Turkey's Prime Minister Tayyip Erdogan said a consortium of Turkish construction firms made the winning EUR22 billion bid on to construct and operate a third airport in Istanbul, which Turkey expects will become one of the world's largest by passenger numbers, with the Prime Minister noting "such an airport ... will carry Turkey to a different level on the international stage". The consortium of Cengiz, Kolin, Limak, Mapa and Kalyon bid EUR22.15 billion for the build-operate-transfer project, which includes a 25-year lease, outbidding rivals including TAV Holding (38% owned by Aeroports de Paris) and Fraport (in a JV with IC Holding). The airport is planned to have a total of six runways and will eventually have capacity to handle 150 million passengers p/a. Limak chairman Nihat Ozdemir commented: "We aim to start the construction in a year," adding the group would initially invest EUR10.25 billion. He explained: "We will pay the amount in 25 equal annual installments, and the airport will be start services towards the end of 2018." Mr Ozdemir said the consortium would seek financing from both domestic and international sourcing, adding that the consortium does not anticipate any difficulty raising the funds. The full amount the consortium will pay total EUR26.14 billion with the 18% value-added tax (KDV) added to the final bidding amount of EUR22.1 billion. Commenting on the process, Turkish Minister of Transport, Maritime Affairs & Communications Binali Yildirim said, as quoted by Antara, that "it was a fair and transparent bid. The airport addresses the following 50 years of Turkey". Mr Yildirim stated that the construction area where a new airport to be "built from scratch" would attract substantial investment and noted: "A large airport to be built in an area of 80 billion square meters, with its six airfields and 1.5 billion square metres terminal and all other auxiliary plants. The airport will be the one to address the following 50 years of Turkey. This airport will not only serve Turkey's needs but also become a popular flight destination from west to east, from east to west and from Africa to Europe". 15 Turkish and two foreign companies received approval for their technical capabilities to construct the third airport. TAV Airports CEO Dr Sani Sener, following the tender award, commented: “We have prepared meticulously for the new airport tender in Istanbul with world-renowned consultants and our expert teams in TAV Group. Therefore, we participated in the tender with the right numbers found as a result of this preparation. As a 44% publicly traded company, we’re responsible to our investors. Knowing that this is not solely a construction project but operational capability is pivotal, we have declared that we would not aim at winning the tender at any cost. Such an approach would jeopardise the company’s health, as well as the future of Turkish economy and aviation sector. As Turkey’s leading global brand in airport operations, we will continue to work towards rendering the best possible travel experience at the 12 airports we operate in six countries. As per our smart growth strategy, we’ll continue to pursue new opportunities around the world. I hope that the result of this tender would benefit highly our country and its aviation industry.” TAV's shares dropped the most in three years at close on 04-May-2013, declining 7.8%. [more - original PR - TAV] [more - original PR - Limak - Turkish]
Limak consortium awarded EUR22bn bid to construct and operate third airport in Istanbul
You may also be interested in the following articles...
SunExpress Germany: summer 2016 route launches may signal a shift to a more pan-European model
SunExpress Germany is probably not an airline that springs to mind for most European air travellers. However, this could be changing. The airline plans to launch 34 new routes in summer 2016, taking its total to 93, versus 59 in summer 2015. Only four of the new routes will be to its core destination market – Turkey.
SunExpress Germany is a subsidiary of SunExpress, an Antalya-based leisure airline 50% owned by each of Lufthansa and Turkish Airlines, and Lufthansa. Set up in 2011, Frankfurt-based SunExpress Germany operates under a German licence and the SunExpress brand, using a fleet of 12 Boeing 737-800s on leisure routes from Germany to leisure destinations in Mediterranean countries, in the main.
In 2016 the airline will continue to move away from its previous concentration on routes between Germany and Turkey, significantly broadening its network. Spain and Bulgaria are also becoming significant and it will add Italy this summer. SunExpress Germany is also Lufthansa's operator of the long haul part of its LCC brand Eurowings. As Lufthansa continues to create options for itself in the development of new operating platforms, SunExpress Germany's steps in a more pan-European direction are intriguing.
Pegasus Airlines' waiting game. Take a margin hit now to keep market share, pending fuel price rises
Pegasus Airlines is playing a waiting game. The Turkish LCC's 2015 operating profit and margin contracted for the second year running, bucking the trend of the majority of European listed airlines. For most, lower fuel prices more than offset downward pressure on unit revenue, and margins expanded in 2015.
At Pegasus, changes to its cost structure prevented it from lowering its unit cost to offset falling yield and load factor in 2015, in spite of lower fuel. Although there are market-related pressures on pricing, including geopolitical concerns, Pegasus also acknowledges that its own capacity growth contributed to falling yield.
Nevertheless, Pegasus will accelerate its capacity growth in 2016. Its argument is that the low fuel price environment is stimulating competitor growth, and that it is important for Pegasus to retain its position. Then it will be able to benefit from any shake-out in the market if and when fuel prices rise, to the detriment of weaker players that are currently propped up by low fuel. Such longer-term thinking is commendable, but Pegasus must nevertheless refocus on non-fuel costs.