Strategy

Turkish Airlines gears up to enhance market share

The airline is undertaking a host of initiatives including FAM trips and co-operation agreements to achieve its goal of establishing itself as a leading network carrier. By Sanjay Yalavatti

Temel Kotil, CEO, Turkish Airlines and Frank Thorwirth, senior VP (Alliances), Deutsche Messe AG sign the agreement

Established in 1933 as 'State Airlines Administration' and restructured as 'Turkish Airlines' in 1955, the airline is celebrating its 75th foundation anniversary. Marking this landmark year, Turkish Airlines is determined to entrench itself as a regional leader in Eurasia and as a prominent global airline.

To this extent it has embarked on a series of marketing and promotional activities. Among these was a recent FAM trip to Istanbul where participants from several countries, primarily comprising international representatives of Deutsche Messe AG, an international trade fair organiser based in Hannover (Germany), tour companies that specialise in and promote trade fairs in Hannover and Istanbul, and the media, were invited. Participants included representatives from Australia, Germany, India, Pakistan, Japan, South Korea, Malaysia, Singapore, Philippines, Indonesia, Vietnam, Taiwan, Thailand, Iran, Iraq, Syria, Jordan, Israel, Egypt, UAE, Hong Kong, China, South Africa and Turkey.

A key component of this initiative was the signing of a co-operation agreement with Deutsche Messe AG for joint marketing operations with the objective of "pooling their resources in the interests of optimal customer support and maximum synergy benefits for trade fair visitors and passengers." Deutsche Messe AG operates a number of trade fairs, like CeBIT International and the Hannover Messe international industrial technology fair, that receive participation from a few hundred thousand visitors annually from all around the world. While the details of the agreement are to be finalised, the broad scope involves Turkish Airlines being promoted as a preferred airline to ferry visitors to and from the various countries to the trade fair cities.

Reaching out

Orhan Kabaoglu, director of Turkish Airlines, says, "With this project we want to reach out to a lot of people and invite travellers to use Turkish Airlines, whatever their destination within Germany and across Europe. When Deutsche Messe representatives and tour agents are promoting visits to the various trade fairs, we would like Turkish Airlines to be an integral part of the picture."

Turkish Airlines is also playing an active role in promoting Turkey as a stopover/leisure destination. "While we are initially reaching out to business travellers through the network of invitees, we are hopeful that those very travellers will also use Turkish Airlines for their leisure trips with their families, maybe even combining them with their business trips for a stopover of a few days in Istanbul and also explore other places of interest in Turkey," he added.

Speaking on the occasion of the signing of the agreement, Temel Kotil, CEO of Turkish Airlines, highlighted the airline's objective of enhancing connectivity in all the regions it services. "We are increasing our fleet annually, and as we increase our flights and frequency, we hope to offer better and more flexible choices to our passengers. We are committed to eventually connect all cities we fly from to Istanbul at least twice a day," he stated.

With a fleet of 111 aircraft, Turkish Airlines currently operates on 33 domestic and 108 international routes, flying 20 million passengers annually. Its immediate expansion plans include expanding 10 new routes in 2008, and the procurement of 16 new aircraft.

Success story

Sharing a little history regarding Turkish Airlines' transition from a state-protected airline to a modern competitive airline company, Kotil revealed, "Until 2003, Turkish Airlines was a company with 98 per cent belonging to the government and only two per cent to other investors. Being a state-owned company we were largely protected and not exposed to competition. In 2003, the Ministry of Transport implemented a new policy, saying we did not know how to compete, and withdrew all protection. In this liberal economy we had to survive on our own merit. That shook us up and that year we learned the lessons of competition very seriously."

Now in 2008, even in times of high fuel costs and other problems plaguing the global airline industry, Turkish Airlines is a profit-making entity. "In 2003, we learned how to compete, and this year our net profit increased 200 per cent," Kotil averred.

This performance turnaround is attributed to several factors. The overall Turkish Airlines fleet is very young, with an average age of six years - claimed to be one of the youngest in Europe. Fuel efficiency is therefore quite high and this has helped the airline save a sizeable amount given the soaring fuel costs.

The airline has also been constantly improving its way of doing business, with internal analysis showing that apart from cost-cutting, initiatives like focusing on fuel efficiency, route optimisation, increasing load factor, streamlining ground and other operations generate savings of almost 100 million dollars annually.

On the personnel front the airline has concentrated on hiring only certified professionals i.e. pilots, cabin staff, technicians, ground personnel, etc in areas that are crucial to operations, while optimising the number of employees in offices and administrative roles. Strategic investments have been made in more sophisticated software, technology and other processes that can perform required tasks efficiently without increasing personnel in those areas even as the scale of operations increases.

"Although fuel cost as a unit increased 60 per cent, our overall operation cost increased only 10 per cent, since we are now carrying twice as more passengers per employee. In 2003 it was 800 passengers per employee, and right now it is almost 1,700 passengers - more than double. Even though the company has not grown much in terms of number of people, our passengers have more than doubled and revenue more than tripled," declared Kotil.

An area that the airline acknowledges it needs to strengthen is the online segment, given the increasing impact of the internet that cannot be ignored. However, Kotil reiterated the importance of their travel agent network stating, "While we are looking to increase our direct online sales, we do not intend to replace the agent segment as they are a vital part of our marketing effort."

Turkish Airlines is now gearing up to meet the challenges of increasing its visibility, profile and garner more mindshare among all segments of travellers. In addition to escalating its marketing and promotional activities, the airline states that it is concentrating on supporting its brand equity through quality of service, comfortable seating, aesthetics and quality of presentation. The airline is also enhancing its investments in areas of flight safety and service quality.