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Commercial Reports
Source: U. S. Department of Commerce - National Trade Data Bank, March 1, 2000 ------- 1. This is an unclassified version of Addis Ababa 6908 detailing econ/commercial officers recent discussions with airline and aviation officials. Topics included procurement requests for the renovation of Addis Ababa international airport, Ethiopia's impressions of the recent open skies agreement in Yamoussoukro, an assessment of Air Afrique, and domestic developments in security legislation and the management of regional airports. End summary. -------------------------- 2. The construction of the new international airport in Addis Ababa is proceeding smoothly. Bole International Airport is already handling double its capacity, with over one million passengers using the airport in 1998. The amount of passenger traffic is expected to increase to 3 million by 2017. The third major supply tender for the airport project was issued last week. Among the items requested are runway lights, navigational aids (including a doppler radar on top of nearby Entoto Mountain), closed circuit television cameras and circuitry, fire-fighting equipment, and other security and safety apparatus. The European Investment Bank provided a $20 million loan for this procurement, thus the bank determines the eligibility guidelines. At present, the project is "only three weeks behind" the original forecast, despite the protracted rainy season this year and delays in placing asphalt on the new 3.8 kilometer runway because of further compacting requirements. ---------------------------------- 3. An Ethiopian delegation, including the Minister of Transport and communications Mohammed Drir, attended the Africa-wide meeting of air transport officials in Cote D'ivoire in early November. The "Yamoussoukro decision" effectively opens the skies over the entire African continent for all air carriers that are "substantially owned" by either an African government or African Entrepreneurs, he noted. The agreement provides some limits on new landing requests and potential surges in passenger traffic to protect the viability of domestic air carriers and the handling capacity of certain airports. The increase in competition between African airports to reduce landing fees and airport usage costs in the near future. There was little happening in Africa toward fulfillment of the previous Yamoussoukro Declaration of 1988. 4. Even though the agreement will supercede all prior bilateral treaties, Ethiopia (and Ethiopian airlines)will continue to pursue bilateral arrangements until the Yamoussoukro agreement is fully in effect. Terms of the agreement will not be binding for several years to allow African countries time to examine the legal and financial implications and take necessary measures to implement the changes. The agreement will help Ethiopia overcome hurdles in its bilateral aviation negotiations. As an aviation official noted, "how can an African country refuse a bilateral overture when they have already agreed to liberalize the whole continent in Yamoussoukro?" Under OAU advisement, the delegations decided to attach the agreement to the already-signed Abuja treaty on economic integration so it would not need separate ratification. 5. As one of the most dynamic airlines in Africa, and certainly the most expansionary in recent years (with new routes to Beirut, Copenhagen, Delhi, Zanzibar, Mozambique, and other destinations in the Middle East and Africa), Ethiopian Airlines (EAL) stands to benefit enormously from the Yamoussoukro agreement. Ethiopia expects to open another direct flight to the United States next year through West Africa. The agreement Should smooth negotiations with Ghana and other West African countries over fifth freedom rights to pick up and drop off passengers. In addition, EAL has a head start on most of the African competition in its effort to be a regional and continental hub. Air transport liberalization is certain to benefit its efforts to market Addis Ababa as the primary entry point for visitors from Europe, Asia, the Middle East, and the United States, where it already operates direct flights three times a week. Open skies over Africa could mean opportunities for Boeing as well, since EAL maintains a well-equipped Boeing repair station and a 757/767 flight simulator. ---------------------------------- 6. The Ethiopian government is examining two important aviation studies at present. The first is the final draft of Ethiopia's national aviation security program. Although this document was sent to the parliament many months ago, its consideration was delayed because of a more recent study recommending the restructuring of the Ethiopian Civil Aviation Authority. Currently, the authority regulates civil aviation affairs and manages Ethiopia's thirteen airports and numerous other airstrips. This broad mandate makes it difficult to be efficient. "airports should be run commercially." The Government must decide whether to divide these functions before approving the national aviation security program. The authority should retain only the regulatory activities while airport management should be turned over to a separate authority. This new body must be granted the necessary flexibility to operate airports effectively and properly. In order to make this decision, the government must examine the legal framework, including the constitution. Even so, parliament is expected to make a decision within the next several months. -------------------------------------- 7. Air Afrique could be a powerhouse airline in Africa. It has several major advantages with its sub-regional monopoly, favorable rights of way, and political support. However, the airline is not allowed to make decisions based solely on proper management. Too often the African country stakeholders impose political demands on the airline that hurts it financially. For example, every country wants a direct flight from its capital to Paris. Politics affects many other routing decisions as well. In addition, the management itself is not selected on merit and competence but to fulfill quotas. The process is therefore susceptible to nepotism and a bloated managerial and administrative staff with higher than necessary salaries. Lastly, the procurement of equipment is motivated by politics. Air Afrique buys mainly from Airbus because of the board's allegiance to France. It would also be more cost effective for the airline to establish a repair station in Africa. In an effort to avoid possible bickering among the African members, all maintenance and service is conducted in Paris. ---------------------------- 8. The reported closure of the airport in Gondar (in Northwest Ethiopia) had nothing to do with security concerns. The contractor requested a two-month closure to complete work on the new runway and terminal building. Ethiopia is constructing an international-standard airport at the site of Ethiopia's ancient capital city. The current runway is only 1.4 kilometers long and can only handle small airplanes. Although the civil aviation authority had agreed to close the airport and hasten completion of the airport, the travel agencies complained vehemently to the Tourism Commission, so the authority reversed its decision. The contractor is now instructed to remove machinery obstructing the runway during aircraft take-off and landing. ----------------------------------------------- 9. The Ethiopian government declined to attend the Global Aviation Conference, held at George Washington University the last week in October because there were no budgetary funds allocated to pay the $995 registration fee. The entire trip would have been expensive considering lodging, food, and travel costs as well. |