Running Head: Impact of Ethiopian Airlines on Ethiopia

Impact of Ethiopian Airlines on Ethiopia

Nahom Benyam

Professor Ou

San Jose State University

This paper will examine the impacts that Ethiopian Airlines has had on Ethiopia as a

country. Firstly, the relationship between the Ethiopian government and Ethiopian Airlines will
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be discussed at length and how that relationship has created the largest airliner in Africa in terms

of passengers carried, destinations served, fleet size, and revenue. We will also discuss how

Ethiopian Airlines is being used to push improvement within Ethiopian society.

Next, a discussion will occur concerning the impact that Ethiopian Airlines has had on

the Ethiopian economy, tourism, environment, and human rights. The impact that Ethiopian

Airlines has had on the aviation communities of multiple other countries within Africa and in the

international community. Through the examination of the impact that Ethiopian Airlines has had

on Ethiopia we can determine that the introduction of aviation related technology has been a

great benefit to Ethiopia as a country.

To develop a deeper understanding of whether Ethiopian Airlines has been a significant

benefit to Ethiopia and its people we must first understand its history and the purpose for its

creation. After the liberation of Ethiopia, Emperor Haile Selassie asked the allied forces

(countries such as the United States, United Kingdom, and France) for help with establishing an

airline due to Selassie’s desire to modernize Ethiopia. The goal of the airliner was to dispel the

notion that Ethiopia was a poor nation. As the airliner grew larger and larger over the years, it

became a positive symbol for a country that otherwise was defined purely by its poverty.

Ethiopian Airlines is distinct from many of its aviation competitors and counterparts in

that it is wholly owned by the government (Meichsner, O'Connell & Warnock-Smith, 2018).

This has both a positive and negative impact on Ethiopia as a country in that every positive and

negative event that involves Ethiopian Airlines is also a reflection of Ethiopia as a country and

can have significant effects on the Ethiopian economy. Understanding that Ethiopian Airlines is

a positive reflection of Ethiopia as a country, the Ethiopian government has made Ethiopian

Airlines a key part of the country effort to improve itself. The Ethiopian government's Vision 25
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framework, the country plan for continued development economically, utilizes Ethiopian

Airlines as an essential part of the framework (Makori, 2019). The goal of the Vision 25

framework is to make Ethiopia the manufacturing hub of Africa (Heinz & O’Connell, 2013). The

framework’s plan specifically is to use Ethiopian Airlines to connect Ethiopia to China and

South America.

Previously and in the future, the Ethiopian government is relying on Ethiopian Airlines to

develop and improve the country. Of all the impacts that will be discussed in this paper, this

impact that Ethiopian Airlines is having on Ethiopia as a country cannot be stated enough.

Another aspect of Ethiopian Airlines’ impact on the Vision 25 framework is the fact that the

Ethiopian government can use the positive reputation of the airliners to foster collaboration with

other countries.

The Vision 25 framework requires collaboration between Ethiopia and countries such as

China and Argentina and its significantly easier to convince countries to collaborate with you if

they see evidence of progression and development within your country. Through the rise of

Ethiopian Airlines in the aviation community, countries throughout the global community see a

bright spot within Ethiopia that can assure them that collaboration will be beneficial for both

sides.

Now that we’ve talked about the positives of the relationship and connectedness between

the Ethiopian government and Ethiopian Airlines, we must also detail the negatives of such a

relationship. The negative impact of the relationship is that aviation tragedies involving

Ethiopian Airlines affect not only the government of the country but also citizens. One example

of this was the recent Boeing 737 MAX 8 crash in which an Ethiopian Airlines airplane

(Ethiopian Airlines Flight 302) crashed six minutes after takeoff in Bishoftu, Ethiopia which
Running Head: Impact of Ethiopian Airlines on Ethiopia
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resulted in the death of 157 people. Besides the fact that many people lost their lives because of

the crash, it affected the reputation and growth of Ethiopian Airlines which directly hurts

Ethiopia’s ability to grow. In the introduction a point was introduced that Ethiopian Airlines is

the largest airliner in Africa based on multiple categories including revenue and passengers

carried.

With this in mind it's fair to conclude that Ethiopian Airlines is the benchmark for

aviation in Africa and that many countries within Africa and worldwide strive to follow the

growth and plan of Ethiopian Airlines. When aviation disasters such as Flight 302 occur, it

reflects poorly on the safety and trust that customers and countries have for Ethiopian Airlines. It

also creates doubt within the global aviation community of whether Ethiopian Airlines is worth

the praise that they’ve previously received while also affecting the willingness of nations to

collaborate with Ethiopian development goals that involve Ethiopian Airlines.

Dow Jones Institutional News writes,”Crash Investigators believe an automated flight-

control system that went haywire led to last month’s fatal crash of a Boeing Co. 737 MAX in

Ethiopia. But some pilots, industry officials and air-safety experts are also raising questions

about the actions of the cockpit crew as detailed in last week’s preliminary accident report. In the

case of Ethiopian Airlines Flight 302, which crashed March 10, killing all 157 aboard, the plane

maintained an unusually high speed during part of its short flight. The pilots also reactivated the

suspect anti-stall system after manually overriding it -- raising questions about why” (As Flight-

Control System Is Blamed for Boeing Crash, Pilots' Actions Also Prompt Questions, 2019).

At this time we cannot conclude the cause of the crash but abnormal speeds during the

flight and the captains attempt to fight the plane’s MCAS (stall prevention system) system by

deactivating and then activating the anti-stall system are indicative that the plane is significantly
Running Head: Impact of Ethiopian Airlines on Ethiopia
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more at fault for the crash than pilot error. Regardless of what actually happened, the quote from

Dow Jones Institutional News illustrates that the crash reflects extremely poorly on Ethiopian

Airlines personnel which transfers over to the rest of the country and its international image.

Ethiopian Airlines has had a very positive economic impact on Ethiopia through the

revenue it generates as well as its role in developing Ethiopia through developmental projects

such as the Vision 25 framework. According to the Ethiopian Embassy of Belgium, Ethiopian

Airlines hit a record net profit of 6.8 million birr (approximately $234,000 usd) in the fiscal year

of 2018 (Ethiopian Profit Hits Record 6.8 Billion Birr, n.d.). Since Ethiopian Airlines is owned

by the government of Ethiopia, all the profit that is generated by Ethiopian Airlines goes to the

government.

Tefera Beyene, who holds a phd in Applied Management & Decisions Sciences,

conducted a study in which he tracked the financial performance of Ethiopian Airlines when the

company transitioned from a command to a market-based economy (Beyene et al., 2009). The

study itself utilized a causal-comparative research method in which two or more groups relevant

to the topic are compared, examined, and contrasted (Beyene et al., 2009). The research method

utilized financial data from Ethiopian Airlines through three regime changes by analyzing

audited financial statements. What the study found was that the mean net profit margin for a

command-based economy was 2.34 while the market-based economy generated a mean net profit

margin of 3.27 (Beyene et al., 2009).

This data is extremely important because it goes beyond the number and shows how

Ethiopian Airlines was able to influence Ethiopia’s economic system. The nearly 1.0 increase in

profit margin was undoubtedly noticed by the rest of Ethiopia and influenced many organizations

and the government itself to, at the least, consider a less controlling economic system in which
Running Head: Impact of Ethiopian Airlines on Ethiopia
6

the market is allowed to operate as it pleases without government intervention (Beyene et al.,

2009). There is definitely an argument that can be made that globalization and the spread of

western influence are factors in Ethiopia shifting to a more market-based economy. But, the

influence of Ethiopian Airlines is understated when talking about the shift that’s occurred

economically in Ethiopia and their role in shifting the economy should not go unnoticed.

The data from Beyene’s research is also relevant to this paper because of its relation to

the next topic this paper will discuss. Ethiopian Airlines has allowed Ethiopia to showcase that

it’s government can show restraint and allow the market to rule rather than government

intervention. Ethiopian Airlines and the Ethiopia government are showing the rest of Africa how

an airline should be run and that aggressive style of control don’t work as well as a more laid

back approach.

Through the data from Beyene’s study we can see that it is in fact more profitable to get

rid of a controlling economy in which government intervention is common in exchange for a

market based economy. Since it’s more profitable to rule with a market based economy, other

countries are bound to take notice of the tactics that the Ethiopian government is using with

Ethiopian Airlines. This will create the same situation with Ethiopian Airlines in that it sets a

benchmark and acts as a successful example for how businesses and organization should be run.

A common theme in this paper is the fact that Ethiopian Airlines makes a substantially

positive impact on Ethiopia’s continuous goal of developing economically and socially. This is

yet another example of how Ethiopian Airlines is illustrating such an important economical

change that may have a significant impact on how the rest of Africa goes about ruling their

countries. Since most African rulers tend to rule in a more controlling manner that is extremely

restrictive, ruling in the way in which the Ethiopian government went about ruling Ethiopian
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Airlines was monumental in terms of finally getting Africa to warm up to westernization.

Another big impact Ethiopian airlines is making for the Ethiopian government and people

is through tourism.

According to the Ethiopian Embassy of London, in 2018 tourism and travel generated 7.4

billion dollars to Ethiopia’s economy which is an increase by 2.2 billion (30%) from 2017

(Ethiopia records biggest growth in World Travel and Tourism, 2019). Tourism and travel

accounted for approximately 9.4% of Ethiopia’s total economy which is a very sizeable amount.

The increase of Tourism by 30% from 2017 to 2018 is extremely rare and it would not be

possible without Ethiopian airlines. Without Ethiopian Airlines progressing to the level that it’s

become today, there is no possible way for Ethiopia to sustain the massive amount of tourism

growth that it has experienced.

According to the Ethiopian Embassy of London, tourism in Ethiopia now accounts for

one in every $11 in the entire economy and one in 12 of all jobs in Ethiopia (Ethiopia records

biggest growth in World Travel and Tourism, 2019). In 2015, the European Council on Tourism

and Trade named Ethiopia the world’s best tourism destination. By mentioning all these statistics

and accolades that Ethiopia has received due to tourism, we must understand that none of these

would be possible without the logistical support of Ethiopian Airlines. It must also be understood

that Tourism is an essential aspect of Ethiopia’s Poverty Reduction Strategy Paper (PRSP),

which seeks to reduce poverty if not outright eliminate it while also encouraging continued

economic development. From the inception of Ethiopian Airlines, the airline has always been

used as a tool to push for economic and societal development that otherwise would be difficult to

achieve. To see a third world country that historically has struggled with poverty, achieve such

monumental change in a multitude of ways (from the economy to tourism) is a true testament to
Running Head: Impact of Ethiopian Airlines on Ethiopia
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how impactful Ethiopian Airlines has been for not only the Ethiopian government but also its

people (Kwifi, Frankwick, & Ahmed, 2019). The environment is an essential part of the global

community that often gets overlooked by the global community. Ethiopian Airlines took a

needed stand against climate change and carbon dioxide emissions while also making a much

needed impact on the environmental situation of Ethiopia. After 1992, carbon dioxide emissions

began to steadily increase by 0.1 metric tons of carbon dioxide until 2010 when emissions

increased by a significant amount. Ethiopia now has a carbon dioxide emissions situation in

which their emissions have risen to 0.10 metric tons of carbon dioxide and statistics show that

number will only continue to increase (Ethiopia CO2 emissions per capita, 1970-2018, n.d.)

To combat this potential dangerous scenario in which carbon dioxide emissions continue

to increase, Ethiopian Airlines decided to create a solution. Ethiopian Airlines started a project in

which one tree will be planted for every passenger flown which will be of huge help to

Ethiopia’s environment. Because of the project, Ethiopian Airlines will plant nine million trees

across different regions throughout Ethiopia. Another interesting thing that Ethiopian Airlines

does to improve the climate change and global warming situation in Ethiopia is to educate people

of the dire nature of the situation. Ethiopian Airlines, using the Ethiopia Aviation Academy,

began providing pilots in training with courses surrounding United Nations Sustainable

Consumption and Green Economy Program. Often times when the climate change situation is

being discussed, there tends to be a tendency to say that climate change discourse is not occuring

enough due to ignorance of the topic. Ethiopian Airlines is taking a stand against the opinion that

is commonly held within the climate change world (the world is ignorant to the magnitude of the

issue) and personally providing education so pilots can become aware of the magnitude of the

situation. When it comes to deal with complex issues such as climate change and global
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warming, education is an important key to ridding society of ignorance and finding solutions for

some of the world’s biggest problems. By providing this education to pilots in training, Ethiopian

Airlines is making a significantly positive impact on the people of Ethiopia. This move by

Ethiopian Airlines to be the environment before themselves and their own financial interests

shows how committed they are to impacting Ethiopian society for the better. Economical

changes are necessary but providing changes to the climate change is an extreme necessity that

trump's nearly any other improvement or impact.

The last significant impact that must be brought up in this paper is the humanitarian

impact that Ethiopian Airlines has been able to have on the people of Ethiopia. Ethiopian

Airlines, through the support of the Ethiopian government, has been able to help impoverished

Ethiopians by distributing valuable products to them through the air. An example of this was

when Ethiopian Airlines collaborated with the African Legal Library Project to transport 40

boxes that contained 720 law books, 101 e-readers that contain more than 1,000 books each to

Debre Markos University, a university in Ethiopia that combines teaching with community

service in an effort to help the local Ethiopian community.

The most impactful part of this move by Ethiopian Airlines is that it seeks to improve an

Ethiopian literacy rate that has consistently been among the world’s worst literacy rates. When

discourse occurs over solutions to various problems education is not mentioned nearly enough.

By providing those of a lower class the opportunity to educate themselves you are giving them

an opportunity to eradicate ignorant ideals from their own lives and the lives of their loved ones.

Rather than just throw money at the problem Ethiopian Airlines are using their transportation

abilities to attack arguably one of the most important problems that Ethiopia is currently facing.
Running Head: Impact of Ethiopian Airlines on Ethiopia
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This is yet another attempt by Ethiopian Airlines to build upon the goal of economic and social

development that it was originally created for.

Another example of Ethiopian Airlines using their ability to transport for good was when

the airlines decided to deliver medical aid to impoverished Ethiopians. Ethiopian Airlines

partnered with Seattle Anesthesia Outreach to deliver 12,000 pounds of medical supplies. The

medical supplies were mostly anesthesia equipment that was given to the Black Lion Hospital,

the largest hospital in Ethiopia. This is another significant impact that Ethiopian Airlines is

making for the community because in third world countries, such as Ethiopia, healthcare is hard

to come by let alone quality healthcare that utilizes good equipment. By making an impact on the

quality of Ethiopian healthcare, Ethiopian Airlines are making a remarkable impact on the lives

of every Ethiopian citizen.

Throughout this paper an attempt has been made at illustrating how Ethiopian Airlines

and its aviation related technology has impacted the Ethiopian government and people in a way

that has led to continuous growth and development for the country. We first looked at how the

introduction of technology through Ethiopian Airlines has benefitted Ethiopia as a country by

allowing it to develop faster. The negatives of the introduction of technology into Ethiopia was

then discussed using the recent events of the Ethiopian Airlines Flight 302 Boeing 737 MAX

crash in Bishoftu, Ethiopia.

The positive economic impact was then introduced into the paper which attempts to show

arguably the biggest impact Ethiopian Airlines has had on Ethiopia. Ethiopian Airlines’ ability to

improve the perception of Ethiopia as a country while also being a role model for the rest of the

African nations is an impact that cannot be overlooked. The impact that Ethiopian Airlines has

had on Ethiopian Tourism, Environmentalism, and human rights has also been presented to show
Running Head: Impact of Ethiopian Airlines on Ethiopia
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that the impact of the airliner far exceeds purely financial success. The thesis seeked to give an

informed opinion of whether Ethiopian Airlines has had a positive or negative impact on

Ethiopia as a country. Through the evidence presented in this paper the reader is urged to

consider the multitude of positive impacts that Ethiopian Airlines has made for Ethiopia and its

development.

References

Heinz, S., & O’Connell, J. F. (2013). Air transport in Africa: toward sustainable business models

for African airlines. Journal of Transport Geography, 31, 72-83.

Meichsner, O'Connell, & Warnock-Smith. (2018). The future for African air transport: Learning

from Ethiopian Airlines. Journal of Transport Geography, 71, 182-197.

Al-Kwifi, Frankwick, & Ahmed. (2019). Achieving rapid internationalization of sub-Saharan

Running Head: Impact of Ethiopian Airlines on Ethiopia
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African firms: Ethiopian Airlines' operations under challenging conditions. Journal of

Business Research, Journal of Business Research.

Makori, D. (2019, April 23). Top 6 Things About Ethiopian Airlines. Retrieved from

https://borgenproject.org/ethiopian-airlines/

As Flight-Control System Is Blamed for Boeing Crash, Pilots' Actions Also Prompt Questions.

(2019). Dow Jones Institutional News, p. Dow Jones Institutional News, Apr 8, 2019.

Beyene, T., Sharifzadeh, Mohammad, Brent, William, & Hamzaee, Reza. (2009). The Impact of

Transition from a Command to a Market Economy on the Financial Performance of the

Sub Saharan Airline Industry: The Case of Ethiopian Airlines, ProQuest Dissertations

and Theses.

Ethiopian Profit Hits Record 6.8 Billion Birr. (n.d.). Retrieved from

https://ethiopianembassy.be/2018/08/13/ethiopian-profit-hits-record-6-8-billion-birr/

Ethiopia records biggest growth in World Travel and Tourism. (2019, April 12). Retrieved from

https://www.ethioembassy.org.uk/ethiopia-records-biggest-growth-in-world-travel-and-

tourism/

Ethiopia CO2 emissions per capita, 1970-2018. (n.d.). Retrieved from

https://knoema.com/atlas/Ethiopia/CO2-emissions-per-capita