Following its part-privatization in 2004-2006, Turkish Airlines has rapidly evolved into one the world’s leading and most profitable airlines. As Turkey hosts the G20 Presidency for the first time, Turkish Airlines CEO Temel Kotil explains why the still expanding airline is now a crucial component of trade and the tourism industry, not just for Turkey but the whole world.
Since 2002, Turkey has been one of the success stories of the global economy. You are now the 17th biggest economy in the world with ambitions to be a top 10 economy by 2023. What role has Turkish Airlines played in helping to fuel Turkey’s growth?
The airline business is ultimately different to other industries because you are linking people by letting others visit your country easily and efficiently. Starting with Africa, we used to be the fourth Eastern destination to the continent and there were just a few flights per day to major cities; today the number has increased more than 20 times.
This means that many people are coming and going, which means that businesses are doing well. On the streets you can see so many beautiful people coming from Africa to Turkey because we linked them very easily as our prices are much lower than our competitors. Before, they used to come here through Dubai, Abu Dhabi, Doha or Paris but now they can come directly from Africa.
Travel costs have been reduced and when this happens, the middle class starts visiting your country, as well as small enterprises. Big international corporations do not need to travel to do business, but for small enterprises, travelling is important. For example, small businesses from Nigeria, Chad or Mali come to Istanbul and become interested in a shoe enterprise that they can invite to invest in their respective countries.
Turkish exports to Africa have grown roughly 20 times thanks to accessibility. Regarding Somalia, we have daily flights from Istanbul to Mogadishu, and there are two benefits of this. On one hand, Somali and Turkish executives can travel very easily and, on the other hand, it is a safe way for Somalians to leave war.
To answer your question, Turkish Airlines in terms of passengers has grown sevenfold and regarding international passengers about six times. We went from 10 million to 63 million passengers internationally, which means we are carrying seven times more people to Turkey who are contributing to business and commerce.
Not only are you helping Turkey, but also, in line with the principle of inclusiveness espoused by of the G20 Presidency, you are boosting African countries by opening up trade whilst exporting Turkish business know-how…
Our market share of Available Seat Kilometers (ASK) worldwide used to be 0.5% and now that market share is close to 2%, so it increased about four times. Two per cent might not seem like a very big number but we are talking about aviation worldwide, including America, South-America, Asia-Pacific and so on; in the region, our market share is about 10%.
Because the ticket price from Africa to Turkey and the rest of the world has reduced by almost half, the middle class immediately started travelling and we started operating there very heavily. If the middle class starts travelling, this means business opportunities are triggered. In Africa, opportunities are endless as 1.2 billion people live there and the continent is extremely rich in resources.
We are doing many things to make Turkey more attractive. In Istanbul, there were 4 million tourists in 2003 and last year there were 12 million; income to the city also increased from €4 billion to €12 billion. With our activities, Turkey becomes more attractive but we are able to succeed only because Turkey is already very attractive politically, socially, culturally and economically, so it generates positive feedback.
The main theme of the T20 meeting of G20 tourism ministers in September will be the link between tourism and employment. What impact has Turkish Airlines’ rapid growth and expansion had on employment in Turkey’s tourism industry, both directly and indirectly?
There is a multiplier effect, meaning that if the airline companies increase revenue by $1, there is about a $5 contribution to the economy.
That’s how the aviation sector creates incremental revenues and employment in the side sectors such as tourism, accommodation, etc.
There is also an equivalent benefit for the aviation sector: Our revenue from tourism increased from $1.8 billion to $11.5 billion this year, roughly a $10 billion increase, so multiplied by five, we have contributed $50 billion to the rest of the economy…
… And tourism keeps growing. Last year was a record year with more than 40 million arrivals, whilst the target for 2023 is 60 million arrivals…
… We are expecting 30 million tourists to visit Istanbul alone as the city offers many attractions. There are other great Turkish cities, of course, but Istanbul is the economic and cultural capital and therefore, the busiest city in the region in terms of tourism.
How do you think Turkey is perceived internationally as a destination these days; and to what extent do you think Turkish Airlines’ own brand identity is intertwined with Turkey's identity?
The airline business has two faces. The first is operational planning and the physical part of the business; however, the real flavoured part is the service and that comes from the heart.
What I have been seeing in the last 10 years as CEO is that Turkish Airlines is accepted in the hearts of people all over the world and the company grows much faster and better because of the quality and hospitality we offer.
For example, we serve classical Turkish Ottoman cuisine on-board, which is excellent because in the Ottoman period the court supported all types of different foods.
Turkish coffee actually came from Yemen and was sponsored by the Ottoman queen sovereign (Sultan in Turkish), and the palace was involved in food issues and promoted different tastes. We bring that legacy on-board.
It is easy for us to get to the heart of anybody on this Earth because we have a nice mix; we are mixing historical Turkish cuisine, service and mentality with the local cultures of the passengers. Whether it is China, Japan, the US, Canada or Nigeria, we combine the cultures.
We showcase some Turkish traditions and one of them is that we serve Turkish delights. If you are visiting a traditional Turkish house, when you enter and sit down on the couch they serve you a welcome drink. In business class, because there are only a few seats, we have time before take-off to serve traditional Turkish drinks.
This provides you with eye contact with our on-board service team, just like when somebody visits your home. In economy class, there is one flight attendant for 40 passengers and there is not enough time before take-off to serve all of them drinks and collect the glasses.
However, we do want eye contact like in traditional Turkish culture, which is why we serve Turkish delights; it is a piece of candy you choose and when you are being served the flight attendant makes eye contact with the passenger.
A ‘Brand Turkey’ campaign was launched in 2014 under the slogan ‘Discover the Potential’. How important a role does Turkish Airlines play in carrying this message to the world?
There is a duality, or two sides to the same coin. For the last 10 years, all the projects and destinations we were running were focused on increasing the income of Turkish Airlines as a company. We have investors and stakeholders who trust us and this is a business; our role is not just to guard the passengers.
However, on the other side of the coin, I am propagating the ‘Turkish delight’ in the international market, which we have served for the last four years.
Therefore, on the other side of the coin, it is propagating Turkish culture. In addition, Turkish businesses are expanding around the region, which increases the weight and influence of Turkish politics and foreign policies.
This is aviation: by linking the people, you are serving them. You can have a commercial flight with a hundred people as your business but inside that plane, there is a bonus as you are propagating your country.
As a Turkish company, we are touching 40 million people internationally this year.
Looking ahead, a new airport is under construction in Istanbul which will eventually have capacity for 150 million passengers annually. How will this new airport impact on Turkish Airlines’ own expansion plans in terms of your fleet size, capacity and passenger numbers?
This new airport is one of the smartest projects on earth; I appreciate the ministers, the Prime Minister and the President for this work. This project started ten years ago. In 2000, the Minister of Transport Binali Yıldırım laid down the policies. He said aviation is crucial and that all people in Turkey should be able to afford domestic and international movements.
We were then a state company, and our cost was very high and because we were labelled as a state company, and nobody else was allowed to operate a flight without following many rules and procedures; we were protected.
Protection has good things; I have nice decorative plants in my room and they can receive enough light to grow, but if I put them outside, they grow even faster.
Hence, what he did was to liberalize the domestic market; Turkish Airlines ceased to be monopolistic and Mr. Yildirim doubled the number of airports and reduced taxes. Traditionally, in Turkey and in the rest of the world, travelling is a luxury so it is better to tax it, but he did it the other way around. Our market value is now about $5 billion and it has increased nearly six times since the project started in 2003.
If an airline is capable of attracting passengers, you need to build big airports to support this. For the construction of the new Istanbul airport, the government provided land from mining areas; this means there is no tourism and no environmental problems because the land is useless after being used for mining for more than 50 years.
A private consortium of five companies are building the airport; they are going to spend €10 billion roughly and once they start operating in 2017, every single year they will give the Turkish government about $1 billion and after 25 years they will return it to the government.
Once the airport opens in 2017, Turkish Airlines will contribute around 60 million passengers in the first year; this means that the airport has enough lots to become feasible. That is only the Turkish Airlines’ terminal, but the whole airport will have four terminals with an 80-million-passenger capacity.
We are going to have a brand-new high-tech airport, so if a passenger travels via Istanbul, he will enjoy it. In addition, next to the airport they are building a small city, so if you arrive late you can stay in a brand new city next to the Black Sea with all the necessary links connecting it to Istanbul and other close-by cities.
We are going to have brand new services that will cost a little bit more than today but the benefit we will get in return is great.
With this airport, people will probably start using Dubai less, as most transfers from the Far East to Europe and the Atlantic currently take place in Dubai, but Istanbul is a better choice due to its unique geographical location and excellent branding of ours.
When G20 leaders and attendees come to Turkey, many will arrive on Turkish Airlines. Perhaps they would like to know a little more about the man behind the global success story that is Turkish Airlines. You have been CEO here for 10 years; to what extent is this remarkable success of the airline a reflection of your own vision?
It is not my vision; we are a family. I am actually a professor, which reflects me and suits me. My contribution to this company is being a friend to anybody. I love airplanes, my colleagues, and our passengers; I assume always that the passengers are our bosses; that is my contribution.