Since 3Q 2017, Turkish Airlines has led a brilliant comeback for Turkey’s aviation sector – one which carriers in the Gulf may be unable to match.
Following more than a decade of consistent growth, Turkey’s aviation sector confronted a barrage of challenges in 2016 and early 2017. National and regional instability forced the national flag-carrier, Turkish Airlines, to bring operations nearly to a halt. It suffered heavy losses as a result. Security issues have also plagued major aviation hubs in the Gulf, such as the United Arab Emirates and Qatar.
However, while sluggishness persists among carriers in the Gulf, Turkish Airlines has recently been on the ascent. By late summer of last year, the airline was seeing double-digit growth in demand, leading to a turnaround which Chief Executive Bilal Eksi described as a “very fantastic”. The airline made 2.4 billion lira ($693 million) in the third quarter, more than the annual gain in all but one of the past 10 years. By the end of 2017, passenger numbers were up 9.3% from the previous year.
Eksi owes his airline’s good fortune to smart network planning, and employee loyalty. These factors may have helped but, according to The Economist, the recovery was driven more by geopolitical developments, such as Islamic State losing ground. Other big regional carriers, such as Emirates of Dubai, Etihad of Abu Dhabi and Qatar Airways, have benefitted as well, though not to the same extent.
A main differentiator between the Turkish carrier and its Gulf rivals is its strong domestic traffic. Emirates, Etihad, Qatar Airways and Turkish Airlines all rely on flows from the sixth freedom, which allows them to serve as hubs between multiple countries. This provides access to countless international travellers and allows the airlines to extend their networks to many more destinations. At the same time, hopping between countries also exposes them to the ebbs and flows of foreign economies. Turkey’s advantage is its lower dependence on sixth-freedom flows, which account for a whopping 80% of the Gulf carriers’ traffic, but only half of Turkey’s.
Eksi expects Turkish Airlines to increase capacity further once construction is completed on the Istanbul New Airport later this year. The ultra-modern structure will be Turkey’s third international airport, and is planned to be the world’s largest. Turkey’s aviation sector should get a boost overall, as the Istanbul New Airport is expected to accommodate 150 million passengers by its estimated 2018 opening date.