Friday, December 1, 2023
BusinessEthiopian Airports makes 400% increment on facility rent

Ethiopian Airports makes 400% increment on facility rent

The Ethiopian Airports Enterprise has made a whopping 450 percent increment on facility rent.

The Enterprise leases offices in its headquarters building near the Addis Ababa Bole International Airport. It also rents offices, catering store and space for container offices and workshops at the Addis Ababa airport. Airlines, pilot training schools, banks and other aviation related service providers rent the offices and stores at the airport terminal and the headquarters building of the Ethiopian Airports Enterprise.

The Enterprise increased office space rent which was 1,890 birr per square meter per month to 8,500 birr. At a consultative meeting with stakeholders held on Wednesday at the Ethiopian Airports assembly hall executives of the Enterprise disclosed that an independent consultant conducted assessment on the service delivery and facilities of the Addis Ababa Bole International Airport. The executives said the airport got minimal grades in terms of service delivery, passenger experience and facility.  

Ethiopian Airports officials told stakeholders that though the national flag carrier Ethiopian Airlines is growing very fast, its main hub has been unable to match the pace of the airline. “We do not compete only by the airline. Our hub airport should also be globally competitive,” the officials said.

Executives of the Ethiopian Airports said that in order to accommodate the growing passenger traffic and improve the competiveness of the airport, the Enterprise is undertaking an expansion project at a cost of 400 million dollars. According to company officials, Ethiopian Airports collects minimal revenue from aeronautical and non-aeronautical services compared to other airports in the region. The officials said in order to recover the huge investment it is making on infrastructure development it has to increase its revenue.

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Tenants, who were baffled by the sudden and staggering increment, complained that the rent increment was so exorbitant. “It is unfair to make this huge amount at one go,” they said. The tenants complained that they were not consulted about the increment prior to the announcement. “Why did you call us for a meeting if you have already made a decision? You could have sent a letter to us to inform us of the increment. You have wasted out time,” a tenant said.     

The Ethiopian Airports officials stated that the office rent adjustment was made based on a thorough study. “We made an assessment on the office rent market around the Bole area. The fast growing passenger traffic was taken into account. We also evaluated the facilities and services delivered by Ethiopian Airports,” the officials said.

Last year, the Ethiopian Airports earned a total revenue of 1.6 billion birr from aeronautical and non-aeronautical services. The Enterprise is expected to make price adjustments on aircraft landing and parking fees. According to sources, it will also make increment on the restaurant and duty free shops rent at the Addis Ababa Airport terminals when the existing contract expires. “The floor price for the rent bid will be adjusted,” sources told The Reporter.

Ethiopian Airports officials said the prices offered by restaurants and shops were very high and their services were incompetent compared to other airports. Owners of restaurants and duty free shops countered the claim. “We know that we have one of the best duty free shops in sub-Saharan Africa,” owner of a duty free shop said.

A senior executive of Ethiopian Airports told The Reporter that it is a challenge to convince the tenants who have been paying marginal rent and service fees for years. “In order to revolutionize the service and facilities of the airport the Enterprise has to make price adjustments,” the executive said.

Last year Ethiopian Airports Enterprise was restructured and merged with Ethiopian Airlines Aviation Group.

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