D-8 Airlines Need to Learn from THY Success Stories

Istanbul, Turkey | December 24, 2008 by D-8 Secretariat

Turkish Airlines is becoming a successful global player

The world today is in the throes of a global crisis that began in the financial markets, writes Turkish flag carrier publication, SKYLINE recently. The aviation sector too is adversely affected by the crisis and is experiencing hard times. The International Air Transport Association (IATA) has estimated that world aviation will lose USD 5.2 billion in 2008 and USD 4.1 billion in 2009. In a climate in which losses are going to be greater than ever, financially-strong companies can create opportunities for themselves and come out stronger than before.

Turkish Airlines (THY) proved its financial strength again last month when it posted its balance sheet for the first three quarters. Boosting its net profit by 244% in the first nine months of the year, the airline made a profit of YTL 668 million. And it did this despite a 65% rise in fuel costs over the same period last year, which is just a further indication of how significant this success is.

“That Turkish Airlines chalked up a coup of this magnitude during a period when the sector is in trouble is due to the steps it has taken over the past five years,” said Temel KOTİL, Ph.D., the CEO and Member of the Board of the Turkish Airlines. The airlines today is in a much stronger position structurally than it was five years ago.  Adding strength to financial and managerial strength through swift implementation of the strategies outlined by the new management, Turkish Airlines has grown rapidly in the market through its concept of customer-based, quality service and now stands out among its competitors. The whole world today speaks favorably of Turkish Airlines’ success and service, and all players in the sector, competitors included, are applauding Turkish Airlines. “This not only gives us great pleasure but is at the same time a great honor for us,” Kotil added.

Temel KOTİL, Ph.D., the CEO and Member of the Board of the THY

The growth initiative that was launched with the target of becoming a global player began with orders for 59 new planes to renew and expand the fleet. With just 65 planes in 2003, THY boasts a fleet of 120 today. “We also acquired a more flexible management structure following our first two public offerings, and the initiatives we in the Turkish Airlines management took to boost productivity have played a key role in the success that was achieved,” Kotil said. He pointed out with special gratitude to the Turkish Finance Minister, Mr Kemal Unakıtan, for his unflagging support during our process of privatization, and the Turkish Transport Minister, Mr Binali Yıldırım, who implemented the policies that cleared the way to liberalization of Turkey’s air transport sector.

Kotil however underlines that the most important factor in the success is that the THY’s valuable passengers, who chose Turkish Airlines. He mentioned his top priorities was to take the criticisms and recommendations to heart, and to seek ways of offering passangers the very best. In addition to offering favorable fares, THY have continuously developed the quality of service during the entire travel experience from ticket purchase to baggage claim, as well as diversifying the refreshment offerings on airplanes. Adding to THY flight destinations by opening new routes, the company have made direct flights possible, and Kotil promised to continue to do so. “In this connection, our membership in the Star Alliance, the world’s largest airline alliance, also realized during this period, has enabled our passengers in the foreign markets to reach almost every point in the world, as well as making a serious contribution to our business passenger traffic,” he said.

The giant airline companies are reporting losses today; some airlines are even going under. A number of airlines are planning to downsize, raising ticket fares, lowering refreshment expenditures and charging extra for baggage, all as a recipe for getting through the crisis. THY in contrast are seeking ways to offer passengers a better travel experience at more favorable prices. “While our competitors are reducing capacity on their winter timetables, we are happy to be the European airline that has increased its capacity the most,” Kotil proudly said.

Turkish Airlines is pleased to be a company that has doubled its number of passengers and tripled its turnover in the last five years. Not only that but THY built the success on a solid foundation, realizing all projects as the result of strategies outlined by our Board of Directors and reaping the benefits of doing so. For that reason Turkish Airlines is continuing to move forward towards its growth targets even under today’s crisis conditions. “The finest example of this being our recently announced order for 105 new planes with an option for 30 more, on which we have also elicited bids. Our goal in the short term is to become one of Europe’s four largest airlines,” Kotil said. THY now projects to make Turkish nation and its people proud by gifting them in 2013 a Turkish Airlines that carries 40 million passengers a year with a turnover of USD 10 billion.

9-month net profit of YTL 668 million

On the stock exchange market, Turkish Airlines recently posted its consolidated financial tables for the first nine months of 2008.

Based on the tables, the airline made a net profit of YTL 668 million, up by 244% on the same period last year. Despite an average increase of 65% on the USD/ton cost of fuel, the airline boosted its operating profit by 18% to YTL 687 million and its principal operating profit by 17% to YTL 489 million.

The airline’s sale revenues, three-quarters of which derive from its international routes and the remaining one quarter from the domestic routes, were up by 24% to 4 billion 416 million YTL. Fuel meanwhile accounted for 36% of the airline’s operating expenses this year, up from 27% in the same period last year.

Turkish Airlines’ Hajj Pilgrimage flights get under way

On the other hand, THY also aimed to carry 94 thousand Hajj pilgrims to Jiddah and Medina during this year’s Hajj season, and transport approximately 190,000 passengers round-trip.

The flights, made from 22 airports in Turkey, landed at the airports of Jiddah and Medina with departures from Turkey between 30 October and 10 December and returns from Saudi Arabia between 11 December and 11 January of the new year.

Turkish Airlines’ fleet of new long-haul, wide-body and large capacity A340 and A310 aircraft will be used for the Hajj flights. The airports of Adana, Izmir, Antalya, Kayseri, Dalaman, Diyarbakır, Erzurum, Ankara, Şanlıurfa, Gaziantep, Isparta, Istanbul, Konya, Nevşehir, Istanbul Sabiha Gökçen, Samsun, Trabzon, Van, Bursa, Denizli, Muş and Sivas will be used for the Hajj flights.

THY reaching foreign markets almost every point in the world

Turkish Airlines is also going to transport Hajj pilgrims from France (Paris, Lyon, Nice), Germany (Dusseldorf, Cologne, Frankfurt, Munich, Berlin, Stuttgart, Nurnberg, Hamburg, Hanover), Belgium (Brussels), Switzerland (Zurich and Basle), Holland (Amsterdam), Austria (Vienna), Denmark (Copenhagen), Sweden (Arlanda) Norway (Oslo), Finland (Helsinki) and England (London and Manchester) with departures between 10 November and 2 December and returns between 11 and 31 December.

D-8 Secretary General, Dipo Alam, encourages the civil aviation authorities of the memberstates to develop detailed program and plan to boost the involvement of private sectors in the airlines, and airport construction business. In addition to the Turkish success stories, he brought to mind the model of cooperation betewen Malaysia’s AirAsia, that worked with the Islamic Development Bank, Gulf-linked Crescent Venture Partners and Deucalion Capital, a Frankfurt-based global private equity fund to help finance the purchase and lease of 11 Boeing 737-300 aircraft.

“These are potentials sectors to work on, considering that we have a very huge potentials in terms of our population that use aviation service for massive purposes, such as for umrah, and hajj” he said in his office. He also underlined the growing importances of air-cargo for export/import, and the migrant workers who are frequently using the service of civil aviation. “To support all of these, of course we should also develop programs of passenger safety, pilot and staffs trainings, especially for aircraft and airport maintanance,” he added.

In the succesfully held Third D-8 Working Group on Civil Aviation and Director Generals’ Meeting in Bali, Indonesia, on 17-18 June 2008, D-8 Organization revealed that it seeks to strengthen cooperation in the field of Civil Aviation as it would help to increase the economic and social conditions of the D-8 people. Dipo Alam said that the D-8 cooperation in this field was in line with strong commitment from each memberstates to enhance the safety, security and services of the civil aviation in order to meet the requirement set by the International standard. He also said that D-8 was very pleased to have the THY Chairman of the Board in the 3rd DGCA Working Group, Mr. Candan Karlitekin, who provided a very interesting presentation on how THY has succeeded in its domestic and international competition, as a study case for the rest of civil aviation industries in the D-8 countries. “It is a must that we have to learn from the Turkish story to lead our D-8 aviation industries into a healthy competition environment and beneficial privatization,” Alam added.

During the 3rd DGCA meeting, the flag carrier Garuda Indonesia forged partnership with Turkish Airlines to expand their market network in the Middle East and Southeast Asia. Also was agreed the cooperation between TAI and PT Dirgantara Indonesia to manufacture civil aircrafts. With the manufacture of helicopters by the TAI, Secretary General of D-8 wished that the further cooperation could also be increased with the PT Dirgantara Indonesia, as the latter also has the capability to manufacture military and civilian helicopters.

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