New home-based airline…Gov’t, ET finalize strategic partnership agreement

Government has finalized its strategic partnership agreement with Ethiopian Airlines for the establishment of a new flag carrier, B&FT sources have confirmed.

The sources say, under the agreement signed last week, ET will hold a 49 percent stake in the new entity, while Government of Ghana (GoG), will hold the rest of the shares; invest initially in the new enterprise, and then offload the shares to local investors who have expressed interest but are waiting for the airline to start operations before coming on-board.

“A number of them have expressed interest and the Ministry of Aviation is still speaking with some of the insurance companies and banks who have expressed interest. But initially, what might happen is that government’s initial shareholding might go beyond 10 percent. It will hold the shares for the potential Ghanaian investors because we can’t wait for all of them to come on-board before the airline starts.

The decision is to start as early as possible, then with time, government will be offloading its shares to the Ghanaian investors.  Initially, government may have to invest in terms of capital, and as the investors come on-board, government will recoup those investments,” Ing. Simon Allotey, Director-General of the Ghana Civil Aviation Authority (GCAA) told the B&FT.

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The progress made follows the signing of a Memorandum of Understanding (MoU) between GoG and Ethiopian in December to signify GoG’s undertaking to work

Sources say more than a dozen names have been proposed, but  the Aviation Ministry is yet to settle on the choice of a name, but will not use Ghana Airways, or Ghana International Airlines for legal reasons. The proposed names include: Akwaaba, Akwaaba Air, Ghana Airlines, and Akwaaba Airlines among others.

New carrier to operate domestic flights

Based on the agreement signed, the new national airlines will operate domestic flights to build its brand, and become a house-hold name, just as the defunct Ghana Airways did in the past, before existing to focus on regional and intercontinental flights.

Tewolde GebreMariam, confirmed this to the B&FT before the signing of the final agreement: “[If we are chosen] we will operate domestic flights in addition to regional flights.”

Analysts have raised concerns about the new flag-carrier operating domestic flights as the market is not big enough for such huge number.

Ing. Simon Allotey, however, believes that the: “Strategy is not to kill the competition. The whole idea is not to take the large market share, but to let Ghanaians know that this airline also exists; this is the quality of service to expect so if you are traveling to the sub-region, you may consider it. There are some people who fly the same airline no matter what. So we need to build a loyal customer base and it [new carrier] cannot do that without domestic operations. Look at Ghana Airways, they did domestic for a long time before focusing on regional and intercontinental flights.”

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The desire to establish a new home-based carrier after the collapse of Ghana Airways—a fully state-owned entity—and the subsequent collapse of Ghana International Airlines, established with private sector participation after the collapse of Ghana Airways, according to government, stems from growth in the sector experienced on the continent and the industry’s future potential.

Huge investments in on-ground infrastructure, such as expansion of the Arrival Hall of Terminal 2 and construction of Terminal 3 at the Kotoka International Airport (KIA), construction of a new terminal building at the Kumasi Airport, expansion of the Tamale Airport, reconstruction of the Wa airport and construction of a new airport in the Volta regional capital Ho, all require that a home-based carrier, which will focus on operating domestic and regional routes before taking on the rest of the world, is established.

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