Ethiopian’s Tewolde vows to sustain growth despite soaring fuel price

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Cost saving mechanisms employed to absorb globally soaring fuel prices will not include downsizing and the flag carrier will continue to expand services and operations, says Ethiopian Airlines Chief Executive Officer Tewolde Gebremariam.
Ethiopian saw its cost soar by 55 percent in midyear but so did its revenues that kept the flag carrier in the black.
Launching a new service to the exotic Seychelles on April 1st with a buy one, get one free promotional offer, Ethiopian Airlines now flies to 65 destinations globally with multiple lines opening soon.
“We are in the most challenging period in aviation particularly for African carriers,” admits Ethiopian CEO Tewolde, “however cutting operations and services isn’t our strategy to sustain ourselves in this difficult period. We will keep on growing; we don’t want to falter from our long term vision because of a small wind.”
After an uprising that distributed fuel exports from Libya and other aftershocks of the so called Arab spring, fuel price hikes made their mark at around 120 dollars per barrel for about a year. This has led to a number of casualties in aviation industry with six carriers already pronounced bankrupt.
The International Air Transport Association’s (IATA) says African airlines are more vulnerable to external shocks like to a spike in oil and jet fuel prices. IATA forecasts African carriers to record a combined 100 million dollar loss in 2012 though globally, the industry is expected to reap a three billion dollar profit.
“Carriers globally would not be able to keep their business model with the current some 120 dollars per barrel fuel price, the price will have to come down. Of course with the Iran crisis still unfolding, things may not calm quickly but eventually they will,” explains the CEO.
While ground forces recently agreed to work six days per week, one day more and for free, crew are saving one dollar from every hourly per-diem to aid the airlines’ saving. However, the airliner said no to a proposal to cut crew’s salaries by ten percent.
“At the end of the day, we are still in the black, we are still profitable. So we said no to a proposal by some employees to give up about ten percent of their salaries,” Tewolde said in a recent interview.
As Ethiopian expands, more services are coming in. A launch of new flight services including a non-stop from Addis Ababa to Cotonou, the economic capital of the Republic of Benin, will be effective by June 15.
“We are also adding Toronto by summer. We took delivery of twelve planes last year. This year we are expecting thirteen planes. The airlines grew about 30 percent in mid year. So in line with our vision 2025 to become a diversified aviation group then, our growth will continue in all major aspects of our service,” Tewolde told Capital on Sunday in the Seychelles arriving in the maiden flight to the island.
This isn’t the first time for Ethiopian to reach in the island; 32 years ago it used to operate direct flights there.
“We were not ready to support partners. Now we are ready, Ethiopian Airlines has also grown tremendously over recent years, so we are both ready to work together,” said Alain Ange, Seychelles Ministry of Tourism and Culture.
The Republic of Seychelles comprises 115 islands occupying a land area of 455 square kilometers. The country attracts a large number of tourists with its warm weather, exotic beaches and welcoming population.
Ange says they are currently working to attain 200,000 tourists per year with the first quarter in 2012 showing they are right on target.
With Ethiopian airlines operating four flights weekly, the tourism sector will be aided significantly, the minister says.
Ethiopian Airlines’ CEO says European visitors are expected to be major travelers in Ethiopian flights. Asian tourists are also increasingly showing interest in the route. Some 30 tourists were on board on the maiden flight that was fully booked.
The flight is also a quickest route for an American tourist; Ethiopian operates daily nonstop flights from Washington DC to Addis Ababa where passengers can connect to a flight to Seychelles which will take less than four hours.