Business

Turkish Airlines Becomes Star Alliance's 20th Member

posted: 01 April 2008 1:32 p.m. ET

: On April 1, 2008, Turkish Airlines became the 20th full member of the Star Alliance, the world's largest global alliance of airlines. Fast-growing Turkish Airlines expects to carry 23.5 million passengers in 2008 and to be carrying 40 million passengers a year by 2013. It is focusing on attracting high-yield international transit passengers, connecting through its hub at Istanbul Ataturk Airport between Europe or North Africa and Central or Far East Asia. Credit: Christian Kjelgaard

ISTANBUL — Turkish Airlines today became the 20th member of the Star Allıance global alliance of airlines, a move its CEO Dr. Temel Kotil said would allow the airline to double the number of passengers it carries annually within the next 5 years.

As is usual for new probationary members joining the Star Alliance, it has taken Turkish Airlines 16 months to prepare its IT systems, service standards and network to align with those of the other 19 Star Alliance full member carriers and three affiliate regional members.

During the last year, Turkish — which celebrates its 75th anniversary this year — saw its passenger numbers grow 18 percent to approximately 20 million, said Kotil. However, as a result of its burgeoning affiliation with Star, the airline’s business-class passenger bookings grew “much faster” over the last 12 months, the growth rate almost reaching 50 percent.

Similarly, the airline’s load factor so far in 2008 — the average percentage of seats it filled with revenue passengers on each of its flights throughout the year — is already 2.5 percentage points up on 2007, reaching 75 percent for the first quarter of the year. Passenger traffic grew so strongly in the first three months of 2008 that Turkish Airlines is on course to carry 23.5 million passengers this year, Kotil said.

The airline has ensured it has new aircraft (the average age of the aircraft in the Turkish Airlines fleet is just 6.5 years), that its inflight food is better than it used to be and that the interiors of its aircraft cabins are furnished tastefully. (Turkish Airlines’ jets feature seats and furnishings in a relaxing light turquoise color.)

Thinking five-star

But training the airline’s flight attendants to think “five-star” — at present Turkish is rated four-star by Skytrax, the industry’s best-known ranking of airline service quality — is a key factor in ensuring that Turkish Airlines reaches its ambitious five-year growth target. Turkish also aims to achieve a five-star ranking from Skytrax by the end of 2009, to put itself in the select company of only a handful of other airlines worldwide.

“The magic touch is the employee side,” said Kotil. “In the cabin the employee is alone and their minds should be set — (service) should be five-star in the mind first.” The airline’s flight attendants like the positive approach that Turkish is emphasizing during their training, he added.

Another major factor in Turkish Airlines’ explosive growth is its willingness to expand its network because of the geographical advantages conferred by its hub at Istanbul. This most historic of cities is regarded by many as the most centrally located city in the world, and the link between “the Occident and the Orient,” as Star Alliance CEO Jaan Albrecht put it during the lavish ceremony held in Istanbul to mark Turkish Airlines’ official acceptance as a Star member.

Turkish is adding 11 new destinations in 2008, among them Aleppo in Syria, Toronto, Washington, D.C. and Sao Paulo, after adding 20 in 2006. By the end of 2008 Turkish will be serving 150 destinations, 31 of them new to the Star Alliance. (Most of the destinations new to Star are cities that Turkish serves within Turkey and in central Asia.)

Kotil is strongly of the opinion that Turkish will thrive most by positioning Istanbul as a hub where its passengers can fly to or from a secondary city on a short-to-medium haul flight to link with a long-haul Turkish Airlines flight to a major destination.

Passengers are happiest transferring through a hub if they are, say, flying on a 3-hour flight to connect to a 7-hour flight — for instance, from Nice to Istanbul to Beijing, said Kotil. Turkish Airlines carried about 1 million transit passengers last year, but this year expects the number to increase 50 percent to 1.5 million.

A new airport for Istanbul

An important foundation supporting Turkish Airlines’ ambitious aims as a member of Star is the Turkish government’s pro-air-transport policy, said Kotil. Istanbul’s existing major airport, Istanbul Ataturk Airport , is becoming highly congested and would not be able to support Turkish Airlines’ long-term growth plans. However, the government has decided in favor of building a much larger international airport, to open in five years’ time, said the Turkish Airlines CEO.

Kotil also is increasingly positioning Turkish as an international rather than a domestic airline. Even though Turkish Airlines’ domestic passenger numbers grew last year, its share of total domestic passengers fell, he said.

This strategy is quite deliberate: Turkish Airlines’ average yield (the fare paid per passenger per mile) is increasing around 5 percent a year, because international fares are usually higher than domestic fares. Turkish Airlines now generates 60 percent of its earnings from international passengers, said Kotil.

“We are carrying more premium (fare) passengers so our segment (of the market) is growing up, and others are taking the lower segments,” he said.

The omens for the future growth of Turkish Airlines’ as an airline and for the scale of its contribution to the Star Alliance are good. In 2006 the total number of passengers who flew to, from and within Turkey was 59 million, but just a year later the number had grown to 70 million. Yet this number is no more than the population of Turkey, said Kotil: In countries such as the United States and the UK, airlines carry many more passengers each year than the total national populations.