Fastest growing carrier in the region

Monday April 5 2010

The Boeing 787 Dreamliner sits on the tarmac at Boeing Field in Seattle, Washington after its maiden flight on December 15, 2009. Photo/REUTERS

The Boeing 787 Dreamliner sits on the tarmac at Boeing Field in Seattle, Washington after its maiden flight on December 15, 2009. Photo/REUTERS 

In January, Ethiopian Airlines shook the African aviation market with the announcement that it had signed an agreement with Boeing to purchase another ten B737-800s aircraft, delivery of which is scheduled to begin November 2011.

The total order is $767 million at a list price.

While KQ operates a smaller fleet of 26 aircraft, Ethiopian Airlines has a mixed fleet of 37 aircraft which include freighters, with another 45 aircraft on order — making it the fastest growing carrier in the region.

Ethiopia’s orders include eight, 78 seater Bombardier Q400s to begin arriving in March 2010, to replace an ageing fleet of five Fokker, 50 seater aircraft currently serving domestic routes.

The Q-400 will be used for both domestic and regional services, probably Juba, Kampala, Arusha and Nairobi.

ET has also ordered five B777-200LRs to be delivered starting in November, the ten B737s slated to begin arriving in July 2011 and twelve A350s set scheduled for delivery in 2017.

Both airlines have until recently operated all Boeing fleets, and were the first African carriers to order the new fuel-efficient, Boeing 787 “Dreamliner” aircraft.

Dreamliners

KQ had ordered nine B787 Dreamliners while Ethiopian Airlines had ordered 10.

But frustrated by delays by Boeing, Ethiopian Airlines has ordered 12 Airbus A350 aircraft to serve growing demand.

According to Flight Global magazine, Ethiopian Airlines is planning to replace its ageing fleet of B767 with the new B787 Dreamliners once they are delivered.

The Addis Ababa-based carrier’s 2023 fleet vision comprises 23 Boeing 737-700 and -800s, 17 787-8s and 28 aircraft in the 300-plus seat range - a new capacity segment for Ethiopian, which currently has 23 passenger jets: 10 Boeing 767-300ERs, eight 757-200ERs and five 737-700s.

Meanwhile, KQ has been talking to Airbus and is expected to order at least six to nine Airbus aircraft in the range A310 to A330 by April, but CEO Naikuni is evasive on acquisition modes and on sourcing for Airbus pilots, who are few in the region.

“The board is taking into account the (Dreamliner) delays and how they impact on the company’s future strategy. In view of this, KQ is deliberating on the pros and cons of available options and will be announcing the final decision on aircraft purchase soon,” Mr Naikuni said in an interview on email.

KQ is owned 23 per cent by the government of Kenya, 26 per cent by Royal Dutch Airlines KLM, with the balance held by individual and institutional investors mainly in East Africa, UK, Netherlands and South Africa.

Even though it operates on a highly business-like model, Ethiopian Airlines is a state corporation owned by the government of Ethiopia.

Occasionally, the Ethiopian government takes one of Ethiopian aircrafts on state missions, interfering with the airlines schedules.

KQ is the only African carrier so far that belongs to the Sky Team Alliance (led by Air France, KLM and Delta).

Ethiopian Airlines has been signing a frenzy of code share agreements in preparation for joining the Star Alliance, most likely ahead of the June 2010 World Cup to be held in South Africa.

Already, South African Airways and Egypt Air are both in Star Alliance, making the group formidable in Africa once Ethiopian confirms membership.

Interestingly, Air France has been fingering Air Algerie as new partner for KQ in the Sky Team, making the battle for African skies an unfinished business.

Ethiopian Airlines hit West Africa in the 1970s before Middle East (Emirates, Qatar) carriers were even born. KQ, under charismatic MD, Mr Brian Davies, copied the Ethiopian strategy in West Africa beginning the late 1990s.

Emirates and Qatar managers have been following ET and KQ expansion in the same region.

Asky Aviation

Ethiopian is also managing Asky Aviation, a new regional airline based in Togo.

ET owns a 25 per cent stake in Asky, whose other shareholders include a private multinational bank, Ecobank, two major development banks in the region – EBID (the Economic Community of West African States-owned Bank of Investment and Development), and West African Development Bank) — as well as South African private investors.

Asky was launched in January.

It is based in Lome and covers Banjul/West African cities with two aircraft.

This airline is a major worry for small airlines in West Africa, mainly because of capitalisation and management.

It plans to fill the gap left by the collapse of Air Afrique in 2002, which was owned by 11 West African nations.