How the Ethiopian-Nigeria Air deal will affect Kenya Airways

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How the Ethiopian-Nigeria Air deal will affect Kenya Airways

Kenya Airways and Ethiopian Airlines planes at Kamuzu International Airport in Malawi. PICTURES | COURTESY

As Kenya Airways continues to extend begging bowls to the government to inject more billions of dollars to help it out of a major financial crisis, its main African rival, Ethiopia Airlines, plans to fight the lucrative market of West Africa as it prepares to expand its dominance beyond. the region.

This is after Ethiopian Airlines, which is now the largest in Africa, won a bid to become the main technical partner of Nigeria Air, of which it will become the main sole shareholder.

Ethiopia and its partners in the deal plan to take over Nigeria Air and build a travel hub in Lagos to serve the West African market.

Ethiopian Airlines will hold a 49% stake in the new Nigerian airline, while the Nigerian Sovereign Wealth Fund will take 46%. The remaining 5% will belong to the Nigerian federal government, according to an agreement reported by the news agency Reuters.

The deal will now give Ethiopia Airlines a home advantage to battle against Kenya Airways, which was one of the biggest beneficiaries of Nigeria Air’s collapse nearly two decades ago under a cloud of debt, bad management and corruption.

Nigeria is the largest aviation market in West Africa and winning the market gives any carrier a numerical advantage.

Under the deal, the new airline will launch with three Boeing 737-800 aircraft and the group plans to own 30 jets and operate international flights in two years.

The Nigeria deal is the latest acquisition for continental carriers.

Ethiopian Airlines Group holds a 24% stake in African Sky (ASKY) based in Lomé, Togo, a 49% stake in Malawi Airlines based in Lilongwe, Malawi, 45% of Zambia Airways, a 49% stake in Tchadia Airlines, a 99% stake in Ethiopian Mozambique Airlines LTD and 51 percent shareholding DHL-ET Logistics Services.

The 100% Ethiopian government-owned airline flies to 127 international routes, over 62 destinations in Africa and 22 domestic destinations.

The airline has expanded its network from the Chinese city of Chongqing, flights to Garowe and Bosaso, Somalia, operations to the city of Beira in central Mozambique, Athens, Bangkok and Hanoi and launched flight services to the India, adding Bengaluru to its network.

It overtook Pride of Africa, Kenya Airways which now flies to 42 destinations worldwide, including 35 in Africa.

Ethiopia has led the fight in West Africa, which is emerging as the next frontier of pan-African airline competition, with struggling state airlines KQ and South African Airways also interested in the route in as part of their plan to build a pan-African franchise.

KQ, which reduced its net loss for the year ended December by 56.58% to 15.8 billion shillings, has made inroads into the giant market but currently lacks the financial muscle to compete with Ethiopia vol par flight.

KQ has signed a codeshare agreement with Africa World Airlines, a West African regional airline operating from Ghana, to extend joint reach on domestic, African and international routes.

“Our combined networks will provide our customers with the convenience of seamless connectivity to and from the Kenya Airways network to the Africa World Airlines network. It is imperative that we continue to interconnect Africa and enable access to inside Africa for our passengers,” said Adedayo Olawuyi. , head of advertising for Africa World Airlines in a statement.

The West African market has been important to the Kenyan airline and the agreement with Ghana will allow KQ customers easy access to Accra directly from Nairobi as well as joint West African and air routes. international organizations, is seen as a move to consolidate the region.

The former flag carrier of Africa’s most populous country, Nigeria Airways, was founded in 1958 and wholly owned by the government, but ceased operations in 2003.

Nigeria is seeking to establish a national airline and develop its aviation infrastructure – currently seen as an obstacle to economic growth – to create a hub for West Africa.

Entering Ethiopia through Nigeria provides a large market for the growing airline, although the market is difficult as Lagos is not a preferred transit point, with exchange control issues making more hard to get money.

But Ethiopia Airlines, which operates in a similar environment at home, is unfazed, it has an edge over the competition being among the few airlines in the world that made a profit in 2020 despite the Covid-19 pandemic.

At the height of the crisis, the company prioritized air freight and refitted passenger planes to cargo planes.

This model has allowed the airline to transport medical supplies, partnering with the World Health Organization, the United Nations and Chinese giant Alibaba in the global distribution of Covid-19 vaccines.

KQ and SAA, on the other hand, are sagging after multi-year losses and struggling through bureaucratic hoops to set up their pan-African franchise.

The Ethiopian Airlines Group, originally established in June 1945, enjoys a profitable financial position and strong support from its government.

Its main hub Addis Ababa is very well located for intra-Africa-India/South Asia and Latin America-India/South Asia traffic.

The versatile airline follows a multi-corporate model to gain the advantage of routing customers through Bole airport where passengers pass through the main hub in Addis Ababa and stop over and connect to onward flights or even stay close to the airport in its Skylight Hotel.

The company has also invested heavily in its digital transformation, generating spending of over 4.8 billion shillings ($40 million) between 2015 and 2020 to increase online sales.

Ethiopia recently signed with a Kenya-based travel technology company, AfroAtlas, to provide the airline’s New Distribution Capability (NDC) platform, which is a travel industry-backed program launched by Ethiopia. International Air Transport Association (IATA) for airlines to create and distribute relevant offers to customers.

NDC content has become popular among airlines around the world due to personalized shopping experience, price autonomy, discounts and add-ons, among others.

Afro Atlas has partnered with over 400 travel providers, including Car Rental for Transportation and Expedia, an American online travel agency.

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