This week I participated in the IATA IGHC which held its annual event in Istanbul.
With event being in Turkey, many of the participants had special presentations focused on Turkey, along with many Turkish participants including Temel Kotil of TK
, Turkish CAA director, and executives from other airlines such as Pegasus.
Below are some of my notes from the presentations and sideline discussions.
o Aviation is one of the worlds key industries. Commercial airline share of global GDP continues to grow - currently 3.4% in 2014, expect 4.1% by 2030
now 6th most connected city globally. (#1 London)
o By 2025 IATA estimates new IST
will be worlds 4th busiest airport globally at 120mil pax. (#1 forecast to be Beijing)
o As global center of global aviation demand shifts eastward, Istanbul is positioned perfectly as hub location to feed markets Europe, Africa, MidEast.
o Worlds largest regions by enplanements in 2003 were: North America = 36%, Europe = 27%, Asia-Pacific = 25%, Latin America = 5%, Middle East = 4%, Africa = 2%
o Worlds largest regions by enplanements in 2023 are estimated to be: Asia-Pacific = 35%, North America = 27%, Europe = 19%, Middle East = 9%, Latin America = 7%, Africa = 3%
o 1.5 billion customers within 4-hours of IST
- some $25 trillion value.
o Turkey worlds 16th largest economy. Estimated to climb to 12th by 2050.
o Istanbul GDP alone surpasses that of some EU countries entirely such as like Hungary, Romania, Bulgaria.
DHMI(national airport authority)
o Turkish aviation has seen an amazing evolution. In 2003 there were 5mil domestic pax, in 2014 it was 43mil. Number of airports in 2003 - 26, 2014 - 53. Active commercial aircraft in Turkey 2003- 162, by 2014 - 441. Turkish airline market total revenue 2003 - $2.2Bil, in 2013 was $21.4Bil. Aviation sector accounts for 5.9% GDP
o 2015 forecast 10-12% growth
o Turkey worlds 6th largest global tourism market so airports all over country are seeing growth and airport infrastructure is a key national priority
o Istanbul 3rd Airport - Oct 2017 opening. Phase 1 will have central terminal(separate Dom/Intl sections), 3 runways - 90mil pax capacity
o Expects some airlines to have flights late 2017, but TK
will move over for Summer 2018 schedule
o During phase 1, all airlines will share terminals, but under future development phases TK
will have its own exclusive terminal.
o Airport will be make extensive use of new technologies including biometric tools to facilitate customers and security. Potential with wearable technologies to aid with things such as way finding. With high consumer adoption rate of smartphone or wearable technology would be wasted opportunity to not try to leverage. Win-win for customers-airline-airport.
airport - tender for 2nd runway should be finalized shortly. New high-speed taxiways to be built in the interim as well.
o See strong future growth at SAW
. For example under construction bridge project will help link Turkey 4th largest city Bursa directly into SAW
airport catchment area.
o Incorporating new traffic management procedures as used by airports like LHR
to boost ATC capacity to both IST
by about ~20%.
o Still investing in IST
- 8 new gates, 26 new parking spots, 32 additional check-in desk, enlarged car park, etc.
o 2014 fantastic year, expect even better 2015.
o THY is 13th largest global airline based on global market share in 2014 - 1.8%. Believe it can grown and plateau around 4% by 2025 and could be top 5 or so airline by market share globally.
market share today versus competitors - Domestic 53%, Intl 40%, Overall 44%. Would be very happy with 50-50 split.
o Thanks to IST
has the unique ability to serve majority of markets with narrowbodies at high frequency unlike ME3.
o Views it as historical mistake European carriers are making by leaving shorthaul routes to subsidiaries or exiting cities entirely. Defeats benefit of running a hub and feed for their longhaul routes.
o Many people believe that TK
is built on connections, but in reality the story is about local Turkish demand. Only 26% of passengers are Intl transit -- far lower percentage than many European competitors at their hubs.
o Istanbul being so well connected by TK
has created other broader benefits. Now 3,200 larger foreign companies operate in Turkey, and some of the worlds biggest enterprises have set up Istanbul as regional HQs - This in itself drives nice new premium revenue which encourages TK
to expand network even further.
o Istanbul represents near 50% of Turkey's business and personal services sector revenue. Istanbul becoming a global financial hub in addition to historic trade hub.
o 3rd airport will allow TK
to introduce additional overlay hub wave structures that will further benefit network connectivity. Today TK
offers about 17,000 unique connection combinations at IST
. See this reaching 30,000 at new airport.
o At new airport, TK
will offer VIP lounges for economy transit passengers in addition to traditional business class lounges. Wants to make Istanbul transit experience superior to other airports. Some pax have 3-5 hour connections so want to make it comfortable for them even if economy
o Big network priorities in 2015-16 are continued heavy Africa focus and growing SAW
o Africa is white spot on many airline route maps. Continent great opportunity to make money. Might not make sense for outsiders, but it works great for TK
. Target to have 50-destinations in next couple of years. TK
to become the "carrier of Africa" Seeks to offer every market atleast daily link then ultimately double daily.
o Grow SAW
network - seek to have 50% market share at airport (2014 was 26%). Growth from 30 to 47 destinations last 2 years. TK SAW
based fleet has grown from 14 to 28 (plus Ajet) last 2 years. More planes coming. Competitors talk about 100 SAW
based aircraft, so TK
can also do the same.
catchment area seeing high local pax demand plus ability to utilize as second connection point to compliment IST
is essentially building a 2nd Turkish Airlines at SAW
- with solid business plan of its own. Linking profitable Europe and Mideast markets. SAW
network will remain after 3rd airport opens and serve as hub of its own. Maybe even longhaul one day.
investing into SAW
facilities. New lounges opended late 2014. now Do&Co at SAW
o Why build up 2nd hub to close by at SAW
? Istanbul is Istanbul. Studied other airports like ESB
but don't see the business opportunity. AYT
primarily a charter market so does not fit TK
business model, ESB
now with AJet offers solid domestic network that has finally reached black financially, but limited Intl opportunity. ADB
while having Intl demand not so great domestic and also is a leisure oriented market thus better fit for Sun Express instead. At end SAW
was clear option for TK
o Bilaterals limit frequency in some markets - India, China, Russia, Canada, Saudi Arabia etc. Could do Istanbul-Jeddah 10X day with narrowbodies if bilateral allowed, but instead must operate 3 daily on widebodies and sell additional frequencies as charter flights.
o 2nd largest carrier. Domestic marketshare 28%
o 58 aircraft by March15, 65 by end of 2015. Fleet about 50/50 owned/leased
o Near 90 routes to 36 countries
o Some Intl markets such as Russia/CIS and MidEast growth limited due bilateral
o Another double digit year growth forecast 2015 – est 16-18%
o Seeks to establish own ground handling company and win tender to operate at SAW
o While committed to SAW
would consider ops at new airport as well if demand and cost justified. Realize PC
is not option for many on European side today. With many new aircraft on order 3rd airport could be good place for them.
needs 2nd runway within next 2-years and further terminal expansion. “New” terminal was designed for 25mil annual pax, and in 2014 airport had 23.8mil. When terminal opened in 2009 there were only had 6.6mil and everyone thought facility was too big. Who could have estimated the quadrupling in 5-years? Original projections estimated it would take till 2023 to reach 25mil.
Hopefully I've not missed anything. Will add more if I run across or remember anything else.
The most interesting things I heard was
will turn SAW
into a full hub
will create lounges for international economy transit pax at the 3rd airport. That should further enhance the travel experience and encourage more transfer travel via TK
versus competitor hubs.
considering operating at 3rd airport also.