Ethiopian Airline is building a series of alliances across Africa. 

A 45% stake in the new Zambia Airways, 49 % in a new Chad Airlines, 49% in Guinea Airlines and 100% of Ethiopia Mozambique Airlines. Let’s take a look at what these stakes look like.

Mr. GebreMariam plans to buy regional jets to serve these markets.  The MAX7 is no in consideration, but the CS100 and E195-E2 are.  The plan is that Zambia Airways will initially serve national and regional destinations.  With these “bases” Ethiopian plans to create and develop its own feed for long-haul flights.

Regular readers are no doubt reminded of a similar strategy at Etihad.   That did not end well – we thought the concept had merit.  Will Mr. GebreMariam and his team learn from the Etihad mistakes?

Africa is thought to have three big airlines: Ethiopian, Kenya and South African.  The table shows the top ten African airlines, and we see several other names that tend to be overlooked.

There is no information about how many “regional jets” Ethiopian plans to order.   One might consider at least two per new alliance for eight total.  But it easily could be more than that.  Ethiopian is already a big user of the Q400 to create a feed for its Addis hub.  The new set of alliances will be a significant upscaling of the same strategy.  It is also possible that Ethiopian adds even more alliance partners – after all, there are many gaps on the map.

Africa may be an early developing air travel market. But its big enough to absorb the USA and China in terms of land mass.  Any regional aircraft that will act as a feed to Addis must have hot and high performance and good range.  The CS and E2 both have that.

While one tends to think of all airline markets in terms of O&D, Africa might be seen as more emphasis on the D than the O.  IATA recently reported: “African airlines saw 2017 traffic rise 7.5% compared to 2016. Capacity rose at less than half the rate of demand (3.6%), and load factor jumped 2.5 percentage points to 70.3%.”   Research published by ForwardKeys shows where the inbound growth is coming from. 

The focus at Ethiopian on 787s and A350s is warranted.  The growth markets all require aircraft with long ranges.

ForwardKeys also offered this next chart as part of its analysis.  Note that Addis is #3 on the list.  But none of the other countries listed as new airline alliance partners features.   The regional jets Ethiopian orders had better be very efficient as there may be low load factors that, perhaps, only warrant one flight per day.  Unless these new airlines can get access to places like Cairo, Cape Town, and Johannesburg where there is clearly O&D.

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