This is a best prospect industry sector for this country. Includes a market overview and trade data.
Aviation accounts for over 80 percent of U.S. exports to Ethiopia. Prior to the spring of 2020, the sector had been growing rapidly with rising demand for air transportation, both passenger and cargo. It will continue to play an outsize role given Ethiopian Airlines status as the leading airline on the continent, and the airline’s infrastructure ambitions.
The Ethiopian Airports Enterprise (EAE), a company within the Ethiopian Airlines Group, carried out an expansion of the Addis Ababa Bole International Airport, under a $345 million contract with China Communication Construction Company. The objective is to triple the capacity of the airport from seven million passengers per year to 21 million. The first phase of the Bole International Airport expansion project was completed in early 2019. EAE also has plans to build a major airport outside of Addis Ababa with a capacity of 100 million passengers per year at a cost of $4 billion.
The new airport would be built outside of Addis Ababa at a lower elevation, reducing jet fuel consumption and enabling flights of a greater distance. Aéroports de Paris Ingénierie (ADPI), a French airport engineering and design firm, has completed a feasibility study for EAE to support identifying a suitable site for the project. Tewolde Gebremariam, CEO of the Ethiopian Airlines Group, which includes EAE, announced that the site selected for the new airport will be in Bishoftu, also known as Debre Zeit, 50 kilometers from Addis Ababa. ADPI is drafting a master plan for the new airport construction project. The master plan design will be followed by tender floating to hire an engineering, design and project supervision consulting firm that will conduct design review, define the requirements of the airport, prepare tender documents for securing the airport development contractor and carry out bid evaluation and supervision of the airport development project.
Ethiopian Airlines Group will seek an international firm to build, operate, and transfer operations to Ethiopian Airlines Group after a defined period, a Build, Own, Operate, Transfer (BOT) model. Ethiopian Airlines group will seek an operator that can provide financing options. Unlike a PPP, Ethiopian Airlines will maintain ownership of the airport. Ethiopian Airlines aims to begin construction of the airport in spring 2021.
The Government of Ethiopia (GOE) drives growth in the domestic aviation sector by building airports throughout the country. EAE has had a goal of increasing the number of total airports in the country to 25 by the end of 2020, but as a result of the COVID-19 crisis many major infrastructure projects will be delayed.
Construction of Nekemte airport began in 2017 at a cost of $27.5 million. The construction of the Hawassa International Airport was completed in 2016 and Ethiopian Airlines flew its first flight to Hawassa city in 2016. A local contractor, YOTEK Construction, built the airport at a cost of nearly $21 million. This airport was built to support the textile industrial park of Hawassa.
During the past decade, Ethiopian Airlines (EAL) has registered average revenue growth of 20% per annum. EAL has been following an aggressive 15-year plan, called vision 2025, with a goal to make EAL the most competitive aviation group in Africa. According to CentreforAviation.com, EAL operates the largest number of aircraft in Africa followed by Egypt Air and South African Airways; with the latter two operating 68 and 64 passenger aircraft respectively. EAL today operates over 100 aircraft, with over 70% of these aircraft supplied by Boeing. EAL aspires to retain its leading African airline position in both passenger and cargo loads.
Under Vision 2025, EAL seeks to double its fleet numbers, increase the number of destinations to 125, carry more than 18 million passengers and 800,000 metric tons of cargo, and improve its current $2.5 billion annual revenue to $10 billion. EAL is looking to renew and expand its flight operations using the following aircraft:
· Bombardier Q400 airplanes for domestic flights,
· Boeing 737 for mid-range flights
· Boeing 787 (replacing both Boeing 757 and Boeing 767) for the long range and
· Boeing 777 and Airbus A350 for the extra-long range.
According to this expansion plan, EAL will buy many new airplanes in the years to come.
EAL has continued to expand its number of routes in recent years. It began service to Chicago in June 2018 from Addis Ababa and EAL began a new regular route to Houston in December 2019. These flights have facilitated greater commercial linkages between the United States and Ethiopia, particularly with the vast number of U.S. firms and Ethiopian diaspora.
Ethiopian Airlines is the first African airline to operate a 100 aircraft fleet, thus establishing its pioneering aviation role and consolidating its leadership position in many aspects of aviation services in the continent. Ethiopian Airlines took delivery of its 100th aircraft, a Boeing 787-900, in 2018. EAL selected the GE GEnx engine to power its six additional Boeing 787-9 Dreamliner aircraft. This selection increases Ethiopian Airlines’ GEnx-powered B787 aircraft to 19 total.
EAL has invested $100 million in expanding and upgrading its aviation academy. The scale and scope of the expansion seals the academy’s position as the largest and the most advanced aviation academy in Africa with an annual intake capacity of 4,000 students training in piloting, aircraft mechanics and technicians, cabin crew, ticket agents and procurement officials. In addition, EAL has invested another $100 million for the first phase of a new cargo terminal that will increase its cargo carrying capacity to 1 million tons, for both dry and perishable goods. The cargo terminal began operating in 2018.
Ethiopian Airlines is expanding fast into West Africa with Togolese ASKY Airlines. EAL is also partnering with Air Cote d’Ivoire, Congo Airways and delivers management services CEIBA International in Equatorial Guinea. The airline has ambitious plans; EAL is working with the Zambian government to relaunch its national carrier with a 45% stake. It also plans to establish a wholly-owned airline in Mozambique and has signed a contract to start an airline in Guinea. EAL has also taken a 49% stake in a Chadian airline. EAL has partnered with DHL Global Forwarding to form a joint venture called DHL-Ethiopian Airlines Logistics Service with an investment of 10 million Euros. According to the partners, the JV conducts business throughout Africa, consequently improving Ethiopia’s logistics infrastructure and connections. EAL has also announced its intention to buy a 20% stake in Eritrean Airlines.
Boeing aircraft with GE engines constitute a majority of EAL’s current operating fleet. At the moment, EAL operates over 70 Boeing airplanes. In recent years, however, EAL began to take deliveries from Airbus, including its first order of a 343-seater Airbus A350. EAL operates 14 A350 XWB, of which 12 have been directly purchased from Airbus and two on lease from AerCap. In 2016, Ethiopian Airlines became the first African A350 XWB operator.
In the past 25 years, small private airways emerged operating small aircraft carrying less than 50 passengers, a regulatory maximum for private operators. These private airlines usually provide local flight services, mostly chartered flights, to remote locations for the diplomatic community, private entities and humanitarian non-governmental organizations.
There are several market opportunities for U.S. companies in airport security, aircraft and other aviation support equipment and aviation infrastructure development.
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(total market size = (total local production + imports) - exports)
Addis Ababa Bole International Airport completed renovation and expansion of its terminals in late 2019. In addition, EAE has carried out a feasibility study and location reviews for the Bishoftu airport outside of Addis Ababa. Tenders for design and construction of the new major airport will be issued during late 2020, but these upcoming tenders present future opportunities for U.S. infrastructure firms. There are many opportunities for U.S. companies to bid on the design and construction of the major airport. Additionally, the new airport will need equipment, machinery, and structures related to indoor and outdoor facilities, including new headquarters, baggage handling, shopping centers, a new cargo terminal, transfers, and parking. Other domestic airports will also require communication, safety, and security equipment as planned upgrades occur in coming years. EAE requires ICT infrastructure and a commercial development plan, which should pave the way for U.S. companies to bid on upcoming tenders.
U.S. Foreign Commercial Service,
Ministry of Transport
Abyssinian Flight Services
Air Ethiopia (Addis Airlines)
Zemen Flight Services
Ethiopian Airports Enterprise
Ethiopian Civil Aviation Authority