The passengers milled about in confusion, staring at departure-gate signs as they searched for their flights. One security checkpoint seemed promising, but it had no staff, so the passengers rushed back and hunted for a new entrance.
It was another day of disarray as construction continued at Ethiopia’s main international airport. But by early next year, after the completion of a US$345-million expansion, the airport will be ready to handle up to 22 million passengers annually − yet another landmark for Ethiopia in its quest to dominate Africa’s aviation sector.
The rise of Ethiopian Airlines, now the biggest airline in Africa, has been matched by the equally dramatic decline of its biggest rival, South African Airways. The fate of the two state-owned airlines has symbolized the contrasting paths of their two countries. South Africa, long the most advanced economy in Africa, has slid into corruption and economic stagnation in recent years, while Ethiopia has become one of the fastest-growing economies on the continent.
The prize of continental leadership is worth the fight. Air traffic in Africa is forecast to grow by 6 per cent annually over the next two decades, faster than any other region in the world.
The stark difference between the two airlines was on display last month. Saddled by heavy debts and seven consecutive years of losses, SAA told the South African government that it will need another US$1.2-billion in government bailouts or bank refinancing to help it survive the next three months. It has already received an estimated US$4.3-billion in bailouts over the past 23 years.
Ethiopian Airlines, meanwhile, was celebrating a victory. A report last month by ForwardKeys, a travel analysis company, found that Addis Ababa has overtaken Dubai to become the top gateway to destinations in sub-Saharan Africa. “Our continued investment in expanding our intra-African network, which is the largest by an airline, is now paying dividends,” said the airline’s group chief executive officer, Tewolde GebreMariam, in a statement after the report.
Ethiopian is already Africa’s largest airline by revenue and profit, with US$3.2-billion in revenue and US$233-million in net profit in the 2017-18 fiscal year. After eight years of passenger growth averaging 25 per cent a year, the airline carried 10.6 million passengers last year.
The report by ForwardKeys predicts a 40-per-cent jump in passengers landing at the Ethiopian capital in the final quarter of this year, compared with a year ago.
“At least some of Ethiopia’s increase in international flight bookings is being attributed to new-found confidence in the wake of reforms carried out by Prime Minister Abiy Ahmed since he took office in April,” the report said.
It noted that the Prime Minister had signed a peace deal with Ethiopia’s former enemy, Eritrea, allowing Ethiopian Airlines to make daily flights into the Eritrean capital for the first time in decades. He has also loosened Ethiopia’s visa policy, allowing international visitors to obtain electronic visas easily online.
Ethiopian flies to almost every significant destination in Africa. It recently became one of the few airlines to fly into Mogadishu, the war-torn Somali capital where most other airlines are too nervous to fly. In total, Ethiopian flies to more than 60 destinations in Africa, often using its home airport as a hub for passengers on complex journeys across the continent.
Johannesburg’s international airport, O.R. Tambo, remains the busiest airport on the continent with about 21 million passengers annually. But the Chinese-funded airport expansion in Ethiopia means that Addis Ababa could begin to challenge Johannesburg for the airport title, too.
Ethiopian has built its rise on simple and efficient no-frills service, reliable schedules and aggressive partnerships with African regional airlines. SAA has offered more-lavish service − until recently, its flight attendants cheerfully handed out two or three small bottles of South African wine at every meal, even on domestic flights − but it has been saddled with top-heavy management, overstaffing, political interference and strategic confusion.
Jacob Zuma, the former South African president who was dogged by corruption allegations until he was forced to resign this year, appointed a close personal friend, Dudu Myeni, as the SAA chairwoman in 2012. Under her control, which continued until last October, the airline was plagued by internal chaos as she blocked changes, bickered with executives and lobbied for hugely expensive airplane deals.
With 58 aircraft and about 180 employees per aircraft, SAA is overstaffed in comparison with most international airlines. Ethiopian, in contrast, has 108 aircraft and an average of about 125 employees per aircraft. The South African government has been reluctant to reduce SAA’s staff size, although the airline has considered a plan to lease its surplus pilots and cabin crew to other airlines.
Jannie Rossouw, head of the school of economic and business sciences at the University of the Witwatersrand in Johannesburg, says the financial crisis at SAA is due to “persistent mismanagement and cronyism” and the government’s refusal to take tough decisions about its future. Its management salaries are far too high, it underestimated oil prices and its bailouts are unsustainable, Mr. Rossouw said in a recent commentary.
Last month, Finance Minister Tito Mboweni mused that the government should consider shutting down the airline. “It’s loss-making, we are unlikely to sort out the situation, so my view would be close it down,” he told investors in New York. “It’s unlikely that you are going to find any private-sector equity partner who will come join this asset.”
Union leaders were furious at the suggestion, and President Cyril Ramaphosa warned that a shutdown could cause the “collapse” of state finances because it would require the immediate repayment of the airline’s massive debts. But a partial privatization is still being considered.
While SAA flounders in a political muddle, Ethiopian just keeps expanding. It has announced that it expects to have 150 aircraft in its fleet by 2025, an increase of nearly 40 per cent from today.