High jet fuel price in Addis worries Lufthansa

Emnet Assefa

Lufthansa, the largest European carrier group, says high fuel price in Addis Ababa has challenged its flight operations to and from Ethiopia.

In a meeting with media professionals on June 11^th Carsten Scheffer, Lufthansa’s Sales and Services Vice President for Middle East and Africa, said the high prices of jet fuel in Addis Ababa was forcing the airline, one of the ten biggest airlines in the world, to look in to customer unfriendly options to optimize its services.

According to Scheffer, currently Lufthansa uses two options to handle the challenges: a refill stopover in Khartoum, Sudan, where the jet fuel prices are cheaper, or carry more fuel from Frankfurt and take less fuel from Addis. “Fuel cost in Addis is a big concern…It’s beyond labour [cost] and is our bigger chunk in the price tags” he said, adding more options may not be convenient to passengers.  The Vice President also said that discussions were on-going with the management of Ethiopian Airlines on this and other issues related to the co-chairing agreements between the two airlines.  Ethiopian is one of the three carriers in Africa with which Lufthansa has a co-chair agreement. The other two are Egypt and South African airline.

Expensive logistics

Expensive logistics of transporting fuel by truck from port Djibouti to Addis Ababa is one of the reasons why jet fuel cost is high in Ethiopia according to Tobias Ernst, General Manager of Lufthansa in Ethiopia and East Africa. “We are discussing with the Ethiopian airlines to optimize the logistics of the fuelling to give us some relieve in the fuelling balance sheet,” he says.  Currently Lufthansa spends 6.3 billion euro annually for its fuel expenses that take its up-to-date aircrafts to 285 destinations in 102 countries globally. The airline had a returned revenues totaling  30.1 billion Euros in 2012 business year alone.

Since Lufthansa started a co-chair partnership with the Ethiopian Airlines in 2011, it has been making use out of the latter’s extended regional flight and providing Ethiopian more option to its flights in Europe and America. But complaints by Lufthansa customers about old aircrafts used by Ethiopian abound. However, Scheffer said Lufthansa was presented with new plans from Ethiopian that included the usage of newer aircrafts included the 878 Dreamliner for regional flights. “Three of our African partners are leading airlines. Ethiopian is a leading airline when it comes to the flight expansion and having the most modern aircrafts but we are constantly discussing on how we can optimize the joint product offer with our partners” said Scheffer.

Biofule options

After undergoing a six months trial of flight with biofuel from Frankfurt to Hamburg in 2007, the Carrier is currently exploring biofuel production in four African countries, Mozambique, Tanzania, Cameroon and Ghana with further possibilities in Ethiopia. “Biofuel is three times the price of the normal fuel during the trial period but two per cent fuel efficient than the normal kerosene” says Aage Dunhaupt, Director of Group Communications in Southeast Europe, Middle East and Africa. Although the price of biofuel is more expensive and that it takes a lot of time to make it happen, the carrier exploring further possible alternatives to go green.

Currently Lufthansa operates in 38 destinations throughout Africa 14 of which with its three co-chair partners. The airline sees a huge market potential in Africa owing to the growing economy and trade transactions in the continent, according to Scheffer. “We are now looking in to African boom like we have seen the Asian boom a certain time ago.”

Lufthansa started operating its flights to Ethiopia in 1964, and currently holds six weekly flights between Addis and Frankfurt. Eighty thousand passengers have used the Carrier in 2012 to travel between Addis Ababa and Frankfurt as Ethiopia continues to be one of its key markets in East Africa as is the case in Nigeria for West Africa and South Africa for Southern Africa markets.

Ethiopia jet fuel consumption annual growth rate

 Year                       Consumption                                                                                     Change

Source: United States Energy Information Administration

Caption: From left – Tobias Ernst, Carsten Scheffer and Aage Dunhaupt

Photo: Addis Standard