Krimson is making its presence felt in East Africa and looking to benefit after the opening up of Eritrean airspace to international flights, as Ethiopia gradually embraces more sophisticated business aviation operations, despite a current lack of domestic operators.
“We started an international trip support company in 2015 doing supervision and permits,” Dawit Lemma, founder and managing partner of Krimson and a Swiss citizen of Ethiopian background, told AIN. “We completed our first year and then we expanded. We started getting requests from other companies for consultancy services, development or operational solutions. We strengthened our flight support.
“We [also] started getting requests from local and regional operators for charter, brokerage, and leasing. Local operators needed support in expanding their charter services. The official title of the Krimson business is ‘Flight Support and Facilitation.’ [Last] year we expanded outside of Ethiopia: we are now offering flight support out of Eritrea, the Democratic Republic of Congo, Djibouti, and South Sudan.”
Business aviation in East Africa, unlike Nigeria or South Africa, is in its infancy, Lemma said. “[D]uring African Union [AU] meetings every January, many heads of state come in, on small Citation jets right up to Boeing 777s. During the rest of the year, predominantly two types of jets come in: one could be an investor or tourist; the other could be technical or fuel stops.”
Ethiopian Airlines, which made $233 million net profit in its last financial year, offers good connectivity and dominates aviation in the country. Lemma said there were six charter brokers in Ethiopia, the largest offering an Embraer ERJ145. A new VIP Terminal at Bole International Airport will cater strictly to government and diplomatic delegations, he said, but the private sector still awaits a facility of its own. In addition to tourism, oil exploration, mining, and humanitarian missions are driving charter growth.
“Investor visits fell in the last year or so. A lot of the jets that came in were for technical landings. I would expect there were around 200 to 300 business jet movements in Ethiopia in 2018 [excluding AU Heads of State]. We only have four points of entry. It is very difficult to get a landing permit at the three airports outside Addis Ababa. I would say [a] significant [percentage] of the traffic was for technical landings.”
Lemma sees growing Saudi and Emirati involvement in East Africa, after Saudi Arabia helped broker the recent Ethiopia-Eritrea peace deal. Ethiopia also keeps an eye on the Horn of Africa, a key geo-strategic location, given the unrest in Somalia, and shipping’s need for access to the Red Sea and Gulf of Aden.
“Definitely, Saudi involvement in East Africa has increased in the last six months. The government gave Ethiopia a $1 billion loan. The Saudis are also investing in Ethiopia. It is a strategic political game, [due to] the Horn. Saudi Arabia also helped broker the peace between Ethiopia and Eritrea. I have seen a lot of Saudi- and Emirati-registered aircraft coming to Ethiopia, whether investors, politicians or families.
The Ethiopia-Eritrea peace deal has brought benefits, allowing regional airspace to open up. “There's a trunk line that cuts straight through Egypt, Eritrea, Ethiopia, Kenya, and Tanzania. If you're overflying or you're trying to get from…Cairo, or even Frankfurt, down to Southern Africa, that airway is now direct. Before, they'd have to go over Sudan, South Sudan, or follow the Red Sea. It’s an improvement in terms of time and fuel burn, but also safety.”
Evolving Regs Aimed at Growth
In terms of bizav’s regulatory prospects in Ethiopia, Lemma is positive. “There is a new aviation law, or policy, that…has been developed in the last two to three years. It’s looking like that new policy might be implemented in the next year. If so, it will give the private sector so much more freedom. Right now, we are operating in a nascent sector, and like everywhere else in the world, a big national carrier dominates the local market. This aviation policy will give local operators the opportunity to grow.”
Economic growth is another factor. “Provided everything remains politically stable, which it has been since the change of prime minister in 2018, that will lead to a boom because you have investors coming in. As [they do], they will charter a local operator to get around. Given the economic situation in the country, married with, let’s say, the regulatory framework, we will definitely support growth.”
Lemma said that Ethiopia’s growing wealth has yet to influence the ability of businessmen to obtain aircraft finance. “I read a statistic somewhere that the city of Addis Ababa has the fastest-growing number of dollar millionaires in Africa. There are many high-net-worth individuals. The main issue, for anyone who wants to enter into aviation or big business is the financing structure. [An] Ethiopian bank will not guarantee your loan or give you a loan to get an aircraft because they see it as a movable asset.
“As a result, there is…no guarantee to get an international loan. Once that gets lifted, once the local banks [provide] finance to the local operators, to an individual, then you'll obviously see the number, as well as the type of aircraft, naturally increase.”
Lemma is open to the prospect of joint ventures with regional or international partners. “There is a strong aviation culture in the region. Now, it’s time to develop the aviation angle. My ambition is one day to have a regional FBO network in East Africa and the Horn of Africa, which would be linked to fuel, support services, and aircraft management. I am a pilot and I love flying planes, but I am not an operator.
“My dream or vision is not to become an operator, but to support operators in, or coming into, the region. Everybody wants to be an operator but nobody wants to provide support services to the operator.”
