ATW's 2011 Airline Market Leadership - Turkish Airlines

>> Wednesday, February 2, 2011

The traffic and revenue performance of this year’s Market Leadership Award winner more closely resembles that of a low-fare carrier or Middle Eastern startup than a mature flag airline with more than 75 years of history. Turkish Airlines, however, defies the stereotypes. Taking full advantage of its geographic position astride the European and Asian continents, THY has morphed from a sleepy, nondescript flag carrier into an industry powerhouse in less than a decade under the ambitious slogan “Globally Yours.”

Along the way it has bulled itself into the industry’s elite earners, reporting income of TRY559.1 million ($370.2 million) in 2009. Earnings through the first nine months of 2010 totaled $169 million, and although this was down 44% compared to the 2009 period, operating profit for the period rose 38%.

THY’s rapid rise began when the Erdogan government came to power early in the last decade and embarked on a program of economic liberalization. The new minister of transport, Binali Yildirim, gave the airline shock therapy. He liberalized the air travel market while easing the tax burden on air transport. He also appointed a new top management and board of directors at THY, enabling a “new way of thinking,” according to Temel Kotil, who was named CEO in 2005. “There was a total ‘reset’ of everything Turkish was doing,” he recalls. “In mathematical terms, we entered a new space.”

That new space extended well beyond the borders of Turkey as THY, which was privatized in 2006, took full advantage of its advantageous location to begin building an efficient hub system. Istanbul is within a 3.5-hr. flight of 55 countries, including all of Europe. As of mid-December it served 169 destinations, up from 101 in 2003. A network traditionally focused on short- and medium-haul destinations is stretching to places like Singapore, Ho Chi Minh City, Washington, Los Angeles, Sao Paulo and Toronto as the airline boosts its intercontinental presence.

Traffic growth more than matched this expansion as enplanements rose 141% between 2003 and 2009. This represents a compound annual rate that is well above the world average and that of other European network carriers. The 2008-09 global financial crisis did not interrupt its growth curve. While world passenger traffic fell 2.1% in 2009, according to IATA, and 5.8% at Assn. of European Airlines members, THY grew by an impressive 12.3%.

The carrier, which joined Star Alliance in 2008, is now Europe’s fourth-largest full-service airline in terms of passengers, fifth in ASKs and sixth in RPKs. It expects to transport 40 million passengers in 2011.

To support this growth, it has embarked on an aggressive aircraft purchase program with confirmed orders for 12 777-300ERs, 11 A330-300s, two A330-200Fs, 24 A320 family aircraft and 35 737NGs. In total, the fleet grew from 64 aircraft in 2003 to 152 in December 2010 and will exceed 200 by the end of 2015.

“We put ourselves in running mode. We did not restructure the company, we rebuilt the company,” Kotil points out. “When you grow quickly, the old dissipates and the new takes over. The average age of our fleet is 6.2 years; this is one of the youngest fleets among our peers. It has many advantages, on fuel burn and CO2 emissions for instance.”

THY took its first 777-300ER last fall. The aircraft served as the platform for introducing its new “Comfort Class” mid-tier cabin and its new business class with fully lie-flat seatbeds. The comfort class seat is 116 cm. wide and offers a very generous 49-cm. pitch. Each seat is equipped with AVOD and access to iPod or USB ports. The 777-300ER also bears the new tail livery.

Increasing passenger comfort is one of THY’s main strategic goals. “We decided in 2006, right before our privatization and listing on the Istanbul stock market, to become a five-star airline,” Kotil notes. It currently holds an overall four-star Skytrax ranking and provides the world’s best catering in economy, according to that firm.

Turkish Airlines’ impressive revenue and traffic growth regardless of business cycle, strong profitability and excellent progress in passenger service make it a deserving recipient of ATW’s Airline Market Leadership Award for 2011.

Source

0 comments:

Post a Comment