Tuesday, 2 December 2014

Staff levels at Ethiopian Airlines and FastJet

     In this latest post in the Ethiopian Airlines and FastJet series, the staff levels of these respective airlines will be discussed. As already shown in previous articles, labour costs in Africa are low and it is interesting to see if this also has an influence on the amount of staff employed by African airlines per 10,000 passengers and per aircraft. Of course it has to be taken into account that airlines have different levels of outsourcing influencing the total staff numbers. Previous articles on Ethiopian Airlines and FastJet in relation to the ‘Airline Management’ courses at Özyeğin University (Istanbul, Turkey) can be found here.

  
Ethiopian Airlines employed 6,559 people in June 2012 while operating 48 aircraft that year. The Eastern African airline transported a total of 4.64 million passengers in 2012. That means that Ethiopian Airlines had 14.14 employees per 10,000 passengers and 136.65 per aircraft in its fleet. To understand these numbers it is also important to know that in Ethiopia, the airline does their own maintenance & engineering, catering and ground handling, besides the core flight and ground operations. The fleet and staff numbers also include the cargo division of the airline, which means that staff per 10,000 passengers is a bit higher than in reality.
Data for 2013 is incomplete, but Ethiopian Airlines had a fleet of about 55 aircraft that year and 7,642 employees, transporting 5.23 million passengers. Taking into account that the fleet number is an average towards the year-end, that shows that there is a small increase in staff per 10,000 employees (14.61) and per aircraft (138.95). Data for 2014 is not available yet, but with a fleet of already 72 aircraft, the number of staff must have increased beyond 8,500 if the same level of employees per passengers and aircraft is maintained. Especially the long haul fleet has grown significantly over the past two years, mainly due to the introduction of the Boeing 787 of which the African airline already operates 10. But also the fleet of Bombardier Q400’s and Boeing 737’s has been expanded.
The distribution of employees for the largest departments can be seen in the graph below, showing that ‘marketing & sales’ and ‘maintenance & engineering’ are the two main departments in terms of number of employees.

 When we look at FastJet, this is just a very small airline which had 3 aircraft in its fleet in 2013. It transported only 370,000 passengers with a total of 433 employees. That comes down to 11.70 employees per 10,000 passengers and 144.33 per aircraft. Also for FastJet the breakdown of employees per department can be seen below, showing that ‘sales & marketing’ and ‘flight crew’  are the two main departments in terms of employees. In this case both cockpit and cabin crew are combined in ‘Flight Crew’. This category is responsible for 30% of the total number of staff, while at Ethiopian Airlines this is just 18%. This can be explained through the importance of primary and secondary activities. For example the maintenance department of Ethiopian Airlines which does most of its maintenance in house and is responsible for 28% of the employees compared to just 7% at FastJet which only does its line and base maintenance in-house and has a single fleet type.


When comparing the numbers of Ethiopian Airlines and FastJet, we see that FastJet has less staff per 10,000 passengers (11.70 versus 14.14). Though FastJet has more staff per aircraft (144.33 versus 136.65), but this can be explained because of the very small fleet of FastJet. Departments such as administration, management and marketing and sales tend to have a large number of employees per aircraft compared to larger airlines, but will experience a lower growth when expanding the fleet compared to flight crew, maintenance and flight operations.
The lower number of staff per 10,000 passengers is more interesting. FastJet as a low-cost carrier focusses more on its core activities and outsources processes such as ground handling and catering (which is only a buy-on-board offer). But also its own staff has to achieve a higher productivity and flexibility. Still the number of 11.70 is high and also the 14.14 of Ethiopian Airlines seems to be high, even for a full service airline. When we compare with for example easyJet (see graph below), there is a huge difference. Still Ethiopian Airlines is a profitable airline. This can be explained by the extremely low labor costs in Africa compared to western Europe. Ethiopian Airlines had only slightly more than US$ 110 million staff costs (in 2012) and FastJet US$ 12 million (2013). In comparison, Brussels Airlines (Belgium) with only 3,500 employees (compared to more than 6,500 at Ethiopian Airlines) had labor costs of almost 220 million US Dollar in 2013. That’s double the cost for almost half the amount of employees. This makes that African airlines push less for higher productivity and flexibility because employees are so cheap.

 Ethiopian Airlines (2011/2012) and FastJet (2013) annual reports

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