Recovery Period: Inside Ethiopian Airlines’ 4-Pillar Growth Strategy

• Ethiopian Airlines is covering all angles, and keen to maximize transatlantic opportunities.

• The African powerhouse reported a 2020/21 revenue of $3.5 billion and transported 4.1 million passengers in the first half of this Ethiopian budget year.

Following two years of downturn, international travel has been bouncing back in recent months. Ethiopian Airlines was forced to heavily adapt during the peak months of the pandemic. The flag carrier of Ethiopiatook it upon itself to redeploy its aircraft to meet urgent cargo demand while conducting over 470 critical repatriation flights. Now, recovery is underway, and the airline is once again evolving. Simple Flying recently spoke with Ethiopian Airlines USA Regional Director Samson Arega, about his airline’s growth strategy in this new era.

Samson noted that his airline is witnessing travel market growth in tandem with remarkable socio-economic progress in Africa. With this pattern, the carrier is concentrating more on corporate & business travel. With growing ties between the US and African countries, these segments will significantly shape themselves as the next big emerging travel market.

Ethiopian Airlines has transported 4.1 million passengers in the first half of Ethiopia’s this budget year, which is higher compared to the same time last year. According to the Ministry of Finance evaluation of government enterprises, the airlines continue to make profit despite challenges. It is said that the Airlines has achieved about 76 percent of its plan for the duration of time indicated above.

“Compared to other competitors, Ethiopian Airlines has demonstrated remarkable progress in this challenging time and it continues to make profits,” Isayas Woldemariam deputy CEO of EAL is quoted as saying.

Isayas Woldemariam added that the airline has been implementing cost minimization in the past six months, and it was able to save about $US 608 million dollars.

Ethiopian Airlines still tops in Africa in terms of passenger traffic, according to latest ranking of African airlines, as Covid-19 continues to shake up the continent’s aviation industry. A new report by AFRAA (African Airlines Association) shows Ethiopian Airlines handled over 5 million passengers last year, followed at a distance by Egypt Air with three million.

The number of scheduled passengers carried by African airlines dropped from 95 million in 2019 to 34.7 million in 2020, representing a year-on-year decline of 63.7%. The reduction in traffic continued until June, before reversing with the gradual opening of borders.

A balanced approach

The refocusing on air cargo helped Ethiopian Airlines end 2021 in a profitable state thanks to a boom in freight demand. Overall, the airline handled the pandemic with its own finances without bailouts while operating close to 70% capacity as the new year arrived.

To handle the challenging conditions of the global health crisis and enter recovery in a strong position, Ethiopian developed a four-pillar growth strategy. The focus areas are:

• Human resource development
• Modern fleet
• Infrastructure development
• Technology

Following the rise of the pandemic, the company capitalized on these pillars and used its agile workforce and technology to cope with the crisis. Samson highlights that the flexibility of its management has been critical in devising new strategies to come through the crisis, including the reconfiguration of passenger aircraft into cargo and redeployment of staff to its least affected business units while applying cost leadership strategies.

Keeping the momentum going

In this next chapter, these pillars will remain integral. Samson told Simple Flying the following about his airline’s recovery plans:

“Passenger business is recovering. Complete recovery is dependent on the confidence of travelers and airlines’ safety measures. For us, safety has been at the heart of our operation, and we stepped up precautionary actions to help gain passenger confidence in travel and expedite recovery. Digitization has also been a priority to bring about a contactless passenger experience from booking all the way to boarding. At the airport, customers’ experience is contactless, easy, and convenient with the newly designed terminal equipped with the latest aviation infrastructure. We digitized most airport activities.”

Samson adds that passengers can seamlessly book, check-in or change travel dates from home. Moreover, most customer flight requirements can be handled by the carrier’s app. As a result, the majority of passenger queries are addressed online with the additional help of chatbots and social media channels.

Ethiopian Airlines has been serving the United States market for over two decades. While the operator has robustly grown in North America over the years, the US is one of the strategic markets that the company is determined to develop.

Samson noted that his airline is witnessing travel market growth in tandem with remarkable socio-economic progress in Africa. With this pattern, the carrier is concentrating more on corporate & business travel. With growing ties between the US and African countries, these segments will significantly shape themselves as the next big emerging travel market.

Thus, in this recovery stage, Ethiopian Airlines’ growth strategy runs in line with its refined focus. Samson told Simple Flying the following about the flight strategy:

“We have scheduled to re-introduce three weekly flights to Washington Dulles Airport (IAD) via Lomé, Togo/West Africa. We are connecting Washington DC, the nation’s capital with West African cities starting in June. This direct flight is evidence of the commitment that we have for our esteemed clients here in the US, to conveniently connect and provide hassle-free air services, and a part of our strategic market expansion in the US. Furthermore, we are also regularizing all our operations to the airports that we fly as the passenger demand eventually recovers.”

Samson adds that passengers can seamlessly book, check-in or change travel dates from home. Moreover, most customer flight requirements can be handled by the carrier’s app. As a result, the majority of passenger queries are addressed online with the additional help of chatbots and social media channels.

Further opportunities

There are notable growth opportunities for the aviation industry across Africa, especially due to the emergence of new passenger segments. The population of sub-Saharan Africa is expected to double by the middle of the century. Additionally, nearly 60% of the continent’s population is under 25-years old. This aspect makes Africa the continent with the youngest population in the world.

Quick shifts

There have been significant changes already this year. Notably, long-time CEO Tewolde GebreMariam stepped down due to health issues and was quickly replaced by new CEO Mesfin Tasew Bekele in March.

Ethiopian didn’t waste time following this shift, with the carrier announcing a thrice-weekly service on an Addis Ababa-Lomé-Washington route that will begin on June 1st using Boeing 787-8 aircraft. The airline’s leadership is keen to optimize opportunities on North American routes, looking to cater to demand from growing business segments.

Ethiopian Airlines concludes that it is determined to recover in the passenger space with the effective practice of safety measures to boost customer confidence.

All in all, the airline’s ability to adapt and show resilience is due to its 75-year journey that has allowed it due evolve with the times. This factor is significant at this time when countries are starting to ease restrictions and airlines need to transition themselves to new challenges to restore business. Therefore, the carrier is working closely with other airlines, airport operators, and aviation regulatory bodies to make the most of this crucial period.

Source Simple Flying