Ethiopian Airlines 2015 outlook: more rapid expansion as it becomes Africa’s largest airline

Ethiopian Airlines annual passenger traffic: FY2008 to FY2014

Ethiopian Airlines annual passenger traffic: FY2008 to FY2014

Ethiopian Airlines is planning further fleet and network expansion in 2015, enabling the flag carrier to widen the gap with other leading African carriers. Ethiopian has already become the largest airline in Africa based on fleet size and could overtake South African Airlines (SAA) in 2015 as the largest based on passengers carried.

 

Ethiopian has doubled in size since the beginning of the decade while most other major African carriers have grown only slightly or not at all. Asia and Africa have been, and will continue to be, the primary drivers as Ethiopian taps the booming Asia-Africa market.

Ethiopian plans to launch services to Tokyo in Apr-2015, which will become its 11th destination in Asia. The carrier will also add its second US destination in Jun-2015 as service to Los Angeles is launched.

Ethiopian Airlines carried 6 million passengers in FY2014

Ethiopian is one of only four airlines in Africa with over 5 million annual passengers. It is also one of only four airline groups with a fleet of more than 50 aircraft.

Ethiopian surpassed the 5 million passenger mark for the first time in the fiscal year ending 30-Jun-2013 (FY2013), when the government-owned flag carrier transported 5.22 million passengers. Passenger traffic reached 6 million in FY2014 fuelled by 15% year over year growth.

Passenger traffic has more than doubled since FY2009 and has grown at a double-digit clip over the last six years.

Ethiopian Airlines poised to surpass EgyptAir and SAA

The other three African airlines that have at least five million annual passengers have recorded virtually zero growth over the last six years.

Royal Air Maroc (RAM) also carried about 6 million passengers in FY2014, roughly matching the Moroccan flag carrier’s figures from FY2008 and FY2011. (RAM traffic shrunk in FY2012 and FY2013 as it restructured but grew again in FY2014.)

SAA carried about 7.1 million passengers in FY2014, maintaining its position as market leader in Africa based on number of passengers carried. But SAA traffic is below FY2008 levels, when it carried 7.4 million passengers. (SAA traffic shrunk FY2009, FY2010, FY2011 and FY2012 but grew slightly in FY2013 and FY2014).

EgyptAir also carried an estimated 7 million passengers in FY2014. The airline’s traffic level reached a pre-Egyptian crisis high of 7.3 million in FY2010. Back in FY2008 EgyptAir transported 6.8 million passengers. (EgyptAir’s financial year ends in June while SAA’s financial year ends in March and RAM’s financial year ends in October.)

As EgyptAir and SAA are both pursuing restructurings in 2015 their traffic levels will likely drop below seven million. RAM is again expanding but not as ambitiously as Ethiopian. As a result Ethiopian could soon become the only African airline with 7 or more million annual passengers – if not in FY2015 almost certainly in FY2016.

This is a remarkable achievement given that SAA carried three times as many passengers as Ethiopian in FY2008. EgyptAir and RAM were also more than double the size of Ethiopian in FY2008.

Ethiopian Airlines grows much faster than rival Kenya Airways

Annual passenger traffic for Ethiopian Airlines and Kenya Airways: FY2009 to FY2014

Annual passenger traffic for Ethiopian Airlines and Kenya Airways: FY2009 to FY2014

But perhaps the best comparison is between Ethiopian and its biggest rival, Kenya Airways. Kenya Airways was slightly larger than Ethiopian in FY2008, when it carried 2.8 million passengers.

Kenya Airways transported 3.7 million passengers in FY2014. Its average annual growth rate has been only about 5% since FY2008. (Kenya Airways’ fiscal year ends in March).

Kenya Airways has pursued a similar strategy to Ethiopian, expanding in Asia and regionally within Africa to leverage the ideal location of East Africa for Asia-Africa flows. But Ethiopian’s expansion in Asia has been much faster and its pursuit of Asia-Africa transit passengers is much more aggressive.

Kenya Airways also has been set back by instability in its home market. After growing rapidly in FY2011 and F2012, Kenya Airways traffic figures were relatively flat in FY2013, FY2014 and 1HFY2015.

Africa-China annual seat capacity for EgyptAir, Ethiopian, Kenya Airways and SAA: 2005-2015

Africa-China annual seat capacity for EgyptAir, Ethiopian, Kenya Airways and SAA: 2005-2015

Kenya Airways currently has only four destinations in Asia compared to nine for Ethiopian Airlines. Ethiopian also has eight more regional international destinations in Africa – 45 compared to 37 for Kenya Airways, according to OAG data. In the key market of mainland China, Ethiopian has more than tripled annual capacity since 2007 while Kenya has pursued relatively modest growth.

Kenya Airways currently only serves one destination in mainland China, Guangzhou (daily), along with Hong Kong (three weekly flights). It has so far failed to move forward with longstanding ambitions to launch Beijing and Shanghai.

Ethiopian currently serves Beijing, Guangzhou and Shanghai with all three destinations now served with daily non-stop flights. Hong Kong is currently served with three weekly non-stop flights and one weekly frequency via Bangkok, according to OAG data. (Ethiopian and Kenya Airways initially served China via gateways in India and Thailand and have gradually upgraded routes to non-stop as new-generation widebody aircraft have been delivered.)

Elsewhere in Asia, Ethiopian and Kenya Airways both serve Bangkok and Mumbai. Only Ethiopian currently serves DelhiKuala Lumpur and Seoul. Delhi is served non-stop while Kuala Lumpur is served via Bangkok and Seoul via Hong Kong.

http://centreforaviation.com/analysis/ethiopian-airlines-2015-outlook-more-rapid-expansion-as-it-becomes-africas-largest-airline-204559

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