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Based at Istanbul’s Ataturk International Airport, with secondary hubs at Esenboga International Airport and Adnan Menderes International Airport, Turkish Airlines (THY) is the national airline of Turkey and the country's largest carrier. The carrier operates a network of domestic and regional services throughout Turkey and the Middle East and international services to Europe, Africa, North America, South America and Asia. Turkish Airlines is a member of the Star Alliance. Turkish Cargo, the airline's freight division, serves over 30 destinations.
Location of Turkish Airlines main hub (Istanbul Ataturk Airport)
Turkish Airlines share price
1,863 total articles
76 total articles
In CAPA’s report on Turkish Airlines’ 3Q2013 results, we highlighted that RASK growth failed to beat CASK growth for the first time this year and suggested management would want to demonstrate this was not the start of a new trend. The airline has now provided some reassurance on this.
Beyond this issue, CEO Temel Kotil used the recent Turkish Airlines’ investor day to reiterate his strategy of using the carrier’s Istanbul hub to attract global connecting traffic flows, leading to growth ahead of the market, albeit with an increased focus on frequencies rather than new destinations in future. This strategy has similarities with those of the Gulf carriers, but is also underpinned by the significant Turkish home market.
The Turkish market includes strong competition in the shape of LCC Pegasus, but the return to profitability of SunExpress, jointly owned by Turkish Airlines (THY) and Lufthansa, provides THY with another option for facing this competitive threat.
Etihad's announcement that it was buying 33.3% of Switzerland-based Darwin Airline was made on the first day of the Dubai Airshow and was easily lost in the fury of orders announced that day.
Darwin only flies aircraft with 50 seats, less than the number of premium seats that will be on many of the 350-plus widebody aircraft Gulf carriers ordered at the airshow. But the announcement is significant, and three reasons stand out.
First, for Etihad the carrier will "connect the dots" in Europe for itself and partners, linking hubs but also tertiary cities, which have largely been passed over by Gulf carriers. Many of these cities are served by the Lufthansa Group. This gives rise to the second significant impact: on Europe's legacy carriers. Gulf carriers changed their long-haul business while European LCCs decimated short-haul. Regional traffic was always typically a burden, and will come under further pressure following Etihad's announcement. Third is that Darwin Airline will re-brand as "Etihad Regional", and Etihad openly states Darwin is only the first carrier to use this new brand. As the industry still digests Etihad's partnership and equity strategy, Etihad promises to change another component of aviation – and raise the stakes in the liberalisation of the industry, especially by stamping its name on a European carrier.
Turkish Airlines’ 3Q2013 net profit was level with the same period last year, but only thanks to non-operating items. The operating result for the quarter was below that of 3Q2012 as RASK growth failed to beat CASK growth for the first time this year. The carrier’s capacity and revenue growth continue at double digit rates, so maybe the occasional stumble is inevitable.
The brightest aspect of the 3Q results was what looks like the beginning of a rebound in cargo activity, which significantly outpaced the passenger business in terms of growth versus last year. Nevertheless, cargo is only 8% of revenues and the passenger operation business continues to be the major driver of the business.
Management will be looking to demonstrate that the weakening of unit revenue growth and strengthening of unit cost growth are not the start of new trends.
For all their success elsewhere, the Gulf carriers and Turkish Airlines are looking rather thin in China. This is not by their choosing. Emirates, Etihad, Qatar and Turkish have reached the limit of air rights and slots made available to them.
All are ready to expand, and Turkish has even said it has service to five cities ready to launch if approved. That is probably of little comfort to China. While the country wants a flourishing aviation market, it also wants its airlines to have a fair share. But this is not classic protectionism. The argument is Chinese carriers are still young and need time to gain experience before being on equal footing with peers.
Yet Etihad and Qatar are younger than China’s long-haul airlines. With a mindset change that favours liberalisation in China being unlikely in the medium term, the foreign carriers will have to find ways to stress their value and why they should receive more air rights. Partnerships are one such answer.
News that Nordic Office of Architecture has been awarded the right to design Istanbul’s new airport, following recent reports that construction may start in May-2014, refocuses attention on Europe’s fastest growing aviation market.
Ultra-LCC Pegasus Airlines and network carrier Turkish Airlines were, in 2012, respectively Europe’s second and fourth most profitable airlines (based on 2012 operating margin).
Air passenger numbers in Turkey have grown at double digit rates in five out of the past six years. The success of Turkey’s aviation sector has been built on healthy economic growth, a relatively productive and inexpensive workforce and Turkish Airlines’ use of its Istanbul hub to attract international transfer traffic.
A new air services agreement recently forged between Mexico and Indonesia opens up an opportunity for a codeshare between Aeromexico and Garuda, which in early 2014 will be joining the Mexican flag carrier in the SkyTeam alliance. The expected partnership should result in the first of many codeshares between carriers from Southeast Asia and Latin America.
Southeast Asian and Latin American carriers are starting to seek out opportunities to partner with each other as ties and trade between their regions increase. The current lack of partnerships between Southeast Asian and Latin American carriers give Gulf and European carriers an advantage in carrying passengers between two of the world’s fastest growing aviation markets.
Aeromexico is the only Latin American carrier serving Asia, where it sees opportunities for expansion using its new Boeing 787 fleet. But Aeromexico only serves North Asia and will need to rely on partnerships to serve Southeast Asia.
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