Moving to the Istanbul New Airport will help Turkish Airlines forget tts recent troubles and once again focus on profitable growth, chief executive Bilal Eksi iells Martin Rivers, Bilal takes Bul by the horns il Es knew hea inforarghride when he Borst ic eceve in Octabe 2016 Tis pedecerty ene Kol had won coe accolades during his timein office, presiding overa decade ‘of rapid expansion and rising prestige forthe super ‘connector airline, By the time of Koils departure, however, ‘events were conspiring against both the Nlagcarsier and its Thome nation, ‘sil coup d'tat a wave of terror attacks by Daesh, anc regional slowdown in demand were setting the soxne for THY’ ist annual losin recent memory. The outlook ‘was so poor that 30 aircraft were grounded and 22 routes suspended when Eksi took over the helm —a dramatic retteat for an airline that had achieved double digit growth THY surged back nto the lack witha 2017 thid-quarte ‘of 2.4billion ira ($095 million). The flag-carir’s share price has now more than tripled from its recent low, building confidence as for an historic mave tothe Istanbul “Actually the third-quarter result was fantastic. Is the record forthe lst sid ksi the former director ‘general of Turkey's 1 Turkish Airis [per Actually, the third quarter result was fantastic. It is the record for the last decade,MIR TRANSPOR’ CCOoNTIUEDFROMAGE25 ‘things in 2016. And one of thems to make the ‘network run ina very smart way’ ‘Atthe ime of writing, many ofthe routes that THY suspended two years ago remain closed ~ among them Alborzin Denmark, Minster in ‘Germany, Rotterdam in Holland, Genoa in Hay, Kermanshab in Iran, and Osh in Kyrggzstan However rising demand has sen the flagcarrier ‘re-open stations suchas Bordeaux in France, and ‘Gassimin Saudi Arabia, And other matkets- such as Havana in Cub, andl Phuket in Thailand “have been launched anes, ‘Such proactive capacity management allowed THY toavoid shrinking, even during the downturn, with passenger numbersrising bya respectable 2.5% in 2016. That was fllowed by stronger 9.56 growth lst year ‘Combined withan increased reliance on wide: body jets up from 94 0 105 units inan otherwise static let of about 290 aircraft the changes have put the Mlag-cartir ontrack fora healthy full-year profit in 2017. And, while such of the eredit goes to management, Eksi strvssedthatall departments pulled together during the hard times He recalled with delight how one trade union had asked im to reopen pay negotiations, despite already agrecing tohkes of 4% every six months, Their new demand? Less money, “They said tous they can accept 2.59% wage growth because they want to show they are helping our airline,” Eksismiled. "The amount {saved] isnot big, but the motivation ard the emotion is amazing. Allaround the world, unions are requesting more. Our employees stand bein theiraifine.” “Sactfices by the worfor Happily sacifices by the workfonce coincided ‘with a vastly improving geopolitical landscape. Having wrought havoc across the regionin 2016- including one deadly assault Istanbul ‘Atak Airport, THY's home base -Daesh lost ‘most of its fertory in Iraq and Syria last year ‘Seemingly onthe back foct, the terror group has not staged any large-scale attacks in Turkey since January 2017. Kurdish militant groups have lso-cut back their activites, And there has been no repeat ofthe 2016 attempted coup. “The overall effect has been that holidaymakersare now flooding back to “Turkish resorts, Foreign tourist arrivals surged by 28% i the first 10 manths of 2017, Officials hope tomateh thealtime high of 56.8 million visitors reached in 2014 ~ this year, ‘Surging demand could not comet a better time for THY. In October, the ag-catrier will begin moving from capacity-constrained ‘Atak Aieport tothe stanbul New Airport —a ‘mega-hub designed to be the biggest inthe ‘world upon completion, Plans forasixrunway airport capable of ‘handling 150 million people a year romain very "muchin the blueprint stage. Just two runways -will be operational when the gateway opens its doors. But, because they are parallel — unlike the ‘twoat THY’ current hub the benefits willbe immediately felt. “AL Atatirk we have the two runways but they cross each other,” Eksi ‘explained. "When the wind is coming rom the south, the capacity drops te hall- For this reason, the new airports offering us much ‘more capacity than Atak from the first day.” ‘The now airport: third runway should be ‘completed in 2019, putting Istanbul on-track to becoming the worlds largest megachub. Only Dubai’ AIMaktoum International Airports ‘eens. contender. ksi admits tha shifting bases willbe a “stresful” experience forthe flag caries Incheon Intemational Airport Corporation and Copenhagen Airports have been appointed asconsulianis for themiove, assisting withthe development of an operations readiness and transfer (ORAT) plan. The precise details ha ‘not boen Finalise at the time of writing, but it i clea the consultants are recommending “big bang” approach. “This means changing the airport ORAT fin 4] very short time.” Eksisaid. “We are discussing how many days one day or one ‘week or two weeks, It willnt take more than, 15 days.” He noted that slots the new airport will be shared liberally wth foreign operators increase competitive headwinds for THY, but ‘management believe theidirect benefits of free-market access will outweigh the costs— particularly when itcomes to bilateral restrictions. "Ourcompetitors from the other ‘countries can easily find slots the new airport, ‘and this means that they wil offer more trafic rights to Turkey” Eks predicted. “Tarming othe fleet, the aelne boss confirmed that long-awaited plans for wide- body renewal are taking shape, THY currently has ust three firm orders for wide-bodies~all Boeing 777-200LRF freighters but much larger commitments are in the works, Possiblepurchase Last September, Mehmet tker Aye, THY's ‘chairman, announced that he was negotiating the possible purchase of 40 787-9s from Boeing, Four months ater healso signed a memorandum of understanding (MoU) with [Airbus covering 20 A350-800s plus five ‘options ks stressed that neither deal has been firmed up. He sid the board had issued a tender for 40 firm units plus 10 options — perhaps hinting at splitorder between Bocing and Airbus, giventhesize of thelatter’s MoU and that deliveries should be completed by 26m, Coe umoays but they cross each ots When ‘the wind is coming rom the south the capaci opets aor tinrosen the ei pets ating ut much nore capacity than Atak rom the ist ay” 2025,""Thereis not any decision right now," he ‘aid, "Whichever i theless cost for Turkish Airlines, we will buy from them.” “Things ate clearer on thenarrow-body front as ‘THY already has firm orders for 92 A321 0s, 65737-8MAXsand 10737-9 MAXs, ‘Teno those aircraft will arrive tis yea, followed by 35 in 2019, 42in 2020, 35 in 2021, 30jn 2022 and 15 in 2025. The A32Ino0 and 1757-8 deliveries will span the fll si-year period, “hileall ofthe 757-9s will arrvein 2019and 2020. ‘At present, THY's passenger feet comprises 197.A520-family jets, 89 757s, 55A530s, 337775 andl four A34Os, The flag.catrier also operates 13 Frojghers. Arossthe broader group, 33 737sane deployed with low-cost brand Anadoluet, and another 31 with Sun xpress a leisure focused joint venture with Lufthansa. ‘SunfExpres has its own oners for 32757 MAXs, but Anadolufet hasno outstanding ‘commitments, Asked about its plans, Eksi speculated that some of the narrow: bodies being retied by THY over thecoming years could be refurbished and placed with Anadoluet. He said ‘that Turkish Seat Industries, another group subsidiary, might be called onto reconfigure the aircrat Exparsion by the low-cost subsidiary couldn ‘un, se the groupdeepenitspresencein Ankara’s Esenho a international Aieport~ particulary if Anuoluetis granted independence. “Today, Anadolufetis the brand name of ‘Turkish Ainines. lis adedictod group butit is ‘not acompany.” Eksiexplained. “Weare discussing whether to separate Anadolufct asa ‘company Iris under discussion andthe decision has notyet been taken, bu the board has requested usto make the evaluation. Anadolu, ifitisseparated ton individual company.can utilise Ankara asa ub.” “The Turkish capital aleady serves as springboard for domestic air travel. owing tits Focation inthe centre of Anatolia, But the city has relatively few international connections, Both THY and low-cost rival Pegasus Aitines~ which alsouses Esenbo a Airport are eager tochange that. Evenashe considers broader nationwide strategy however Ekss attention remains firmly focused on Istanbul Powerfulnetwark ‘Thecity’ location atthe crossroads of Europe, Africaand the Middle East creates a powerful network efeot for THY. ls geographical advantages strengthened by the flazcarters high proportion of narvow-bodies-— opening the door to thin markets ~as well asthe allure of politcal relations with Turkey, an enticing prospect fr investment-hungry African nations The result is that THY now flies to 300 airports in 120 counties ~ more thanany other airline ~and management continue looking for row routes, “We willopen three to ive new destinations for 2018.” Eksi sid, singling out Samarkand in Uzbekistan, and Freetownin Sierra Leone “But, actually; you look at the map, theres ‘not much space! Mainly, we will increase the frequencies for existing destinations.” "THY appetite for foreign investments has also subtly shifted gears. While it plans to take a stakein Air Albania, the new Albanian flag carrier being set up with Turkish assistance, no ‘other projets areon the horizon, “Aso today, we haveno sich intention,” Eksi said, when askod about media reports linking ‘THY to various African start-ups. “Ofcourse, some countries and some aifines are coming usand they ae offering to.stablish joint ‘venture. f they request some help we are very keen tohelp them. But, a2 poli, the joint ‘venture and other establishment isnot on the table. "You knows establishing arlinesis easy. but running aitines isnot soeass! You should have ‘enough population, enough network. Otherwise yeuean lee money very easy. “That focus.on commercial viability and Financial health willbe Eksfs guiding ight ashe leads the Mlag-cartier away from its darkest year inrocent history With the imminent openingof the Istanbul New Airport, its future once again Fook bright. . TURKEY Pegasus keeps pace Like al Turkish caror, Poyasus Aitinoshada tori time n 260s political unrest and terrorism laidwastetoits county tourism sector. “ktuo 016 war avery catastrophic yerfor very arin in Tarky."saté Emre Pekesen sales and network planning director atthe lowcost “Tho coup atom andthe other security issues aiected inbound tafe alot But al hose esos ‘seom be solved rightnowand for 2017, Lean Say ithos defintely recovered” Pokosen was speaking shorty beore Pegesus publshedinanciatresults othe firstine ‘months of 2017. Rs figures sowed an emphatic traffic fom abroad was affected bythe coup emt but outbound rom Turkey international ‘lestnations was Eastand North Acs, “Thosetivee regions are bil shes, right” Pekeson this because they are mostly underserved ‘markets andthe campettion is ss than) “Anincressedconmimmantor AI2Ine0 will boost acess o slot restricted markets. Pegasus agreodt buy 25more ofthe stotched airratin December having already signed for unis. That ‘rougtit is order book to 1004220amily eos, of which 12havesofarbeen delivered.