The Ethiopian government is planning to speed up the airline deregulation process allowing foreign investors to participate in domestic aviation. According to The Reporter, a government document has quoted “the domestic aviation sector will be liberalized to improve efficiency and access."
The domestic aviation market in Ethiopia is dominated by the state-owned Ethiopian Airlines and has been closed to foreign investment. In 2020, new regulations were drafted that allowed for the joint investment by foreign and local investors. However, the policy is pending implementation.
Getachew Mengiste, Director General, Ethiopian Civil Aviation Authority (ECAA) said: “The investment code already allowed a joint venture for local aviators to hold the majority stake in the partnership. But it is not implemented because further directives are needed to implement the investment code. In the past, there were no interested foreign investors, but that has changed now. But we have to do a lot to promote the new laws and attract foreign investors into the domestic aviation sector. Most of the foreign aviation investors are requesting incentive packages, and we will solve it with the Ethiopian Investment Commission."
Going ahead, interested foreign investors are currently approaching the ECAA and are in the process of investing in the local aviation industry as per the ECAA report. The investors are also asking for loans, using their aircraft as collateral along with tax holidays and airport access as part of incentive packages to invest in Ethiopia's aviation sector.
Currently, 13 private local aviation operators are licensed by the ECAA and operating in the sector, new aviators have acquired licenses in the last year, but no foreign investor asked to enter under the 49/51 equity ratio allowed under the investment code, the ECAA report clarified.