TBY talks to Hamdi Topçu, Chairman of Turkish Airlines, on record growth, new destinations, and marketing strategies.
THE BUSINESS YEAR Turkish Airlines (THY) is one of the only major airlines that has shown consistent growth in passenger numbers in recent years. What were the main challenges in 2011 and what is your outlook for 2012?
HAMDİ TOPÇU It was a very important year because it was the year that the most wide-body and narrow-body aircraft were added to our fleet. It was also a year for investment—up to $750 million worth—outside of aircraft purchases. We also added 24 new destinations this year; most of them long haul. Despite this, we finished the year in profit. In 2012 we are aiming for 18%-20% growth. We also hope to increase our fleet to 195 aircraft; 29 of the planes we’ve ordered will have joined our fleet by the end of this year. There will be new destinations and flight points as well, and frequency increases to existing lines. For example, we’ve upped our flights to New York to three a day, and we’re increasing the frequency of flights to Europe and the Far East. New destinations are also expected in Europe and Africa. We are planning on expanding into Central and South America. We believe that 2012 will be better than 2011, barring any unforeseen circumstances. We haven’t got any unresolved problems related to our operations. It’s all going smoothly. One of the most important things in 2012 will be the opening of our THY Technic facility at Sabiha Gökçen Airport in Istanbul over a 380,000-sqm area. Operations will start in 2012 for narrow-body aircraft, and then as of next year it will include wide-body aircraft. As a result, Turkish Airlines will operate one of the key aircraft maintenance facilities in the region. We’ve finished design plans and will begin serial production of aircraft galleys, starting with Boeing galleys, in conjunction with Turkish Aerospace Industries (TAI). We also have an airline seat design company, which is expected to begin production in 2013. THY has various deals with US companies in other production areas too, such as with Goodrich for the production of aircraft components. On top of this, THY’s pilot academy is currently graduating 100 pilots a year. We’re relocating that academy and increasing the capacity to 300 pilots per year. This school is different from our Aviation Academy, which was recently IATA approved. So, it’s a busy time for Turkish Airlines.
Are these new production initiatives aimed at export too?
Sure, it’s both for us and eventually for export, the aim being to develop and expand the Turkish civil aviation industry in Turkey.
What impact will these new educational developments have for THY’s position in the region?
Our schools include foreign students from other airlines in the region. It will play a great part in the growth of educated and qualified aviation staff not just in Turkey, but in the region.
How important is the Turkish Airlines brand on the cargo side of the business?
We eventually will make our cargo division a separate company. We have over 190 cargo destinations around the world, and our brand image as a safe and reliable airline is well established. We’re one of the fastest growing cargo companies in the world. Turkey’s geographical location, with Istanbul as a hub, is an important factor for our strong cargo growth.
What trends can you identify within the cargo industry?
Istanbul has great potential and is developing very quickly. Turkey’s and Istanbul’s growth and development and increased importance on the international scene have a direct impact on the growth of our business. We foresee a growth in cargo business, even though Istanbul still hasn’t used more than 30% of its potential in my opinion. We need more airport facilities too; Atatürk Airport is overcrowded right now, but the new airport project should resolve that. There’s a new project to dedicate an airport solely to cargo, possibly in Çorlu, or possibly as a part of Sabiha Gökçen Airport.
There are rumors that Turkish Airlines will be acquiring a European airline. What effect will this have on THY?
We’re currently talking with the Polish national carrier, LOT Polish Airlines. We’ve had meetings and the process is underway to finalize this deal. This deal will of course have a positive effect on both airlines. We’re not just seeking benefits for Turkish Airlines; we want it to be a win-win situation for both airlines, and both countries. We also have other deals and initiatives we’re working on with other airlines, and we’re evaluating various offers.
You mentioned 24 new destinations in 2011, and new destinations in the Americas. How would you characterize the demand in South America?
We seek to serve all three kinds of passengers: tourists, business people, and transit passengers. We find that there is a large number of transit passengers from South America to various points in Asia and the Middle East, most of which used to transfer in Europe. We would like to expand our share of transit passengers, and have increased the number of transit passengers by 18%-20% as a result of increased traffic in Istanbul. We are also active in domestic flights. There are 48 airports in Turkey, and domestic air travel is also increasing rapidly, adding to our overall growth. This positive outlook obviously has to do with Turkey’s overall GDP per capita growth over the last few years.
Do you have any other strategies to increase the number of passengers who choose Turkish Airlines?
We focus on increasing service quality to make Turkish Airlines the best option. We think of it as a complete package, improving the flight experience, upping technology, making flights more comfortable, and adding more destinations.
You made a big impact with your promotional deals with FC Barcelona, Manchester United, and Euroleague Basketball. How have these deals added to Turkish Airlines’ popularity?
These sponsorships have added greatly to our public exposure. We have $100 million set aside for these kinds of deals, and the sponsorship deals you mentioned will continue.
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© The Business Year - May 2012