government’s restrictions on foreign airline access. Ethiopian Airlines holds a near-monopoly on domestic routes, where it competes with just one other Ethiopian-registered carrier, Trans Nation Airways, which has one aircraft in service and none on order.Ethiopian Airlines Kenya Airways Aircraft in service 47 36 Aircraft on order 36 21 B787-8s on order 10 9 Dedicated cargo aircraft in service 5 0 Dedicated cargo aircraft on order 2 1 African destinations 32 45 International destinations (Africa and beyond) 56 56 Global airline alliance Expected Star Alliance SkyTeam Codeshare partners 17 14
Addis Ababa Bole Airport capacity, seats, per week by carrier: 31-Oct-2011 to 06-Nov-2011Source: CAPA – Centre for AviationEthiopia has proven one of the least LCC-friendly markets. Full service carriers account for no less than 99% of capacity at the airport, with flydubai the only LCC to operate into Ethiopia, operating a three-times weekly B737-800 service from Dubai.
Ethiopia capacity share, seats, by carrier type: 31-Oct-2011 to 06-Nov-2011Source: CAPA – Centre for Aviation
Protective policies do little to help Addis Ababa’s aspirations to become a large hub, so its future remains inextricably linked to the flag carrier’s growth plans. The result is, paradoxically, to make Ethiopian more exposed to competition from the Gulf carriers’ services into Ethiopia and other African ports. As long as Ethiopian shoulders all of the hub development, so the airport’s attraction limits the flag carrier’s potential to on-carry traffic from other airlines.
Outlook promising but expansion alone is not enoughEthiopian Airlines has been consistently profitable over the past four years and is likely to see future profitability as its expansion plans are rolled out. Freight, although sensitive to market fluctuations, remains a strong point. Ethiopian has experienced considerable success with its network and sees it as a future revenue generator.
Liberalisation must surely spread across Africa, but Ethiopian – more than almost any other airline in the region – has the opportunity to restructure in time to meet the new challenges this brings. So long as it continues to expand rapidly, this revitalisation process will be made easier – provided it is addressed as a key priority. Expansion alone will not suffice.
Background informationEthiopian Airlines’ Africa and Middle East route mapSource: Ethiopian Airlines
EgyptAir’s Africa and Middle East route mapSource: Skyscanner
Post courtesy Centre for Asia Pacific Aviation
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Star Alliance reaffirms position as strongest alliance in Africa with Ethiopian and potentially ASKY
Posted: December 18, 2011, 5:46 am by nero
Star Alliance has further cemented its position as the leading alliance in Africa after Ethiopian Airlines officially became a member on 13-Dec-2011. Ethiopian, which has been working on joining Star since being accepted as a new member in Sep-2010, becomes the third African carrier in Star following South African Airways (SAA) and EgyptAir. Ethiopian’s membership significantly boosts Star’s presence on the continent, adding 23 African destinations to the Star Alliance network. Four of the top five African carriers are now aligned, and three of these four are in Star.
Overall the African continent remains largely unaligned. But Star is currently not looking to recruit another African carrier. Instead Star is looking forward to Ethiopian subsidiary ASKY later joining the alliance. Togo-based ASKY would improve Star’s connections in West Africa, the alliance’s weakest region within Africa. Ethiopian gives Star a stronghold in East Africa and Africa overall as Ethiopian has the largest African network among any African carrier, with 40 destinations. Star is already strong in southern Africa, where SAA is based, while EgyptAir is based in North Africa.
With Ethiopian formally joining, Star's share of total capacity in Africa has increased by nearly 5 percentage points, from 22.1% to 26.8%. Star is by far the largest alliance in the region.
SkyTeam now accounts for 9.6% capacity in Africa thanks largely to local member Kenya Airways as well as the African networks of Air France, KLM and Delta Air Lines. oneworld (including oneworld affiliates) has just 6.8% of the total capacity in Africa, making it the least represented of the three global alliances.
oneworld is only represented locally in Africa by Comair, which operates a British Airways franchise in South Africa. Unaligned carriers still account for 56.8% of capacity in Africa, a high figure compared to other regions.
The impact of Ethiopian’s Star membership is biggest in East Africa. Star has now taken over from SkyTeam as the largest alliance in East Africa, increasing its share of capacity from 5.7% to 28.7%. SkyTeam has 22.4% of the capacity in the region followed by oneworld, with only 1.5%.
Africa: The Continent of the Future
Star Alliance CEO Jaan Albrecht said adding Ethiopian represents “a large step forward in completing our Africa strategy”. He said with three big hubs in Africa, Star has succeeded in its task to create an efficient travel system for all of Africa and “bring Africa to the world”.
Star Alliance now has three main bases in Africa - Johannesburg OR Tambo International Airport (through SAA), Cairo International Airport (through EgyptAir) and Addis Ababa Bole Airport (the home of Ethiopian Airlines). The addition of Ethiopian and the Addis Ababa hub means Star carriers now serve Africa with over 750 daily flights to over 110 destinations in 48 countries.
Mr Albrecht says offering a wider choice of flights to, from and within Africa than other alliances is particularly important because Africa is “a region of the world in which air travel is enjoying steady growth rates”. He called Africa “the continent of the future”.
Star Alliance CEO Jaan Albrecht said adding Ethiopian represents “a large step forward in completing our Africa strategy”. He said with three big hubs in Africa, Star has succeeded in its task to create an efficient travel system for all of Africa and “bring Africa to the world”.
Star Alliance now has three main bases in Africa - Johannesburg OR Tambo International Airport (through SAA), Cairo International Airport (through EgyptAir) and Addis Ababa Bole Airport (the home of Ethiopian Airlines). The addition of Ethiopian and the Addis Ababa hub means Star carriers now serve Africa with over 750 daily flights to over 110 destinations in 48 countries.
Mr Albrecht says offering a wider choice of flights to, from and within Africa than other alliances is particularly important because Africa is “a region of the world in which air travel is enjoying steady growth rates”. He called Africa “the continent of the future”.
ASKY likely to join Ethiopian in StarSpeaking to CAPA after the 13-Dec-2011 joining ceremony in Addis Abba, Mr Albrecht says Star does not see a need to add a fourth African member. Instead the alliance’s recruitment efforts are now focused on Russia, India and China. Star is still not represented in Russia or India, two important growth markets. In China Mr Albrecht believes new members beyond Air China and incoming member Shenzhen Airlines would be beneficial.
Mr Albrecht acknowledges Star is still relatively weak in West Africa but believes Ethiopian can fill this void. Ethiopian already serves several destinations in West Africa and has ambitious plans to grow ASKY, a Togo-based subsidiary which launched services at the beginning of last year. According to Innovata data, ASKY already serves 18 destinations, primarily in West Africa.
Mr Albrecht, whose decade-long tenure as Star CEO ends later this week as he has already started a new job as CEO of Austrian Airlines, says the alliance has not yet considered adding ASKY as a member. But as ASKY grows adding Sky would “make sense”.
Otherwise, West Africa lacks suitable candidates that meet Star’s standards. Mr Albrecht says Star was impressed with Ethiopian’s high standards, including its training and maintenance standards, and expects Ethiopian will bring those standards to West Africa with ASKY.
Star to help Ethiopian pursue rapid and profitable growthEthiopian Airlines hopes its Star Alliance membership will significantly boost its hub’s role as a prominent African gateway, boosting revenues, reputation and presence.
Speaking at Ethiopian’s joining ceremony, Ethiopian CEO Tewolde Gebremariam said joining Star is an important pillar to its 15-year business plan, known as Vision 2025. He says Star specifically will help Ethiopian implement its cost savings initiative and advance its multi-hub strategy in Africa, paving the way for “fast, profitable and sustainable growth”.
Ethiopian is already one of the world’s fastest growing carriers and plans to pursue further rapid growth, driven partially by its membership in Star, over the next 14 years. Mr Gebremariam says by 2025 Ethiopian plans to generate revenues of USD10 billion, across seven business groups, and carry 18 million passengers. The carrier expects to have 120 aircraft in service by 2025 and a network of 90 international destinations.
Ethiopian currently operates a fleet of 47 aircraft and a passenger network of 62 international destinations, including 40 within Africa. The 47 aircraft include six freighters which are used to operate dedicated freighter service to 24 destinations, including 15 in Africa. Ethiopian plans to continue to pursue rapid growth of its cargo business and is planning an expansion of its cargo terminal in Addis Abba. Ethiopian is also planning to expand its maintenance and training facilities as well as build a new headquarters over the next several years.
Ethiopian needs to order about 60 additional aircraft to meet growth planAs Ethiopian only has 32 aircraft on firm order (include 12 A350s, 10 787s and eight 737-800s) and plans to replace about 20 of its current aircraft over the next decade, additional orders for approximately 60 aircraft are needed to meet its Vision 2025. As CAPA reported earlier this week, Ethiopian is now looking to exercise several options for 787s. Ethiopian will become Africa’s first 787 operator in 2Q2012 and will use the new type partially to expand its Asian network, where it sees huge opportunity for growth.
See related article: Ethiopian eyes 787 service to Hong Kong and new Asian services as Africa-Asia market booms.
While Ethiopian plans to add several new destinations, particularly in Africa and Asia, it will use Star partners to help expand its offline network. Ethiopian already codeshares with 17 carriers, 10 of which are also in Star – BMI, Brussels Airlines, Lufthansa, SAS, SAA, Turkish, Air China, Asiana, EgyptAir and SIA. Ethiopian plans to expand its codeshare partnerships with several of these carriers as well as implement new codeshares with some of the nearly 20 Star carriers it currently does not codeshare with.
Star increases presence in Ethiopia by over 19 foldAddis Ababa is now served by only three other Star members - EgyptAir, Lufthansa and Turkish. By joining Star Alliance, Ethiopian has increased Star's capacity share in Ethiopia by over 19 fold, from 4.5% to 88.5%.
The second largest alliance in Ethiopia is now SkyTeam (2.0%) although unaligned carriers make up the country’s second largest capacity share. The SkyTeam alliance is represented by Kenya Airways, who serves Addis Ababa with approximately 2,000 seats per week. oneworld does not have any service to Ethiopia.
Ethiopia total capacity, seats share by alliance: before and after Ethiopian's Star membership Source: CAPA – Centre for Aviation and Innovata
NB: Each alliance is not represented by the same colour in each graph.Addis Ababa BoleAirport total capacity, seats share by alliance: before and after Ethiopian's Star membership Source: CAPA – Centre for Aviation and Innovata
Ethiopian Airlines currently operates approximately 115,000 seats per week at Addis Ababa, accounting for 83% of total capacity at the airport. Emirates, the second largest carrier, offers just 7,220 seats per week.
Addis Ababa Bole Airport capacity, seats per week, by carrier: 12-Dec-2011 to 18-Dec-2011Source: CAPA – Centre for Aviation and InnovataEthiopia has very low LCC penetration, with just 0.8% of total capacity being held by an LCC (in this case, FlyDubai). Liberalisation has always been a contentious issue across the African continent including in Ethiopia. Ethiopian Airlines, because of its recent financial success and membershiop in Star, is in good position to meet any challenges future liberalisation may bring if the Ethiopian Government is willing to open Ethiopia’s sky to more international operators.
Ethiopian Airlines’ network is a valuable addition to Star Alliance as it serves many of the mineral-rich African countries such as the Democratic Republic of the Congo (gold and diamonds), Botswana (diamonds), South Africa (iron and oil), Namibia (via codeshare- lead, zinc, diamonds) and Angola (oil). It also serves Rwanda, Uganda, Tanzania and Nigeria – some of Africa’s fastest growing economies.
Ethiopian has a dedicated freight network like no other in Africa. Overall Ethiopian's African network is one of the most developed in Africa and is extremely valuable to Star, especially as air traffic on the continent is expected to increase in the years to come.
Its network does however have some limitations. Ethiopian’s coverage of Northern Africa is weak, which, luckily for Star, is already well covered by EgyptAir.
Important destinations missing from Ethiopian’s African network include Libya, Morocco, Tunisia and Algeria. EgyptAir serves all these destinations but has a weaker East and West African network. Therefore the Ethiopian and EgyptAir networks are highly complimentery. There is only small amount of cross-over between Ethiopian Airlines and EgyptAir’s networks, with both carriers serving Dubai, Khartoum, Nairobi, Jeddah, Abu Dhabi and Lagos. Together, Ethiopian Airlines and EgyptAir have Africa covered for Star.
Ethiopian Airlines African route mapSource: Ethiopian AirlinesBackground informationStar Alliance, the largest of the three major alliances, now has 28 members. This will grow to 30 in 2Q2012, when Copa and Avianca-TACA are added as new members. Shenzhen is slated to become Star's 31st member in late 2012.
Global Alliances members
Article Courtesy: Centre for Asia Pacific Aviation
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Ethiopian to use B787 Dreamliner in the Hong Kong and new Asian services as Africa-Asia market booms
Posted: December 18, 2011, 5:29 am by nero
Article Courtesy: Centre for Asia-Pacific Aviation
Ethiopian will become the first carrier in Africa and Europe to operate 787s when it takes the delivery of its first 787-8 in 2Q2012.
Ethiopian Airlines will further strengthen itself in the nascent but rapidly growing Africa-Asia market by using its new Boeing 787 Dreamliners to open new routes – potentially in China, Malaysia and Singapore – reduce costs and align its overall fleet strategy to better serve existing Asian destinations. The geography of Ethiopian's hub in Addis Ababa allows the carrier to offer as efficient or more efficient connections than those through Middle East hubs. Ethiopian's African network is also unrivaled in the number of destinations served, and the booming times are seeing Ethiopian consider exercising 787 options and accelerating deliveries, slots permitting. Elsewhere in its route network, whose capacity is growing at 30% a year, Ethiopian next year will commence services to Toronto and in 2013 will increase capacity to Washington Dulles by deploying 777-300ERs.
Ethiopian will become the first carrier in Africa and Europe to operate 787s when it takes the delivery of its first 787-8 in 2Q2012.The 787 last week made its African debut, with a demonstration aircraft in Addis Abba that coincided with a ceremony celebrating Ethiopian joining the Star Alliance.
Ethiopian had planned to first deploy its 787 – most previously expected in Jan-2012 – to Guangzhou, as CAPA reported in Jun-2011. Ethiopian CEO Tewolde Gebremariam told CAPA yesterday that Guangzhou is still an option for the carrier’s first 787 but Ethiopian is also now looking at using its first 787 to serve Hong Kong. He says Ethiopian is also evaluating three potential Asian routes which could be launched with the 787: Chongqing in China, Kuala Lumpur in Malaysia and Singapore.
787 better suited to Hong Kong's lower demandGuangzhou may not end up receiving Ethiopian's 787 on a regular basis because demand is now so strong from Guangzhou a larger aircraft is needed. Guangzhou had been served daily via Bangkok with 767-300ERs and the intention was to upgrade the route to non-stop once the first 787 was delivered. But Mr Gebremariam said Ethiopian decided to instead upgrade Guangzhou in Oct-2011 to non-stop using the 777-200LR, which seats 321 in two classes. Ethiopian's 767-300ER typically seats 234 while its 787-8 will seat 270 (24 in business and 246 in economy), giving the 777-200LR a 50 seat advantage – as well as greater cargo capacity, critical on the route to Guangzhou, China's manufacturing heartland.
Ethiopian has seen higher demand from mainland China than Hong Kong.Mr Gebremariam says Guangzhou is switching back this week to the 767 via Bangkok but says demand is generally sufficient to support the 777-200LR. While Guangzhou could still see the 787 instead of the 777-200LR during certain times of the year, Mr Gebremariam foresees the 787 used more regularly to Hong Kong because Ethiopian has seen higher demand from mainland China than Hong Kong.
Ethiopian now serves Hong Kong with four weekly 767-300ER flights via Bangkok. Mr Gebremariam says these will be upgraded to non-stop, likely in 2Q2012, after the first 787 is delivered.
Africa-East Asia routes currently operated or planned
Source: CAPA - Centre for AviationFour 787s in 2012 with further orders likelyMr Gebremariam says Ethiopian is now slated to receive four 787s in 2012 with the first to be delivered in the April to June timeframe. Ethiopian currently has 10 787s on order. All are for the -8 variant with the last aircraft slated for delivery in 2014. Mr. Gebremariam says the carrier is interested in exercising options for additional 787s and accelerating its deliveries, although 787 production slots are tight. Ethiopian, which also has orders for 12 A350s and nine additional 737-800s, needs more aircraft to meet its 15-year business plan.Carrier Destination(s) Air Austral Bangkok Air Mauritius Bangalore, Chennai, Hong Kong, Kuala Lumpur, Mumbai, New Delhi, Shanghai, Singapore Air Zimbabwe Beijing Cathay Pacific Johannesburg Ethiopian Beijing, Bangkok, Guangzhou, Hong Kong, Mumbai, New Delhi Hainan Luanda Jet Airways Johannesburg Kenya Airways Bangkok, Guangzhou, Hong Kong, Mumbai Malaysia Airlines Cape Town, Johannesburg Singapore Airlines Cape Town, Johannesburg TAAG Angola Airlines Beijing Thai Airways Johannesburg South African Airways Beijing (planned), Hong Kong, Mumbai
Mr Gebremariam says the 787 will enable Ethiopian to open new destinations while lowering its operating cost. “It is a pillar of our Vision 2025 [business plan],” he says.
Ethiopian is particularly bullish on using its 787s to expand in Asia although the type will also be used on some European routes, likely starting by the end of 2012. Ethiopian now serves three destinations in mainland China – Guangzhou, Beijing and Hangzhou – and is planning to add several Chinese cities as part of Vision 2025, likely starting with Chongqing. While new destinations in Southeast Asia and North Asia are also part of Vision 2025, China is particularly the focal point as traffic between China and Africa is expected to boom.
Consideration of Asian hub in SingaporeEthiopian is particularly interested in Singapore. Mr Gebremariam acknowledges that Addis Ababa-Singapore is a small local market but sees potential for Singapore to become Ethiopian's Asian hub. Ethiopian Airlines and Singapore Airlines began a codeshare at the beginning of last month on the Addis Ababa-Dubai-Singapore route (with Ethiopian operating Addis Ababa-Dubai and Singapore operating Dubai-Singapore). This codeshare could potentially be expanded to include Singapore Airlines and SilkAir destinations in Southeast Asia as well as destinations in China, giving Ethiopian offline access to more of Asia.
Singapore Changi is also keen to attract an East African carrier given the opportunities a Singapore-East Asia route could have in developing Singapore as a hub for broader Asia-Africa connections. Currently Changi only has one African carrier, Air Mauritius, and Singapore Airlines only serves one African country, South Africa, non-stop from Singapore (Cairo is served via Dubai). Rival hub Bangkok has been far more successful at developing African connections and has service from several African carriers including Ethiopian and Kenya Airways. While Ethiopian is also considering Kuala Lumpur, Singapore makes more sense as Singapore is a Star hub. Bangkok is also a Star hub but Ethiopian does not yet have a codeshare with Thai Airways.
As CAPA reported in June of expected rapidly growing China-Africa links:
China is a key market for the carrier as Ethiopian is ideally positioned geographically to tap into the fast growing China-Africa market. Ethiopian currently operates 26 weekly flights to four destinations in China, making it the largest carrier between China and Africa. It has already begun codesharing with Star member Air China.
Over the past decade air traffic between Africa and Asia has doubled. Africa supplies China with one-third of its fuel needs as well as notable amounts (by value) of timber, copper and diamonds, with trade between Africa and China surpassing USD100 billion in 2010.
Annual number of inter-continental seats to/from Africa: 1988-2010
Source: AirbusOf all traffic measured in revenue passenger kilometres to/from and within Asia-Pacific, Africa will have the highest annual growth rate at 8.4% through 2020, eclipsing the 7.5% of intra-Asia-Pacific traffic and 7.5% of Latin America-Asia-Pacific traffic, Airbus forecast in its 2011 market outlook.
Average annual growth of traffic to, from and within Asia-Pacific: 2011-2020
Source: AirbusAfrican travel will also eclipse the global average of traffic growth to/from and within Europe. RPKs from Africa will grow at 4.5% a year between 2011 and 2030, outpacing the 4.2% average, although Africa falls behind the Middle East, Russian Federation and Asia-Pacific.
Average annual growth of traffic to, from and within Europe: 2011-2030
Source: AirbusAfrica will account for the second-highest growth of traffic to/from and within North America, growing at 5.6% a year from 2011 to 2030.
Average annual growth of traffic to, from and within North America: 2011-2030
Source: AirbusWhile Africa's growth rates are high, the growth is based off currently low figures. Travel to/from/within Africa will be the single smallest region, representing just 3% of 2030's RPKs by Airbus estimates.
Share of world air travel by RPKs: 2030 projection
Source: AirbusAddis Ababa hubs provides strategic connectionsEthiopian's hub in Addis Ababa provides geographically convenient connections. On a sample routing from Shanghai to Johannesburg, transiting through Addis Ababa is only 21nm longer than transiting through Dubai.
Route comparison: Shanghai to Johannesburg via Dubai and Addis Ababa
Source: Greater Circle MapperRouting Distance (nm) Shanghai-Dubai 3488 Dubai-Johannesburg 3450 Total distance via Dubai 6938 Shanghai-Addis Ababa 4773 Addis Abab-Johannesburg 2187 Total distance via Addis Ababa 6960
A routing from Guangzhou to Entebbe (Kampala) is 162nm shorter through Addis than Dubai.
Route comparison: Guangzhou to Entebbe via Dubai and Addis Ababa
Source: Greater Circle MapperWhile intermediate point connection distances matter (as well as connection flight timing, which Emirates excels at with three departure banks) so too do the destinations served on the other end. Ethiopian serves 40 points in Africa compared to Kenya Airways' 44, Emirates' 21, Qatar's 14 and Etihad's 11. South African Airways, although not as strong a competitor for Asia-Africa services, has flights to 31 destinations in Africa.Routing Distance (nm) Guangzhou-Dubai 3152 Dubai-Entebbe 2010 Total distance via Dubai 5162 Guangzhou-Addis Ababa 4345 Addis Abab-Entebbe 655 Total distance via Addis Ababa 5000
Beijing a borderline route for Ethiopian after 787 performance shortfallBoeing sees the 787 as a vehicle to increase connectivity between China and Africa. Kenya Airways, which is one of four African customers for the 787 (the others are Arik Air and Royal Air Maroc), is also well positioned to tap in the booming China-Africa market.
Boeing sales director for Africa Rob Faye told CAPA following a press briefing yesterday in Addis Abba that the 787 in Africa will be used more for route development than replacing existing aircraft, pointing out that Ethiopian and Kenya are both planning to double their overall fleets over the next 10 years. The 787 demonstrator will be stopping in Kenya later this week as part of its multi-month world tour.
The 787 is geared as a 767 replacement, and Ethiopian's order of 10 787s corresponds to replacements for its 10 767-300s, but its comments to obtain additional frames support route growth. Likewise Kenya Airways has 5 767-300s in service and 9 787s on order.
“Africa is going to grow. Aviation is the catalyst to growth,” Mr Faye says, adding that without connectivity economic growth is limited.
Ethiopian is now unable to use its 767s to serve China non-stop because of the takeoff restrictions at Addis Abba, which has an altitude of over 7000ft. Hangzhou is served via Delhi and is another likely non-stop route for the 787. Ethiopian also previously served Beijing via Delhi but was able to upgrade its daily Beijing service to non-stop in May-2011 after taking delivery of its second batch of 777-200LRs.
Mr. Gebremariam says Ethiopian plans to continue using 777-200LRs on the Addis Abba-Beijing route rather than switch to 787s as he expects the carrier would have some payload limitations with the 787 to Beijing. Mr Gebremariam says Ethiopian would likely have to leave a few seats empty flying the 787 out of Addis Abba for Beijing and would also be restricted in carrying belly cargo.
Boeing, however, claims the 787-8 has the range to reach Beijing from Addis Abba, factoring in Addis Abba’s high altitude and normal 242-seat configuration. Ethiopian plans to operate its 787-8s with 246 seats in two-class configuration.
Even if Beijing ends up being a borderline route for operating the 787-8 with full payload, all of Ethiopian’s other Asian routes and all its European routes are safely within range with full payload. As a result, Mr Gebremariam does not seem to upset with the aircraft coming in with less range than originally expected.
...the range difference between the expected and actual range is very small...Mr Gebrermariam says the range difference between the expected and actual range is very small with Beijing the only affected current route. He says Korea and Japan are also now out of range but while Korea and Japan are potential routes in the carrier's long-term business plan they are currently not high priorities.
Ethiopian originally intended to use its 787s to serve the US via Europe but later decided to order five 777-200LRs to help offset the impact of the delivery delays on the 787. The first batch of two 777-200LR were delivered at the end of last year and used to upgrade Washington Dulles, which is now served non-stop on the eastbound leg. The last three 777-200LRs from Ethiopian’s order were delivered this year and used to upgrade Beijing and Guangzhou. Ethiopian also uses the 777-200LR on one of its two daily Dubai flights.
Preliminary changes to Ethiopian Airlines long-haul route network
Source: CAPA - Centre for Aviation with airline reportsToronto to be launched in 2012Ethiopian was planning to begin flights this quarter to Toronto with 777-200LRs but postponed the launch of the new route. Mr Gebrermariam says Toronto is now planned to be launched in summer 2012 with two or three weekly 777-200LR flights. Like Washington DC, Toronto will be served non-stop on the eastbound leg but will stop in Rome going west.Route Status Equipment Remarks Chongqing Under consideration 787-8 Europe, general Active
Future767-300ER
787-8Guangzhou Active 777-200LR alternating with 767-300ER 787 may replace 767 during select times Hong Kong Active
Future767-300ER via Bangkok
787 direct serviceLikely first 787 destination Kuala Lumpur Under consideration 787-8 Singapore Under consideration 787-8 Toronto Future 777-200LR Washington Dullles Active
Future777-200LR
777-300ER
Ethiopian is continuing to study other potential new destinations in North America. But for now the carrier plans to focus on Washington Dulles and Toronto. Both are Star Alliance hubs which will help Ethiopian connect with the rest of North America.
Ethiopian does not plan to acquire additional 777-200LRs but Mr Gebrermariam says the carrier has committed to acquiring two 777-300ERs for delivery in 2013. He says the intention is to use the 777-300ERs to up-gauge the Washington Dulles route.
The 777-300ER has the range to be able to operate non-stop from Dulles to Addis Abba. Westbound a fuel stop will still be required but this is no disadvantage to the longer-range 777-200LR, which also needs a stop going west because of Addis Abba’s high altitude. Mr Gebrermariam says Ethiopian will keep its 777-200LRs even as the Dulles route switches over to 777-300ERs as it still has routes which are too thin for 777-300ERs and are too long for the 787.
Overall Ethiopian is a flexible carrier and will likely change multiple times its deployment of aircraft. The main focus is rapid growth and to secure as many modern widebodies as possible.
Mr Gebrermariam laments the 787s are still not coming fast enough, forcing the carrier to stick with some of its ageing 767-300ERs for longer than it wishes. He says Ethiopian this month returned one of its 767-300ERs, which leaves it with 10 of the type. But he said Ethiopian is unable to phase out any of its 767s in 2012 as it aims to continue growing capacity at a clip of 30% per year.
Ethiopian, however, is phasing out three of its seven 757s in 1H2012. Mr Gebrermariam says the 757s will be replaced by a mix of additional 737s, 787s and 767s. Ethiopian is not increasing its 767 fleet but some 767s will be freed up to replace 757s on routes to Europe and within Africa as 787s replace 767s on Asian routes.
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Fish cakes
Alas a fish cake.
Yet more fish cakes
Guess what ... yeah ... fish cakes.
The end of the fish cakes
