Ethiopian Airlines’ success is premised on prudence and long-term planning- WoldeMariam Haliu

ESAYAS WoldeMariam Hailu is Managing Director of Ethiopian Airlines International Operations. He spoke to journalists from Lagos last week on various issues regarding the airline. From market share in Africa, to its most lucrative market to its first all female crew flight from Addis Ababa to Lagos. The former Area Manager of Nigeria in the 2000s also spoke on how Ethiopian Airlines has built its brand over the years and how the airline plans to harness the African market for African carrier. Nigerianflightdeck.com was among reporters present for the interview. Excerpts:

Intro:
If anybody wants to know the perspective of a guest working and leaving in Lagos, then it is me. I have travelled in all the geopolitical zones of Nigeria, to the north, to the central south, both the east and west and when I was based in Lagos. And my experience in Nigeria is that Nigeria is the largest African nation and the largest black humanity on the planet, the second one is Ethiopia, in terms of population. You could see a lot of vibrancy in Nigeria especially in the aviation sector; it is the largest aviation market in the continent of Africa. And the people I met were very friendly, very knowledgeable even though those who have not gone to school. The market women can put up an argument during their sales. While living in Nigeria I was nicknamed by vegetable market women in Bar Beach as ‘Baba Ijebu’ because I bargain very well.

That is an embodiment of Ethiopian Airlines strict corporate governance and prudence in cost management and in everything that is the basis for success. Those people who are very prudent in cost management are rich people. People who are carefree in management is not always good, we have to be very careful as far as cost management is concerned.

And the way you see Ethiopian Airlines operating, we are the first national carrier on the continent of Africa since 1945. When we started flying the African skies, we started launching route to Cairo and then to the rest of Africa in the 1960s because Ethiopia was a Pan Africanist. We came to Nigeria in 1960 and have served that great nation for more than half a century now. Because Ethiopia used to be a member of league of nation before the Second World War, it is the only black voice representing the entire black humanity on the planet and a senior founding member of the United Nation right after the Second World War.

So Ethiopia had this civic duty to the continent, to decolonise it in a diplomatic forum. And when diplomacy is not working or when it is failing Ethiopia even sent troops to go and fight, like in the case of Zimbabwe, fighting for the Rhodesia in South Africa. Nelson Mandela was trained in Ethiopia police cadet; he was given an Ethiopian passport His Emperor Majesty Haile Selassie, the last emperor toppled in 1974 by the military communist. So our Pan-Africanism emanates from our history and Africa is our home. And we have been serving the Nigerian public in passenger and cargo operations since 1960 and even when there were a lot of military coups and political unrest, Ethiopia airlines never ever suspended its flight. It has always served, it has always connected the nation of Nigeria to the world and its traffic as well. So we are an all-weather partner, be it rain, be it sunshine we have always been serving that great place. Right now we are operating to five (5) gateways, Lagos, Abuja, Kano, Enugu, as well as Kaduna. And the travelling public has always been travelling from Nigeria for different purposes, pilgrimage into the holy land of Saudi Arabia as well as Israel, Tel Aviv, traders to the South East Asia in Dubai, China and intra-Africa, and student exchange and other things. Even here in Ethiopia there are lots of Nigerian teachers in about 40 Ethiopian universities. Ethiopia is an emerging nation when it comes to education but Nigeria has a mature base. There are a lot of people here and Addis Ababa being the home of African Union and the capital of Africa, UN, ECA and AU are based here.

What do you think aided the acceleration of the achievement of vision 2025 seeing that you have almost done over 80%?

The number one contribution to the success and the attainment and meeting our own goals and even beating it, is having a clear strategy, clear matching order that is not vague. So where we are going tomorrow, today we are planning for it. Infrastructure, fleet planning, human resources management, systems procedures. Whatever we have to plan for tomorrow we do those things today, this is our four (4) pillars.

In terms of human resources, we have been recruiting and we have opened up the largest aviation academy in Africa and that is recruiting pilots, flights engineers, cargo logistics, aviation finance, marketing and sale and what have you. In systems and procedures, Ethiopian Airlines is adapting the SARP system integrator, and so we have clear policies and procedures for everything to reach that vision 2025. And number three (3) fleet planning, we have been planning our fleet much earlier and we have been doing negotiations with Airbus and Boeing and bringing the right sized fleet to launch to all the destinations we have been planning to go. And also the human resources management, performance management, training, fulfillment and all these things for our more than 12,000 employees. And as I said earlier, the strict corporate governance which precludes and disallows any kind of mismanagement and the government is also not interfering in any of the things that we are doing. Although Ethiopian Airlines is 100% owned by the government, the government has given 100% autonomy to the senior management of Ethiopian airlines to conduct the business without any interference. So those things have been the factors that are helping us to achieve and beat our own plans for the future.

Ethiopian airlines is not a member of AFCAC and You are not Ethiopian government which are the top player as far as Africa is concerned. So what is the length of success or would be success of Open Skies Africa, looking at those who are reluctant to abide by the principles?

Africa is one continent, people are talking about Africa Union, free skies for African carriers, and this has already been ratified and agreed by all individual governments. Some have applied it some have not, so when we have that challenge of blockade of traffic right in some places in Africa, what we do is that we try to surmount that problem with a bilateral negotiation with that particular country. Some of the African countries are granting free skies to other airlines which are coming from overseas but they are not giving it to their fellow Africans.

As I am speaking more that 80% of Africa’s air traffic is uplifted by non-African airlines. All African airlines put together have only 20% of the market share in Africa, it is very unfortunate. So our bid is to ensure that Africa’s traffic is defended and distributed to African airlines. That is why we are establishing regional carriers like Asky Airlines in West Africa, in Malawi, now we are in discussion with numerous African airlines to do that, so that they can integrate the regional traffic and then we do traffic feeders, that way we try to stimulate Africa’s energy to defend Africa’s traffic for Africa’s airlines. So Yamoussoukro is very important. And whoever has not been doing it, it is high time for them to come to terms and apply that.

Ethiopian airlines decision to use an all women crew for one of your newest aircraft in your fleet, is it more of a gender thing or a Public Relations stunt or a business decision?

You know we are all in Africa in the sense that our mothers, sisters, daughters and wives, half of us are feminine. But in our culture in Africa there has been a long history of loving them but at the same time looking down at them. So we just want to dispel and break the stereotype that women are able to handle everything and anything even a hi-tech machine like a new Boeing or Airbus or whatever equipment, to fly it , engineer it, to operate it and to conduct it. So we just wanted to show that, because I heard some people talking about the history of Adam and Eve, people say that Adam must be a white man because if he was an African he wouldn’t have listened to his wife. So our sisters are someone to listen to and they are able to do everything and anything, so we just wanted to show in our own continent in Africa that the role the women have is something very big and also to show to our brothers in the continent that our sisters are capable of doing anything and everything. Number two, by so doing, direct or indirectly public relations advantage also come, because people who are in the gender cause, it is called social cause marketing, they appreciate what we are doing and they try to decide to do business with us, so that is an added advantage. Even our mother Africa we call her a She. Why do we do that? Because it makes it more affectionate. It has a Public Relations angle although the primary aim is not that but in addition it has that public relations angle.

What are your reasons for establishing your cargo facility?

You know Africa has a lot to export to the rest of the world be it fresh produce. If we talk of fresh fruits from Nigeria for example, in fact we have a plan, if there are people in term of the season like mango and other fruits like pineapple, if there is a definite guarantee supply, we are ready to carry it to the Gulf, Middle East, Asia, China and Europe. By way of import also Africa import a lot of technological things like mobile telephone equipment, computer parts, automotive parts and the rest of it. So for those we are trying to attract a lot of foreign direct investment like LG, Samsung and the rest of them to have their regional logistic hub in Ethiopia. Because geography also allows them to come directly here and from here because we have the largest Africa network in the entire history of aviation, more than 55 destinations in the continent, daily routes, cargo as well as food freight. We have a lot of freighter aircraft, 100 ton capacity, Boeing 777LR. So with that we want to distribute from those regional distribution hubs in here to the rest of Africa and also to take Africa’s produce and broadcast them to Gulf, Middle East, Asia and Europe. So that way Africa will not only be an importer but also an exporter, so the trade balance will be okay. And with that Ethiopian airlines wants to play its role as the new spirit of Africa, it wants to take Africa’s produce to the rest of humanity and also bring other countries produce to Africa. So for that we need to have 800,000 tons of cargo capacity per annum with electronic transport, cool storage, valuable storage and the rest of it that is why we built that facility.

Recently one of the managing directors in the Nigerian aviation industry lamented that African airlines are paying quadruple of whatever European or an America airlines are paying in form of insurance on their aircraft and even on the leasing of aircraft. How does this insurance premium affect your operations?

Insurance are always there assessing their own risk, so risk are based on the past experiences, safety standard and what have you. So, for any African operator to have a palatable insurance expense, we Africans need to build our capability of safety records by way of safety assessment, safety avoidance, accident predictions and our aviation facilities and safety equipment need to be of the world standard. Once it is done then people will be comfortable to cover us with acceptable insurance expenses, that is exactly what Ethiopian airline is doing. Because the safety area of aviation is over regulated, there is Safety Audit Offering Airlines (SAOA), EASA, from the European, FAA, from Federal Aviation of America, ICAO, there are a lot of safety establishments which are regulating safety. So for all of them they come every year to Ethiopia, they review our facilities and renew our safety licenses every year. But that does not come easily because we have to live safety every day. It is not only for the audit purpose which we conduct once in a year but we just have to live it.

So, it all boils down to meeting the safety requirements because aviation is something very, very safety orientated. Because once the aircraft leaves the ground it needs to land back safely with all the souls it is carrying. So it is for a purpose that safety is being giving a big emphasis. So insurance all depends on our safety capabilities and safety records, the better it is, the lower we pay.

So all what we need to do is safety oversight, trainings and our aviation academy gives a lot of training as far as aviation safety and cargo logistic is concerned especially for African students. We have a discounted price for African students from everywhere in Africa in our aviation academy. So the more aviation personnel we have, aviation professionals we have, we build our facilities and we conduct our business in a safe way, then insurance expense won’t be much of problem.

You have about 8.8 million passengers annually, how much of this comes from local operation?

Passengers originating from Ethiopia and going to the world and coming from the world to Ethiopia is about 30%, and 70% is passing through. From Europe, America, Gulf, Middle East, Asia and Brazil via Addis Ababa to West Central South East Africa and coming back the same way. The morning back is coming, the evening back coming from Africa and going to the world, so that is close to 70%.

On your indigenization policy in Ethiopia, how do you attract investment into the aviation industry considering the expansion of fleet and the infrastructure you are developing?

First of all Ethiopian airlines does not expect any cash injection from the government, it does all its expansion and finance it from its own bottom line. Of course we have different finance organisations like Exim Bank of China, Bank of America, Europe and all those who are suppliers of the aircraft and everything. So when they see that Ethiopian airlines profitability year after year and its success, then they try to chip in and we do financing from them. But when it comes to indigenization, when Ethiopian airlines was established in 1945, it was Trans World Airlines from the US, which is no more now, it was one of the big carriers at that time, which came to set up Ethiopian airlines. It was from the request of His Emperor Majesty Haile Selassie from the friendly nation of the US and once they came they established policies, procedures and structure. But in a few years’ time it was completely Ethiopianised because Ethiopians were kin on studying what was being done. They were studying how they Americans were maintaining the aircraft and how they are doing it and it a short period of time they phased them out, from the CEO to the person sweeping the floor, everything was Ethiopianised. Then we gave big attention to training and development and succession planning, coaching and mentoring, and HR development. When it comes to supplying our group, we do it purely from our revenue as well as foreign capital which are interested in long-term loan, and we are paying back the principal and the interest without any default so far.

Most of your operations in Africa are not solely guided by profit, there is this obligation to serve, how do you evaluate your operations in Nigeria? And looking at the performance of Nigerian airlines, what advise do you have to give to them to operate efficiently. And do you think having MRO will be critically important for Nigerian operation?

Not all of the routes in Africa are profitable, but they have little contribution. For one all the routes to Nigeria have little contribution we have the largest number of passengers from the continent from Nigeria, it has little contribution. Number two, whatever you lose from here you subsidize it from the other with that we serve the whole continent as one piece, that is our strategy. Because without having Nigeria into your network, it just doesn’t work because that is the biggest chunk of market. Because the people are very mobile and it is the largest population on the continent. It is because there are a lot of airlines there and because of competition the yield is very low and the operating expenses in West Africa especially Nigeria are very, very high.

But the entire network contribution is very good plus we have that civic duty of ours. When we started, our commercial tag line was bringing Africa together, that was 72 years ago. At that time there was no African Union but we were talking about bringing Africa together, now having established the Vastest network in Africa, we have succeeded in that civic duty of ours to our own continent. Now we are linking Africa to the rest of the world. Our current commercial tag line is the new Spirit of Africa. Why the new, because people perceive Africa as a place of conflict and problems. But now Africa is an emerging economy with one billion young populations, endowed with natural resources, human capital, and ready for foreign direct investment. So the new spirit of Africa is completely different, it is an emerging continent, so now we want to play our role in facilitating that. So, it is not only counting profit and loss but as a whole the entire network contribution needs to be regarded as one. MRO is very important because aviation without MRO is incomplete. Because the aircraft needs to be maintained, it has A checks between every circle and then B and C checks are there. If we depend for our aircraft checks with other aircraft maintenance facilities and other things, then they will be charging us hands and legs and it is not going to be sustainable. So we need to be very careful about being self-sustaining when it comes to maintenance. And as we earlier said safety is paramount so the maintenance needs to be regarded very importantly. So, that is why Ethiopian airlines as maintained its own MRO, it maintains all aircraft not only for itself but also for Gulf and African carriers. Ethiopian airlines is an aviation group, it is a complete aviation group, it is not just an airline, it has its own maintenance, cargo, domestic network, its own international network, its own catering, and ground handling. So we cater for all airlines operating to Ethiopia. There is a choice for any business make or buy, should I procure catering or should I do it myself. Should I do ground handling or I should outsource it. For those Ethiopian airlines chose to do those in an integrated way because we are an aviation group and we supply this service for ourselves and for others including the training. Unless you have trained aviation personnel who are able to maintain the aircraft, able to fly the aircraft then you have to depend on foreign skills and that can be very expensive.

Considering the fact that Nigeria is the most populated country in Africa followed by Ethiopia, what is the percentage of traffic emanating from Nigeria? And how much is aviation contributing to your GDP?

Aviation contribution to Ethiopia’s GDP is not more than 6% because Ethiopia is predominantly an agricultural society. Three quarter of Ethiopian economy is built on agriculture, then one-quarter is on other, finance, manufacturing, industry including aviation and tourism. Tourism is now emerging, we are reaching 1 million tourists per annum. It is very much a dwarf number when we compare Morocco, Egypt or South Africa even Kenya and Tanzania. So aviation is a small part of GDP, but when it comes to the proportion of Nigeria’s traffic to the rest of Africa, because we fly virtually to everywhere in sub Saharan Africa. Nigeria by country unit is the largest but in proportion it is not that much, because we go into multiple gate ways even in one country. For example when we go to Tanzania, we go to Zanzibar, Das Salem, Kilimanjaro. When we go to Malawi, we go to Lilongwe, when we go to Zambia, we go to Lusaka, Ndola. When we go to Zimbabwe, Victoria Falls and Harare. When we go to South Africa, we go to Cape Town and Johannesburg. When we go to Congo DRC, we go to Goma, Lubumbashi and Kinshasa. To Congo Brazzaville, Pointe-Noire and Brazzaville. In Cameroon, Douala and Yaoundé. So we have multiple gate ways to where ever we are flying, so from all those places we uplift a lot of passengers. In Nigeria alone you know we have about 5 gate ways, so from all those 55 regions of Africa we have a lot of passengers. Most of them have almost daily flights, some of them have 4 times daily flights, like Kenya, Uganda, 3 times daily to Sudan, Khartoum. So because of that, our approach is to integrate Africa and linking it to the rest of the world. And whenever there is a viable effort and endeavour to revamp aviation, we immediately corporate with them so that they can cover the region and they can be on their own. Because the more we are merrier. We want to see strong Kenya Airways, strong South African Airways, Egypt Air, Royal Air Maroc, we want to see strong carriers in Africa. Because we are better off having strong African carriers instead of them being weak and non-Africans come and uplift 80% of the traffic, it is not to our advantage.

A couple of years ago Ethiopia through Ethiopian airlines was making efforts to open up Ethiopia as a tourist destination such that people won’t just transit through the country, but is seems the push is not as strong as it is before?

We started from a low base, the tourist arrival was not even up to 500,000 per annum now it has doubled. Ethiopian airlines has carved out an in-house tool called Ethiopian Holidays and that is even succeeding in bringing a lot of traffic. A month from now there will be an Epiphany holiday and carnival in Ethiopia and with that we are arranging a stopover package for whoever is flying through Addis Ababa, if they are not pressed with time to branch out. We are going to annul the stopover charge on their ticket and also annul the change penalty on their ticket so that they can branch out for 3 or 4 days and then travel to their destination. So Ethiopia has nature, culture, history and wild life but Ethiopia has always been like a beautiful girl covered and waiting for the groom to come and unveiled her. Instead of going out and boasting about is history, wild life and culture, we have not chosen to do that, it has never been like that. So we feel that they should come and discover this without us going out to advertise. That has been the situation and the way we are brought up, the family circle has always been that if you are trying to list your competitive advantages then people would see you in suspicion. But Ethiopia is the centre for major civilization of Christianity and Islam. It has been named 40 times in the bible, the Queen of Sheba and King Solomon and the Ethiopian treasurers in the book of Acts. So there is a lot of history to discover in Ethiopia, you have nature, culture and wild life