PRACTICES AND CHALLENGES OF NEW AIRCRAFT ACQUISITION PROJECTS: THE CASE OF ETHIOPIAN AVIATION SECTOR

Abstract

Despite the various challenges and dynamism in the sector, airlines still continue to acquire aircrafts to support their operational requirements to meet the flying needs of their customers. They also expand their operation and earn improved profits. However, they also face grave danger of bankruptcy if they make the wrong acquisitions. The main purpose of this research paper was to assess the practice and challenges of aircraft acquisition projects in the case of Ethiopian Aviation Sector. The study targeted a total population of 501 management and senior level employees of air operators in Ethiopian Airlines and the aviation arena. Hence, 222 samples were systematically taken. From the total 222 samples, 180 responses were found valid for analysis. Mixed research approach with concurrent triangulation strategy was adopted. The study used mostly primary data sources and also secondary data sources as required. The Primary data collection instruments were questionnaires, interview and personal experience as aviation professional while secondary data were obtained from policy documents, journals and newspapers. Statistical Package for Social Science (SPSS) v20.0 and Microsoft Excel 2010 was utilized to analyze and present the data through table and graph. Descriptive Statistics (frequency and percentage) as well as Mean and Standard Deviation were adopted to showcase and explainthe results. The results of the study showed that air operators in Ethiopia face multi-dimensional challenges in their attempt to acquire aircraft among which are aircraft financing, restrictions imposed by the government and regulatory body, lack of adequate financial and legal consultations, as well as lack of skilled human power. The results also indicate that air operators embark on aircraft acquisition solely driven by operational and environmental requirements without meticulously analyzing other aspects such as financial, legal and regulatory requirements. It can be concluded that the sector’s challenges are both internal and external and need solutions from within and outside the sector. It is recommendable that the government grants the sector the deserved attention, ease up some financial and regulatory restrictions, liberalize and allow foreign investors to take part in the sector, as well as, for financial and legal firms to expose themselves to the sector. Air operators are also recommended to take the necessary measures to assure that right acquisition are carried out taking different factors such as financial, legal, operational, environmental, regulatory (national and international requirements), professional requirements and technical specifications into consideration.