Emirates Airlines: New threat for Ethiopian

By Tamiru Geda

Airlines’ merging internationally, both in assets as well as human forces, or sharing their routes in the world market is becoming a threat for the competitors who have not yet integrated such business strategies in their plan of actions.
Due to the creation of such alliances and aggressive market approach, many airlines have been kicked out of the market and those remaining are fighting tooth and nail to hold on their share of the market.
Star Airlines for instance that is composed of airlines like United, Lufthansa, Singapore Airlines and Thai International recently enrolled South African Airways. Such airlines are seen creating wider and stronger network and route concentrations.
In these difficult times compounded with terrorist threat and attacks as well as heightened competition in the airline sector, airlines like Swiss Air were pushed out of the airline business entirely. A few, however, have sustained the shock and even made some profit and among them Ethiopian Airlines. “Thank God we are saved and we end the year with profit,” declared CEO Girma Wake to the House of People’s Representatives during his report on the flagship’s last six-month performance, on Friday April 2, 2004.
Ethiopian has recorded a net profit of Birr 276 million. Out of this total money, nearly Birr 160 million is gained from the sale and. lease of airplanes. It generated Birr 106 million from passengers and other services. According to the CEO, the rate has increased by 35% in comparison with last year’s same period performance.
However, Ethiopian is facing a big challenge from other airways it had been able to push out from some routes they were operating some years ago, but are now back on the market. According to Girma, Ethiopian has been dominating the market from Eastern Africa to Western Africa up until 1978, competing with airlines like Pan American Airways before it went out of business.
Recently however, some airlines including Kenya Airways have rehabilitated themselves and rejoined the international market. “And they are working quite well.”
Other airliners, which were not aware of the African market before, are now showing great interest. They are competing with Ethiopian in the Western African air travel business, particularly in Nigeria. The Emirates Airlines that operates from Dubai has entered the Eat African market of Tanzania and Kenya and then in to South Africa. These were routes largely dominated by Ethiopian.
“In recent times it (Emirates) started to directly fly from Dubai to Nigeria and Ghana as well. This creates quite a strong competition and is a challenge for us,” said Ato Girma. Emirate is also said to be negotiating to start flights to Senegal as well.
Not only does Emirates have bigger airplanes compared to Ethiopian’s, but the flight they offer are also direct. Most of the passengers from west Africa use Ethiopian to go to Dubai and would rather prefer a direct flight from Accra or Nigeria with out a stopover at Bole International.
On the other hand, says the CEO, the airline is supporting and encouraging local exporters of flowers and meat. Girma believes that the country has a good potential for flowers, vegetable and livestock export, and the sector should be encouraged as it is a good source of foreign currency to the nation. However, he has some reservations on the matter, considering that the airline is not making profit in the shipment/transportation of these export products, and asks to what extent the airline is required to help the sector.
“We lost half million dollars within six weeks recently for chartering cargo planes just to fill the gap,” he regrettably said. “But we can not continue in this pace, as long as the airline is expected to be a profitable entity. And unless it makes good profit, it simply cannot compete in the airline business.”
“We want to work with the exporters, but during pick periods we cannot outdo ourselves and go beyond our capacity without having the necessary airplane.”
In his view, exporters should also consider the space available and be flexible, instead of urging the airline to carry any excess products, they may have. And when it fails to do so, accuse the later of stopping Ethiopian products from export.
According to him, such urgency and obligation might lead the airlines in to bankruptcy in the near future. He proposed that they discuss it with the exporters during the next harvest and come up with a solution of how best to handle the exporters transportation needs. Such problems, it was suggested will be solved when the airlines introduces new cargo planes.
Ato Girma concluded trying to draw the attention of the parliamentarians on the fact that both Ethiopian and the exporters are profit oriented entities, and if the support is only focused on the former, then it is inconceivable to achieve any success in the country. Girma is optimistic that the airlines will remain profitable and continue its dedication to serve its customers better, by reducing the complaints on the delays and other related matters.
In his view, to compete with other airlines, Ethiopian must brace itself with excellent service for its passengers in flight, and respectful treatment for all its customers.