Ethiopian sees progress in multi-hub ambitions

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Ethiopian Airlines is advancing its multi-hub strategy across Africa as it targets $10 billion annual revenue by 2025.

The east African airline acquired 49% of Malawi's grounded flag carrier in July, gaining a foothold in southern Africa. Talks are now under way to establish a central African hub – most likely in the Democratic Republic of Congo (DRC) – while Ethiopian already has a strong presence in west Africa through its 40% holding of Togo's ASKY Airlines.

"The joint ventures are part of a bigger strategy under [15-year development plan] Vision 2025," explains chief executive Tewolde Gebremariam. "So far we've been serving the continent from one hub in Addis Ababa. But going forward – when you have very strong competition coming from the Gulf, Turkey and Europe – we need to position the carrier as a pan-continental business."

Ethiopian's southern African investment will see defunct flag carrier Air Malawi resurrected as Malawian Airlines in "about three months", Gebremariam confirms. The airline will initially launch operations with one Boeing 737 and one Bombardier Q400, but it will grow to about 10 aircraft within five years. Widebody jets have not been ruled out for the fleet. "A significant Malawian population lives in the UK, so we [Ethiopian] or Malawian Airlines may also fly from Lilongwe to London," he speculates.

Plans for a central African hub remain in the "initial discussion stage", but Gebremariam is bullish on the prospects for the DRC. "The natural resources of DRC are valued around $17 trillion, so this is a huge market," he notes. "If DRC becomes peaceful and stable, then there will be a huge influx of foreign direct investment … that is going to need substantial growth in aviation." Air France is spying the same opportunities through its proposed start-up Air CEMAC. If Ethiopian fails to make progress in DRC, Gebremariam says Congo Brazzaville would be a suitable alternative base. Talks are on-going with "multiple governments", also including Equatorial Guinea and Gabon.

The flag carrier's push into southern and central Africa follows rapid progress by west African subsidiary ASKY. The Lomé, Togo-based airline has expanded to 22 destinations in its five-year history, helping to restore connectivity on the sub-continent and providing a second hub for Ethiopian. "Since the demise of Air Afrique, Ghana Airways and Nigeria Airways, there has not been a strong carrier to serve the region," Gebremariam says. Ethiopian is now considering requests from its Star Alliance partners to establish a second ASKY hub in Accra, Ghana.

The chief executive believes that third-party services will secure additional revenue growth under the Vision 2025 plan. Training, MRO, cargo, catering and ground services all have the potential to be "profit centres" for the group, he says. But the multi-hub strategy will play the largest role in spreading Ethiopian's reach across Africa. "We have one [joint venture] for the ECOWAS region, one for the SADC region, and one very soon for CEMAC," Gebremariam concludes. "The continent is growing, and we are growing."