Ethiopian Airlines Group, has made a 450pc to 3,500pc rental fee increases on the service providers operating on its premises.
Ground handling companies, transistors, private airline companies, cargo service providers are the companies that the Group revised rental fees for. The companies provide the airport with a scissor lift, storage, loading and unloading services, issuing air waybill, warehouse service and transporting cargo inside the terminals.
The decision was made by the Group two months ago and was communicated to the companies with a written letter.
The Ministry of Finance & Economic Cooperation (MoFEC) has been providing the Group with a budget. Although it is about to quit and exclude the Group from the federal budget, as it is a business-oriented state enterprise, according to Tewdros Dawit, CEO of the Ethiopian Airports Enterprises, one of the Group’s business unit.
“We are informed that we need to source budget by ourselves,” Tewdros told Fortune.
Last fiscal year Ethiopian generated 2.7 billion dollars revenue, with a net profit of 233 million dollars. Months back it inaugurated a new cargo terminal constructed for 150 million dollars on a 150,000sqm of land, with a capacity of accommodating 600,000tn of air cargo a year.
The International Cargo & Aviation Services (ICAS), Abyssinia Flight Services, National Airways, and Trans National Airways (TNA) are among the companies asked to pay the adjusted rental fees.
The ICAS has been paying an annual rental fee of two million Birr for the Group. Lately it was asked to pay 27 million Br, which is 1,250pc higher than the current price, while Abyssinia Flight services was requested to pay 450pc higher than the initial amount.
For an office space with an area of 30sqm at the Bole International Airport, ICSA has been paying a monthly rental fee of 700 Br a square meter. The Group had to amend the price to 1,200 Br a square meter.
“Due to this, we closed our office and vacated,” said a management member of the company, who spoke on the condition of anonymity.
“The raise will discourage the companies and make them leave,” said an aviation expert with two decades of experience. “As it will end up creating a monopoly in the industry.”
However, Tewdros, argues that the price revision was made after conducting a comprehensive assessment.
“The price amendment is reasonable,” he told Fortune. “Most of the companies were paying a minimal fee.”
ICAS has been operating passenger services, such as check-in, arrival and transfer, lost and found, special passenger and VIP services. It also provides cargo services, such as cargo handling; postal services, document handling (import and export); warehousing and special cargo handlings.
With an approval under the leadership of Worqeneh Gebeyehu (PhD), who was the minister of Transport, ICAS had started providing ground services. It has been operating out of its two offices, one on the premises of Bole International Airport and the other in Gerji. Saudi Airways outsourced its ground handling services to the company.
Following the grievances of the service providers, the Group and the companies have started negotiations with the intervention of the Ministry of Transport (MoT).
“The negotiation seems positive,” said a source close to the case, “until the negotiation ends none of the companies have paid the requested amount.”
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