There’s a revolution rising in Turkey, but it is not being shaped by the disaffected populace on the ground. Rather, it’s in the skies.
The Turkish aviation industry has been hyped by experts as the one to watch over the next decade. And for good reason. The national carrier, Turkish Airlines is expanding international operations at a faster rate than any other carrier in the world.
The world’s largest airport is due to come online in Istanbul with a capacity to transfer a seemingly improbable 150 million passengers by 2018. Turkey was ranked third in the world for its year-over-year increase for passenger growth (16.7 per cent) in 2012, surpassing all of its European rivals, according to the International Air Transport Authority (IATA) data released in August.
All these are clear signs that the Turkish are already moving and shaking the global aviation industry. But, just how far can it go?
“Considering the slow pace of growth at British Airways, Air France-KLM and Lufthansa, Turkish Airlines is more than well on the way to being the preferred European long-haul airline,” Saj Ahmad, Chief Analyst with the UK-based Strategic Aero Research, tells GN Focus.
Where established European carriers have suffered in the wake of the Eurozone financial malaise, bottom line-decimating fuel costs and ferocious competition from Gulf-based airlines, Turkish carriers have emerged through the clouds of uncertainty — energised and ambitious.
Turkish Airlines’ 2012 end-of-year report showed a 27 per cent traffic growth and a 46 per cent increase in international passenger transfers.
Pegasus Airlines is also laying notable foundations. In December last year, Turkey’s fastest-growing low-cost carrier and second-largest carrier, placed an eyebrow-raising $7.5 billion (Dh27.5 billion) order for 75 Airbus aircraft (58 A320neos and 17 larger A321neos), plus 25 options, which could take the order to more than $9 billion, as part of the airline’s push to tap a promising domestic sector.
In contrast, the 13 biggest European carriers recorded a net profit slump of 72 per cent in 2012, according to Centre for Aviation (CAPA) data. The annual financial results came after IATA warned that European carriers could record a $1.2 billion loss.
Turkish Airlines’ success owes much to its strategy, scooping up intercontinental traffic and routing it through its centrally located Istanbul Atatürk airport. And its 75 per cent stake in the 70-million-strong domestic sector is helping drive revenues.
Temel Kotil, CEO of Turkish Airlines, in an interview with Oxford Business Group, said, “The competition is in the transfer market, and Istanbul is an ideal hub.
“From Istanbul, it is possible to reach more cities with higher frequencies than any airline can from other locations. European, Russian and Gulf cities are all within two to four hours from here.”
But Kotil’s approach brings Turkey’s largest carrier into direct competition and comparison with the three giants in the Gulf: Emirates, Etihad and Qatar Airways. While some startling CAPA research shows that Turkish Airlines is in fact growing faster than Emirates in the international markets, just how realistic is Istanbul’s bid to become the next Dubai?
Plus points
A larger domestic market and more Euro-centric location permitting short-haul flights to Europe and parts of Africa (where Gulf carriers are forced to utilise more expensive-to-operate widebody aircraft) are two significant pros.
But Ahmad says, “Turkish carriers have the added issue of taking on or meeting common ground with other big Arab airlines so that they’re not all poaching traffic from one another.
“Given the swathe of airlines operating around Turkey, especially from the GCC, the sad reality is that Turkish Airlines does not offer anything that cannot be had elsewhere. Sure, it has a fantastic cabin product, but then so do the three big Arab carriers.
“Turkish Airlines can only continue to do what it does right now — focus on growth via Istanbul and proffer flights to even more destinations with its new long-haul fleet that it has on order,” he says.
With almost 240 destinations, Turkish Airlines has a significant global presence over the other GCC airlines and needs to maintain this gap if it is to keep ahead of the game.
Turkish Airlines has the world’s second-largest network by number of international destinations, but it is only eighth by number of international seats and Turkey itself is only the number 15 aviation market globally, CAPA research shows.
Peter Morris, Chief Economist at Ascend, an international aviation consultancy, also says there is further cause for caution regarding Turkey’s ambitions to become a global hub where infrastructure is concerned.
“The key to Turkey’s success is the whole transit process through Istanbul. Now, if you look at the beacon airports that have supporting developing hubs such as Dubai and Abu Dhabi, they ploughed a lot of money into it, so when things went wrong, which they did, the infrastructure and investment were in place to support the growth. I don’t think this is the case yet with Istanbul. The plans are there, but we’re yet to see it materialise.”
Given Turkey’s recent political instability, the immediacy of turning the country into a global hub could take longer than Turkey’s General Directorate of Civil Aviation would like.
“One thing is certain that people don’t like uncertainty. Look at tourism, you could see the consequences of economic uncertainty in Greece and Spain, all that happened there was that people got holidays for less. But, when there’s political uncertainty, it’s a different matter. People are reluctant to travel where there is social upheaval,” Morris adds.
He continues, “But, the biggest question for Turkey, which will shape the direction the aviation sector is able to take, is the accession to the EU. That certainly would be a landmark point. If it happens there’s a more positive future because of Turkey coming officially within the European framework.”
EU debate
The EU issue is a debate that rages on. Whether Turkey still wants to be a full EU member or whether it opts to forge an identity more Middle Eastern in appearance to cooperate with GCC countries for further trade and economic reasons will ultimately shape the kind of offering the country’s aviation sector is able to assemble.
If Turkey can get its house in order, it could rival Dubai as the world’s de facto aviation intersection. The former seat of the Ottoman Empire could be breeding a powerhouse as influential as Suleiman the Magnificent: Turkey the magnificent if you will.
