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Ethiopia plans to boost tourism and economy with a new $4 billion mega airport

Addis Ababa ethiopiaEthiopia has announced plans to construct a US$4 billion mega airport in Addis Ababa that is intended to serve as many as 120 million passengers annually when it opens in more than a decade’s time. The planned airport is set to be one of Ethiopia’s most ambitious projects, surpassed only by the US$4.8 billion Grand Ethiopian Renaissance Dam and demonstrates the government’s ongoing commitment to state-led development through investment in huge infrastructure projects.

The new airport is planned in addition to an ongoing US$350 million expansion of the current Bole International Airport in Addis Ababa, illustrating the importance the government has attributed to planned aviation sector growth. The current airport expansion is set to increase capacity from 6 million passengers annually to 22 million by 2018. The two developments combined aim to transform Addis Ababa into one of the largest aviation hubs in Africa, with the new airport consisting of four runways, several passenger terminals and an airport city on the outskirts of the capital.

The construction of the airport is consistent with Ethiopia’s aims to develop its tourism and light manufacturing sectors. As the culture and tourism ministry plans to triple Ethiopia’s annual foreign visitors to 2.5 million by 2020, tourism represents a core pillar of the government's growth strategy. Tourism currently generates US$2.9 billion for the economy and several international hotel chains have set up operations in the country in recent year. Increases to freight capacity will likewise support the light manufacturing sector, for which the government has already attracted several global brands and where Unilever, General Electric and GlaxoSmithKline are all planning investments that will supply international markets.
The new airport is also intended to support the state-owned national carrier Ethiopian Airlines to maintain its position as the leading airline in Africa. At a time when other major regional airlines, including South Africa Airlines (SAA) and Kenya Airways, are scaling back operations or facing financial difficulties, Ethiopian Airlines reported record profits of US$175 million in 2014/15. Of the four African airlines that carry more than five million passengers annually, Ethiopian Airlines has doubled its passenger traffic since 2009 and increased the number of aircraft in its fleet, while the other three – SAA, Kenya Airways and Royal Air Maroc – have seen virtually no growth. With the arrival of the new airport, Ethiopian Airlines will be well positioned to consolidate its market share, benefiting from increased passenger traffic and air freight. This is likely to see Addis Ababa emerge as the principle aviation hub in East Africa, overtaking Nairobi over the next decade as passenger traffic surges.

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