Ethiopian Air has taken the first steps to building a world-class pan-African gateway.
Ethiopian Airlines has launched a US$10 billion project to build the continent’s biggest airport by the end of the decade, through a financing partnership with the African Development Bank (AfDB).
Africa’s stand-out success story in the air transport sector, posted record revenue of $7.6 billion in its 2024/2025 fiscal year, an 8% increase over the previous year, in transporting more than 19 million passengers - including 15.2 million on international routes – and moving more than 785,000 tons of cargo.
‘World-Class Gateway’
For his part, AfDB President, Dr. Akinwumi Adesina, commented: “With its 75 years of operational history, Ethiopian Airlines is Africa’s oldest and best airline. It is critical for regional economic integration, connecting capitals, people and markets, with its globally rated cargo facilities.”
Aimed at transforming the aviation sector in Africa, the new airport, situated near Bishoftu, around 40 kilometers southeast of Ethiopia’s capital, from Addis Ababa, will have an initial capacity of 60 million passengers per year, expandable to 110 million, with the potential to handle more than 3.7 million tons of cargo annually too.
Its sprawling facilities will include over 100,000 sq/m of cargo and support facilities.
The ‘mega airport city’ project is in response to the rapid growth in Ethiopia’s air passenger traffic which will see Bole International Airport (ADD), that currently serves Addis Ababa, reaching its maximum capacity in the next few years.
The new airport will have the advantage of a lower elevation compared to ADD, which is one the highest airports in the world and subject to operational restrictions, such as reduced aircraft payloads.
ADD’s future role, when the new, four-runway mega-airport enters service, will be to operate as a hub for Ethiopian Airlines’ domestic network.
The new airport will be of a scale enabling it to compete with major global hubs such as Dubai, Doha, and Istanbul.
Compensation Fund
Land clearance work on the new airport is scheduled to begin at the end of 2025, pending an agreement with the 2,500 farmers who currently occupy the site.
The Ethiopian Airlines Group has made provision for a compensatory fund totaling $350 million to restore livelihoods and resettle communities that will be affected by the construction of the airport.
Phase I of the project is slated for completion by November 2029.
Secret to Success?
But what are the factors which have enabled Ethiopian Airlines to undertake such a potentially game-changing project?
Well, in Africa’s extremely challenging aviation sector, it has maintained a strong growth curve and now serves 125 destinations worldwide - including in the US, New York, Chicago, Washington D.C. and Atlanta – with a modern fleet of 150 aircraft, which could swell to 270 by 2035.
On the cargo side, the carrier has built up an extensive regional and inter-continental network over many years to become a respected name in the industry.
The result is today Ethiopia Airlines stands as a model international airline poised for more expansion both in the air and on the ground.
And the secret of its success?
According to a case study by a unit of the University of London’s School of Oriental Studies (SOAS), Ethiopian Airlines’ story is one of “continuing to defy the sceptics” and an outstanding demonstration that a state-owned enterprise in a low-income African country can be sustainably, and sometimes exceptionally, profitable.
It underlines that the East African carrier is professionally-run with an independent company culture and has built technological and human capabilities in a high-tech sector.
The study goes on to highlight that Ethiopian has sustained corporate partnerships (including with foreign firms) and fostered an effective transfer of skills and technologies; contributed significantly to economic transformation through foreign exchange earnings, export diversification and the creation of skilled jobs; and survived intense political instability, wars and regime changes.
Profitable During Pandemic Years
During the COVID, when most airlines had to be bailed out by governments, the airline showed its resourcefulness in re-fitting 25 passenger planes as cargo carriers. This enabled the company to support the country’s horticultural exporters who were struggling with high freight costs as well as to deliver millions of COVID vaccines across Africa and South America.
Despite the pandemic, Ethiopian Airlines was one of only three carriers to make a profit in the years 2020-2022 with no pay cuts or job losses.
Partnerships and JVs
Ethiopian Airlines has also developed a series of strategic partnerships with other African carriers, including the acquisition of ASKY Airlines in Togo and a 49% stake in Malawi Airlines. This has enabled the carrier to establish its hub approach in West and Southern Africa which has cemented the airline’s reach on the continent.
The airline’s strategy has also entailed a joint venture with a major logistics player in the shape of DHL Global Forwarding, DHL’s air and ocean freight specialist with whom it has created a joint-venture company. DHL-Ethiopian Airlines Logistics Services has enhanced Ethiopia’s logistics infrastructure and connections, and the company does business across the entire African continent.
Catalyst for Exports
Ethiopian has been quick to tap into new air cargo markets too, building a facility dedicated to e-commerce, mail and courier logistics services and positioning Addis Ababa as a cross-border hub for Africa and beyond.
It has also served as a catalyst for a range of service and export-oriented industries.
For example, the initial expansion of the floriculture sector was facilitated by the existence of an efficient state-owned carrier able to transport highly perishable and time-sensitive products to destination markets. The growing success of the sector in turn prompted the airline to invest in modern freighters and expand cold storage warehousing.
The group’s cargo-handling complex is now the largest in Africa with the capacity to handle one million tonnes of cargo per year and the floriculture industry has become an important foreign exchange earner employing 20,000 people directly and indirectly.
Quite a story and one with more chapters to come...
