By Kaleyesus Bekele
The management of Ethiopian Airlines is finalizing negotiations with the Government of South Sudan to establish a new regional airline in Juba, which will serve as a flag carrier for the newly-born African nation.
Ethiopian Airlines will hold a 49 percent stake on the new start-up airline while the Government of South Sudan will own the majority 51 percent share. A senior official of Ethiopian told The Reporter that they started the negotiation early this year and hope to finalize and sign the deal next month.
At the initial stage the start-up airline will operate scheduled domestic flights in South Sudan and regional flights to neighboring countries, including Ethiopia, Kenya and Uganda. The new airline will feed passengers to Ethiopian Airlines. “Initially, the airline will serve domestic and regional routes but eventually it will go international,” the official said.
Initially, Ethiopian will deploy senior staff members to manage the start-up airline. Ethiopian will train and empower South Sudanese staff who will take over the management of the airline eventually. “It is not like any other management contract. We will build their capacity so that they can run their own airline.”
Ethiopian will lease regional aircraft to the start-up airline. It will also provide maintenance services by deploying its technical staff from Ethiopian maintenance and engineering department. The amount of investment Ethiopian will make is not yet determined.
Speaking of the market potential of South Sudan, the official said it is a big travel market and is projected to grow even further.
Ethiopian is implementing a multi-hub strategy. The Ethiopian national flag carrier is a strategic partner of ASKY, a pan-African airline based in Togo Lome. ASKY , which began operation in 2010, serves 22 destinations in west and central Africa. Ethiopian has a 40 percent stake on ASKY.
Ethiopian has also invested in another start-up airline in Southern Africa, Malawi Airlines Ltd. Malawian Airlines based in Lilongwe began operation last year from its hub at Lilongwe International Airport. It serves six domestic and regional destinations. Ethiopian has a five-year management and technical service agreements with both airlines.
The management of Ethiopian anticipates to partner with the Government of the Democratic Republic of Congo to establish another regional airline in Central Africa. An airline industry analyst The Reporter talked to said that non-African airlines are establishing subsidiary airlines in Africa taht serve them as feeder airlines. “So I think the management of Ethiopian is doing the right thing to withstand the stiff competition coming from non-African mega carriers,” the analyst said.