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‘Subsidized rate for locals only,’ ET
Ethiopian Airlines (ET) has implemented a new rate on its domestic flights. Ethiopian had for a long time adopted a subsidized rate on its domestic flights to promote tourist destinations in the country and to encourage tourism as well as local travelers.
Although the privilege was for residents of Ethiopia, later tourists that enter the country using other commercial airlines were also using the cheaper and heavily subsidized rates offered by Ethiopian to visit the tourist attraction sites in the country.
Private tour operators however felt that the price increment is not only very significant but sudden and not fair. They said that the airline did not discuss the increment with stakeholders in the tourism sector in the decision making process. “We can’t help it, we feel this is an attack on us. We have been worried about the newly established ET Holiday operations and before we even reach some sort of understanding on that, the Airline now adds this. We feel that the move by the Ethiopian Airlines Enterprise is to monopolize the tour operating sector,” one tour operator said.
Issayas Woldemariam, Marketing Director at Ethiopian Airlines explains, “This is not a new thing that we suddenly implemented; the regulations of the airline states that subsidized prices are for the locals. This system has always been there, it just has been abused by tour operators and we want to put a stop to that.”
He further stated that subsidized prices have been abused so much by the tour operators, impeding ET from becoming profitable in the domestic flight service and added that the airline could even have held the tour operators liable and filed complaints against them to the Federal Ethics and Anti-Corruption Commission.
Tour operators on their part say that ET’s decision comes at a peak season, where tourists plan their visit, and that their customers have already booked or paid their trips according to the old price package. The tour operators also added that the sudden change would result in tourists canceling their trips, which will lead to a devastating effect not only on their businesses but also on the tourism sector.
“When we communicated the changes in price to tour operators this week, they complained that they had customers that have already booked their trips according to the old price. In the beginning, the price change was to be effective starting from November 1st, but taking into consideration the concern of the tour operators, we decided to give them a grace period of 15 days to sort out their businesses,” Issayas stated.
He also said that the Airline currently has 17 domestic destinations and is in the process of adding another one. The domestic flight service has never been profitable and this is because all passengers have been using the subsidized price. The airline is going through a restructuring and it wants to make more profits from all its services, be it domestic, international or cargo.
“Where is the benefit for ET in allowing tourists who choose to fly other airlines to take advantage of fare prices that are set for only ET customers that are Ethiopians? Ethiopia and Ethiopians are the ones that should be benefiting from the scheme; this airline belongs to the public,” Issayas added.
Some sources say that once the new price has taken effect, tourists or tour operators will have to purchase domestic flight tickets from Ethiopian Airlines offices. Customers may also be asked to provide a residence permit or flight details in order to benefit from the cheaper airfares.
According to the PR office of ET, there are three new tariffs that are introduced; while the fair for residents in Ethiopia will remain highly subsidized, there is an increment of 7 percent. Promotional fares higher than the subsidized fares have also been introduced for long haul passengers who have used Ethiopian Airlines to travel to Addis Ababa. The third parcel which increased significantly is on passengers that uses foreign carriers to come to Ethiopia.
Ethiopian is currently implementing a 15-year strategic plan called Vision 2025 that will see it become the leading aviation group in Africa with seven business centers: Ethiopian Domestic and Regional Airline; Ethiopian International Passenger Airline; Ethiopian Cargo; Ethiopian MRO; Ethiopian Aviation Academy; Ethiopian In-flight Catering Services; and Ethiopian Ground Service.
In a related development Ethiopian will take delivery of the first of its four Boeing 777-300ERs on 7 November 2013. The B777-300ER is the largest aircraft in the airline’s fleet with 400 passengers seating capacity. Ethiopian B777-300 ER will operate in its dense routes such as Guangzhou, Washington D.C., Dubai and Luanda. The aircraft is scheduled to serve the Addis Ababa – Luanda route three times a week, as of 10 November 2013, and three times a week on the Addis Ababa – Guangzhou route, as of 15 November 2013.
CEO of Ethiopian Tewolde Gebremariam said “The B777-300 ER will be the biggest aircraft in our fleet. Its introduction marks another big milestone in the history of the airline, which has always been and remains an aviation technology leader in Africa. Ethiopian B777-300 ERs will give our passengers exceptional on-board comfort and enhanced travel experience with its spacious cabin interior, high ceiling, advanced in-flight entertainment system, increased stowage capability and additional cargo uplift flexibility.”