John David Kabasa does not limit himself to the academia, where he is an Associate Professor at Makerere University, teaching Veterinary Medicine. He also runs an IT firm, with the help of a partner; a business that sometimes makes him fly around the world in Business Class.
 

His trip from Germany to Kampala, booked in Business Class of Emirates, began from Frankfurt; it was just one of his many journeys through the air. But he had to stop over in Dubai, the hub of Emirates, where 120 airlines land daily, so that he could talk to his partner there. Yet there was no additional cost that he incurred when he got on board on May 1, 2008, to fly to Entebbe, via Addis Abeba, after spending two nights in the commercial city of the United Arab Emirates (UAE).
 

This is only one of the many advantages the gulf airline offers to African travellers, giving it a competitive edge in Africa, as elsewhere in the world. Emirates financial profile, disclosed in Dubai two weeks ago by Emirates Group’s Chairman and Chief Executive Officer (CEO), Sheikh Ahmed bin Saeed Al Maktoum, is telling of this fact.
 

“It has been a record breaking year in every aspect,” Sheikh Al Maktoum told an army of journalists gathered inside the Group headquarters on April 30.
 

For 20 consecutive years now, the Emirates Group has remained profitable, although the Emirates Airline is where the Group’s bread and butter comes from. Its sister company, Dnata, the oldest but junior partner in the Group, is involved in handling airport and cargo operations at Dubai International Airport, which is the fifth busiest airport in the world that entertained 35.6 million passengers last year and also posted a net profit of 83 million dollars last year.
 

The most impressive performance comes from the Airline, in spite of the challenges it shared with the global aviation industry as a result of soaring oil prices, which put an additional expense of half a billion dollars last year on Emirates.

“Despite the oil price increase and the sub-prime mortgage crises, we have continued to remain profitable,” the Chairman said.

This year’s profit in fact topped the billion-dollar mark for the first time since the airline’s establishment in 1985. Emirates Chairman disclosed two weeks ago that it has made a net profit for the year ended March 2008 of 1.45 billion dollars (representing an increase of 54.1pc from last year), after generating a turnover of 11.2 billion dollars. The carrier takes the lion share of this achievement: It has made a record net profit of 1.37 billion dollars during the same period, up by 62.1pc when compared to last year.

So its operation in Africa, where it flies to 15 destinations, was consistent with its global performance, according to Adnan Kazim, senior vice president responsible for Commercial Operations for Africa. Flying passengers such as Mr. Kabasa from and to Africa has contributed 10.2pc to the Airline’s profit, which also represents an increase from 8.9pc last year.

Emirates officials believe that there is a lot more business to make in Africa than it has had to date. They see Africa as an underserved continent.

“Africa has been identified as a key market destination for Emirates,” Radhika Markan, Media Relations manager for Africa told Fortune in Dubai. “There is a growing trade of Africa with China.”

Her view is shared by those high up in the hierarchy.

“I think the market is there in Africa,” said Sheikh Al Maktoum. “Some of the destinations are not well served.”
 

Emirates flies to 15 destinations in Africa, including Cape Town, a route opened only recently in March 2008. This could be small compared to the flight networks managed by Africa’s giant airlines: Ethiopian Airlines (28), Kenyan Airways (26) and South African Airways (19). But it has more destinations in Africa than some of Africa’s well-known airlines such as, for instance, Egypt Air, which has 10. Emirates officials are, however, promising to go to more places in the years to come, owing to their massive expansion plans across the world, in their drive to become the largest airline in the world by 2020.

“You will see us flying to more places in Africa in the near future,” said Sheikh Al Maktoum.

With the largest ever order of 182 aircrafts, including 58 Super Jumbo Airbus 380, with a total worth of 58 billion dollars, indeed, Emirates Airlines will become a force to be reckoned with in the years to come. Interestingly, the challenge to African airlines is already there. No other places demonstrate this clearer than the markets in East and West Africa.

Two years after it started flying to Addis Abeba, with a colorfully marked median flight in March 2006, as an extension of its route to Entebbe, Emirates Airlines has shown how much its global position can help it gallop across Africa. It was within the six-month period that it increased its flights from three times a week to daily. Both the number of passengers it transports from Addis (and Entebbe) and the revenue it generates are continuously on the rise, although its officials are reluctant to talk about passenger numbers and revenues generated.
 

Sudhir S. Achipra, Emirates’ area manager for Ethiopia, attributes this rapid growth to the consistency maintained by the airline in departure time and uniformity in the quality of in-flight services across all routes.
 

And their fare is very competitive, too!

It was his reaction to an announcement made by a cabin crew on May 1 that the aircraft would disembark passengers destined to Addis and wait for one hour and 15 minutes before it took off to Entebbe. If there was any inconvenience he had felt in the four hours flight to Entebbe that day, it was only the hold up in Addis, although he would be compensated for this with the personalized and courteous treatment he would get from the cabin crew once onboard.
 

Officials at Emirates promised that frustrated passengers such as Mr. Kabasa will soon be pleased when the airline meets its over all desire of having non-stop flights to all the destinations it is flying to.

“Our biggest and long term plan is to have a non-stop flight,” said Mr. Achipra.
 

How long will Emirates take to separate Addis Abeba from Entebbe, an established market where the airline has been flying for over a decade, and the largest contributor of revenue to the route, is an answer Emirates officials may not be prepared to provide.
 

“I am sure sooner or later this flight will be de-linked,” Mr. Kazim told Fortune.

De-linking the route largely depends on whether or not there will be enough aircrafts dedicated to the two destinations, according to reliable sources. With the Emirates acquiring all the aircrafts ordered this year, this issue may be resolved soon. The toughest challenge lies in the ability of both destinations to fill up 267 seats in their own rights.
 

“If there is sufficient demand to support this route independently, I do not see that it is [de-linking the route] coming too late,” said Mr. Kazim.
 

Industry observers doubt if Addis is placed to generate such traffic daily at this moment; they attribute this to the fact that more than half of the flight from Entebbe to Dubai, via Addis, is booked from Uganda.

This may have offered a competitive advantage to the Ethiopian Airlines. Perhaps paradoxically, Ethiopian significantly increased its frequency to Dubai to 17 times a week, only after the Emirates began to fly not only to Ethiopia, but also to West Africa, a region where the Ethiopian Airlines gets its bread and butter. In fact, the battlefield in the competition is in West Africa, far from the hubs of both airlines.
 

Serving West Africa for over 30 years, Ethiopian had been a dominant airline in West Africa until about four years ago. Passengers, particularly businesspeople from Nigeria, fly to Addis in transit to the Middle East and Asia. Today, Ethiopian has given up the lion share of this market to the Emirates, which claims 52pc of the market, according to industry sources.

Kassim Geresu, executive vice president for Finance and Strategic Planning, conceded that Emirates flying to West Africa, more so Nigeria, has affected the revenue Ethiopian Airlines has been generating from there. Nevertheless, he rejected the claim that its business has been seriously damaged as a result. He attributed the growth of market there partly to the emergence of Emirates flag in the West African skies.

Interestingly, this is also a view echoed by Achipra.

“Emirates going to Guangzhou is an additional choice for African traders,” said Mr. Achipra. “We provide two markets.”
 

Indeed this will become a double-edged challenge to the Ethiopian; not only will it offer a competitive fare and enhanced services, as well as new aircrafts, it will also offer these traders the rare opportunity to drop off at Dubai (another important merchandise centre) and spend two to three days there before they head off to the Chinese town, with no additional cost involved.
 

Officials at the Ethiopian Airlines, albeit recognizing the new challenge, hope that they will remain competitive on this route, owning to the larger frequencies they have than their competitor. Ethiopian flies to China 14 times a week: Three to Hong Kong, five to Beijing, and six to Guangzhou.
 

“I don’t think they will have as many frequencies when they start as we do have,” said Kassim, the vice president.

Whether Emirates is set out to do that, or whether it will slash Ethiopian’s market share to the Far East as it did in West Africa, only time will tell. What is certain is that the national carrier, which is hoping to achieve the billion-dollar mark in revenue by 2010, is up against a strong competitor that just paid one billion dollars in dividends to its owners, the government of Dubai, from its lucrative net profit.

Tamrat G. Giorgis
FORTUNE Staff Writer