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Ethiopian Airlines pushes cargo business
African Business

By Larry Luxner

ADDIS ABABA -- Ethiopian Airlines, one of Africa's largest and oldest air carriers, says cargo will account for 36% of total revenues in 2000 -- dramatically up from previous years.

Mekonnen Abebe, the airline's executive officer for marketing, says that in the past, cargo comprised 22% to 25% of revenues. But the opening of new routes to and from Europe and the Far East has helped spur new growth in the cargo sector.

During 1998, Ethiopian handled 31.7 million tons of cargo, rising to 28.2 million tons in 1999 and a projected 46.6 million tons this year.

"For 2000, we are expecting a much higher revenue contribution from the cargo sector," Abebe said during an interview at airline headquarters in Addis Ababa. "We are developing new markets which were not there in the past. The plan now is to operate from Europe to Dubai, Bombay and Jedda (Saudi Arabia). At the same time, we plan to operate from the Middle East and Asia to Nigeria, Zaire and Johannesburg. The other area we're looking into is flying from all points to Nairobi (Kenya) and Entebbe (Uganda)."

Government-owned Ethiopian Airlines, which recently marked its 55th anniversary, flies to 47 foreign and 33 domestic destinations from its hub at Addis Ababa's Bole International Airport. Its international passenger fleet, which has an average age of 9.5 years, consists of one Boeing 767-260, four Boeing 757-200s and two Boeing 767-300s.

Its domestic fleet includes five Fokker 50s, two ATR-42s and four De Havilland Twin Otters. The airline also leases a Boeing 757-260 freighter with a cargo capacity of 15 pallets of 88 by 125 feet each. That plane has an operating weight of 53,000 kilograms, and total cargo volume of 8,429 cubic feet.

Ethiopian's cargo flights operated three times a week from Addis Ababa to Ostend (Belgium), one a week to London, three times a week to Dubai and three times a week to Bombay. Cargo between Africa and the Middle East and Asia consists mostly of textiles and electronics, while shipments from East Africa to Europe are mostly fruits and vegetables, cut flowers and fish.

"The cargo in general is industrial goods," says Abebe. "Besides [expanded routes], we are also slightly increasing our rates. If you give proper service, people will be ready to pay more for it."

Ethiopian Airlines, using its hub in Addis, transports passengers from eastern and southern Africa to the Middle East, Asia, Europe and the United States, and vice-versa, and from western Africa to the Mideast and Asia. Close to 65% of the traffic is "fifth-freedom" traffic, and the remaining 35% is to and from Ethiopia itself, of which only 10% to 15% of passengers are actually Ethiopian nationals.

Ethiopian Airlines started flying to the United States in June 1998, with two flights a week between Addis Ababa and Washington's Dulles International Airport.

"Right when we started operating that route, the war between Ethiopia and Eritrea broke out," Abebe said. "Our initial plan was to cater to both Ethiopians and Eritreans, with daily immediate connections to Asmara (Eritrea). We were at a point of no return, so we continued our plan. Since traffic to and from Ethiopia was not sufficient, we decided to rework our schedule in such a way that we could give immediate connections to eastern and southern Africa, and also to start serving Newark (New Jersey). If not for the war, we would have made a fortune out of that route."

Planes to and from Washington and Newark are generally filled with passengers -- mainly Ethiopians either living in the States or with family there -- but not with cargo in the bellies of the aircraft, said Abebe.

"Cargo to and from the United States is insignificant," says Abebe. "We operate with 767-300s, which hold 233 passengers. Ethiopians generally carry lots of suitcases and are willing to pay the charge for extra baggage, so there's no room for cargo on these planes."

In early December, Ethiopia and Eritrea signed a peace treaty, ending the state of war that had existed between the two countries for over two years. That's particularly good news for Ethiopian Airlines, which since 1998 has not been allowed to overfly Eritrea during flights to the Middle East or Europe. Abebe says this has forced the airlines to divert its planes over Sudan, "adding significant costs" to its passengers and cargo operations.

In fiscal 2000, Ethiopian Airlines reported 1.9 billion birr ($230 million) in revenues, and is expecting fiscal 2001 revenues of 2.2 billion ($270 million).

"The last two years were not favorable because of several factors, the main ones being the political situation and fuel price increases," said Abebe, adding that "in the last 20 years, the political situation in Ethiopia was not conducive to tourism, so only now are we working on developing tourism. In the past two years, it just wasn't worth it. There was a war going on."

The airline is trying to lure African-American passengers, many of whom are interested in discovering their roots in West Africa and elsewhere.

"Black Americans are a very important target market for us," said Abebe, adding that for now, the most lucrative passenger destination for Ethiopian Airlines is Dubai, followed by Jedda.

Besides the end of Ethiopian-Eritrean hostilities, Ethiopian Airlines should also benefit from the construction of a $30 million passenger terminal at Bole International Airport. When completed in December 2001, the new terminal -- being financed by the government of Kuwait -- will be five times the size of the current one.

At present, Ethiopian Airlines has 83% of the airport's passenger traffic and nearly 100% of its cargo traffic.

Abebe also said he's sure Ethiopia and the United States will soon conclude an "open skies" agreement, allowing U.S. and Ethiopian carriers unrestricted freedom to fly to each other's countries. But he said the agreement won't likely have much effect on Ethiopia for the foreseeable future. At present, the only competition Ethiopian has on that route is Lufthansa, which code-shares with United Airlines.

"Certain issues need to be sorted out, and we are definitely going to sign an agreement soon," he said. "We support the idea. One should be afraid of competition when there's a home-based market. But traffic coming to and from Ethiopia is very low. You can't be afraid of competition when there's no business."

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