With one wing in Europe and other in Asia, Turkish Airlines (Turk Hava Yollari – THY / TK) continues on a flight plan destined to prove Napoleon Bonaparte correct when he said some 300 years ago: “If the earth were a single state, Istanbul would be its capital”.
Similar to the extraordinary growth of the big three Gulf carriers (Emirates (EK), Qatar Airways (QR) and Etihad (EY)), with whom the Turkish carrier is often compared, TK uses its geo-strategic location to connect continents, but is further advantaged by having a large and mobile home market of over 77 million potential travelers with access to 52 Turkish airports. In addition, its Istanbul (Ataturk) Airport (IST) is within narrow body reach of 55 countries, including over 100 European cities served non-stop. The airline’s President and CEO Dr. Temel Kotil says that the carrier’s strong growth will continue as it pursues a strategy of building international-to-international transfer passengers to create one of the airline industry’s largest global networks, currently ranked fourth.
Dr. Kotil says that the Turkish carrier serves more countries (108) than any other airline, and also leads the category of international destinations served (219). It offers the largest number of origin and destination city pairs to and from Africa and the Middle East, and is the second largest to and from Asia and the Pacific. Besides, its main market within Europe—in which it has come into prominence as a key player over the past decade— Turkish has also penetrated thinner European markets, and will continue to expand to many of the continent’s second and third-tier markets which are not economically served with larger aircraft such as Edinburgh (EDI), Liverpool (LPL), Billund (BLL) and Genoa (GOA). Building critical mass is the foundation of the airline’s strategy, he notes, with further market route development planned this year, especially to Asia, Africa and the Americas.
THE PASSENGER IS ‘BOSS’
The Aeronautical Engineer from Istanbul Technical University joined the carrier in 2003 in the technical section and became the CEO in 2005, a year prior to the airline’s partial privatization. The Turkish government holds a 49.12 percent stake, with 50.88 percent held by the public; its shares are traded on the Istanbul Stock Exchange. Dr. Kotil believes that it is not coincidental that the airline’s dramatic growth and sustained profitability were propelled after the partial privatization. “Government-owned airlines are like poisoned in some way,” he states. “At Turkish, the passenger is now the ‘boss’ as it should be. The object of our attention must be the customer. Successful airlines will be those that love their passengers – and we do love ours” he says with a smile.
Battling the competition in various parts of the globe, Dr. Kotil points out that the marketplace no longer blindly buys tickets. “Passengers can select any carrier they wish—there is no captive market. If you don’t have the product, forget about it. At Turkish, management wants to support our staff by investing funds in the product, as if we were inviting passengers into our own homes in the true Eastern tradition.” For example, he says that the airline does not consider catering just a ‘food service’, but a true example of Turkish hospitality. “We want to satisfy our guests in an utmost level and are upgrading our already excellent offerings. In essence, we are competing with ourselves and are totally concentrated on how we can do it better.”
TWENTY FOUR ISTANBUL ROUTES ADDED IN 2014
Last year, Turkish added 24 new routes from its Istanbul-Ataturk hub. The company flies to 101 airports in Europe; 42 in Africa; 33 in the Middle East; 31 in the Far East; and 10 in the Americas, with eight gateways in the United States (New York (JFK), Boston (BOS), Chicago (ORD), Washington Dulles (IAD), Los Angeles (LAX), San Francisco (SFO) Houston (IAH)) Miami (MIA) and two in Canada (Toronto (YYZ) and Montreal (YUL)). Already the largest non-African carrier to serve the African continent, Turkish will bolster their presence by launching three new points in 2015.
“I believe that Africa will grow to be one of the most important continents in the world,” says Dr. Kotil. “The region has an enormous potential so we are planting a seed and it may take some time to be fully nurtured,” He notes that Turkey is the third biggest investor in Africa after China and Saudi Arabia and by expanding the network, Turkish will make the region more accessible than ever before. The strategy is to add international-to-international traffic which reached 14 million passengers last year, more than the total passengers flown by many airlines over their entire networks.
He jokingly refers to the airline’s fleet of Boeing 737-900s as the ‘African Queens’, plying long, thin sectors in a 10/141 configuration. As routes mature, the carrier will upgrade to Airbus A330s to meet increased demand, he notes. TK’s expansion in Southern Africa will increase as the airline gets more wide-bodies capable of flying the route segments non-stop as they are beyond the range of fully-loaded and fueled narrow-bodies.
The Turkish mega-carrier not only has a global route network, it has multi-daily frequencies in key markets to build mass and reduce operating costs by maximizing aircraft and crew utilization. For example, the carrier has eight daily round trips to London from Istanbul (five to Heathrow and three to Gatwick); six daily trips to Moscow and Tel Aviv; and five or more daily rotations to Frankfurt, Berlin, Dusseldorf, Amsterdam, Vienna, Paris and Brussels. Its network in Germany numbers 13 cities, serving German business travelers and tourists as well as the large Turkish diaspora which numbers over four million in Germany alone.
The strong market to Germany enticed Lufthansa (LH) to join with Turkish Airlines in 1989 to create a 50-50 percent joint venture, SunExpress (XQ), a LCC which connects cities in Anatolia (the Asian part of Turkey) with popular European destinations using a fleet of Boeing 737 aircraft. The carrier does serve Istanbul as well, but from Istanbul’s secondary airport Sabiha Gökçen (SAW), which is located about 18 miles (30 kilometers) on the Asian side of the city. In 2014, SunExpress carried over seven million passengers. Turkish also established a domestic LCC in 2008 branded Anadolujet, which uses both Boeing 737-800 and 900’s and Embraer 190s as well as Airbus A340s for long-haul missions.
Dr. Kotil points out that his carrier has its sights set on further expansion in the Indian sub-continent and China as well as Australia, but for now the priority will be the Americas and Africa. Currently, Turkish utilizes all the traffic rights granted by the Chinese and Indian bi-lateral treaties, but wants to increase the number of frequencies and destinations it serves. He notes, “India is a large and important market (5th largest domestic air market), as it expands its economic global power. Air India’s (AI) joining Star Alliance will assist our goal of spreading our reach within India.”
NEW MEGA AIRPORT IN THE WORKS
Turkish Airlines has reaped the benefits of a booming demand for commercial air service in Turkey which has experienced high rates of growth in the last decade. Although it has tripled over 10 years, Turkey remains under penetrated compared to more mature markets indicating its growth potential. In 2014, the market grew by 13.5 percent more than doubling the global industry growth rate of 5.1%. A consequence of this rapid growth has caused Turkish to be constrained by capacity limitations at its Istanbul Ataturk hub (Airways, May 2015). In anticipation of the continued demand for traffic to Istanbul and for international connecting passengers, the government of Turkey has begun work on an ambitious project to build the world’s biggest airport based on passenger handling capacity which is estimated to reach 150 million passengers by 2021.
Located on the European Black Sea coast approximately 20 miles outside of Istanbul, the six-runway project will be delivered in four phases, the first phase being completed in 2017 according to official Turkish authorities with an aim of serving 90 million passengers per year. Terminal 1 of the new Istanbul Airport will be the world’s largest airport terminal under one roof, with a gross floor area of nearly 1 million square meters. The airport will be highly functional with an architectural design closely linked to the area’s unique character, creating a stunning gateway to Istanbul and Turkey. In spite of its size, the massive terminal building will be designed and positioned to blend into the landscape. It will replace Istanbul’s Ataturk Airport.
When completed, the capacity of the new as yet unnamed but generally referred to as ‘New International Airport of Istanbul ‘will be 180 million passengers. Istanbul is within range of non-stop flights to Europe, Asia and Africa which are located within a radius of 1,800 miles (3,000 kilometers). “Istanbul is a natural hub and it provides the most economic routings due to its strategic location allowing for one-stop connections between any two cities on earth”, the Turkish chief points out. The new airport will likely entice other Star members to begin on-line flights to Istanbul.
While Istanbul is a natural hub to connect continents, it is surrounded by politically unstable countries which have impeded traffic flows. The airline boss calls the region ‘complicated’. Turkish has been forced to reduce or suspend services to Libya, Iraq and Ukraine, and it borders Syria and Iran under existing conditions. The airline is adept at modifying flight schedules and can move aircraft around with ease as political conditions warrant.
FLEET TO NUMBER 434 BY 2021
Dr. Kotil is not sentimental when it comes to fleet discussions. “ To us, they are tools, machines to get the job done,” he states. At the end of 2014, Turkish had a fleet of 261 aircraft with 197 narrow bodies split between 90 Airbus A320’s and 107 Boeing 737’s and 55 wide-bodies (39 Airbus A330’s and 16 Boeing 777’s). The carrier also operates 7 cargo aircraft (with an additional four Airbus A330F aircraft ordered last March). By 2021, with the addition of aircraft on order, the fleet of Turkish will total more than 430 units, (including dedicated cargo aircraft), comprised by 350 narrow-bodies, 95 passenger wide-bodies and 10 freighters approximately. On order are 117 Airbus A320 Family aircraft and 95 Boeing 737’s, the mass majority of which are neos and Maxs. SunExpress, the Lufthansa/Turkish Airlines joint venture, has placed an order for 50 additional 737-800’s and Maxs. Turkish’s Board of Management is constantly evaluating further aircraft options. The airline currently offers a premium economy on its fleet of Boeing 777-300ER’s but there are plans to remove those sections this year, and expand their business class product to meet increasing demand.
With seven dedicated freighters, Turkish also has a growing presence in the carriage of international cargo. Currently the six largest airlines in Europe in terms of freight tonnage, the carrier transported only 1.0% of the global freight market share in 2009 which rose to 2.0% by year-end 2013. It has set a goal of achieving $1.7 billion in cargo revenues by 2018, , representing 3.4% of global carriage, and about 11% of the airline’s total projected revenues of $18 billion.
MASSIVE LOUNGE AT ATATURK
Turkish operates one of the world’s largest airport lounges at Istanbul Ataturk Airport. Sprawled over two levels, the lounge is over 60,000 square feet (6,000 sq meters) and should not be missed by anyone passing through the airport and traveling either in business class or as an elite member of Star Alliance. First conceived as “Lounge Istanbul” in 2011, two major extension projects have two folded the space and capacity is now 1,100 seated guests, many of whom arrive early to enjoy the sumptuous fare and soothing design.
Within the lounge is a fully stocked library, a children’s playground, pool tables, showers, private rooms for napping and the Golf simulator (Turkish Airlines sponsors the Turkish Golf Open). Catered by Turkish Do&Co, the food options are varied and of gourmet quality. Fresh omelet stations are available throughout the lounge for morning flights and there are plenty of healthy food and drink options including many Turkish specialties. There are a tempting selection of Turkish Meze (bite-size appetizers featuring healthy fare) and desserts are spread out throughout the lounge with numerous tea and coffee stations.
Impeccable in-flight service, gourmet food and amenities with small touches like dinner by faux candlelight (LED) all combine to make the long-haul Business Class experience memorable. The course-by-course cart presentations, including tea and coffee, are the crowning touches. The airline uses famous athletes like football greats Lionel Messi and Didier Drogba to get their message across, and in earlier campaigns contracted US basketball legend Kobe Bryant to underscore the theme that Turkish Airlines is home to the stars.
To get another competitive foot up, all passengers arriving in Istanbul on Turkish Airlines off of international flights and continuing on another Turkish International flight are offered a free hotel in Istanbul and a complimentary city tour with all transportation, meals and museum fees covered. Visitors are almost unanimous in praise of the tours of magnificent Istanbul—and many choose to return.
As Dr. Kotil ponders his airline’s future, he can be inspired by the words of Mustafa Kemal Ataturk, the father of modern Turkey, who said, “On the meeting point of two worlds, the ornament of Turkish homeland, the treasure of Turkish history, the city cherished by the Turkish nation, Istanbul has its place in the hearts of all citizens.” The Turkish CEO would also agree again with Ataturk who predicted “The future is in the skies”, and for Turkish Airlines, that brilliant future has arrived.
News & Image Sources: Internet