THE ECONOMIC CATALYTIC EFFECT OF ETHIOPIAN AIRLINES ON ETHIOPIA’S GDP

Abstract

Since its establishments Ethiopian airlines has been owned and controlled by the government of Ethiopia. Air transportation sector particularly aviation is characterized by the involvement of many stakeholders’ manufacturers, carriers, and governments. Ethiopian airline is being fully owned and controlled by the government. The research paper examines the impact of Ethiopian airlines on Ethiopian’s economic growth particularly on its GDP. The research tried to showcase the relationship of air transport to economic growth of Ethiopian. Since Ethiopian airlines is the only predominant national airlines carrier in the country, this paper manly focuses on the various strategic business unit of the airlines group that affects economic growth. The indicators from the two sectors, which were air transportation and Ethiopian economic growth were selected according to their relevance and the degree of the indicator's capability to express each sector. Analyses has been performed to examine the impact of air transportation on Ethiopian’s GDP using data within fiscal period from 2003/04 up to 2018/19. The analysis indicated that Ethiopian’s economic growth, predominantly the GDP is indeed affected by air transportation sector in the short and long term. A single percentile increments in number of passenger and number of employees will result 0.26% and 0.48% increment in the GDP. and a single percentage change in GDP and cargo payload rill result 0.36 and 0.47 % in the number of passengers traveled. Accordingly, considering the air transportation sector’s exceptional performance during the previous years and the contributions made by such performance to Ethiopian’s economic growth, extra efforts and investment made towards expanding such service-providing airlines will dramatically improve Ethiopian’s economic growth.