Foreign investment – the rise of Turkish Airlines16 July 2015
Building on its status as the overseas carrier with the largest African network, Turkish Airlines is set to add six new destinations across the continent this year. Ross Davies meets CEO Temel Kotil to discuss the business strategy that lies behind the operator’s ongoing success story in the world’s most up-and-coming aviation market.
On 3 March, Turkish Airlines commenced a five-times-weekly service to Abuja, Nigeria, marking the carrier's second link with the West African nation.
Shortly before the 169-passenger-capactiy Boeing 737-900 narrow-body jet began its ascent from the runway of Istanbul Atatürk Airport, the launch was celebrated by a delegation of Nigerian trade ministers and Turkish Airlines officials.
The red-letter event crystallised the impressive progress the Star Alliance airline has made in infiltrating the African market. In the past three years alone, it has added 25 destinations across the world's second-largest continent.
Having become the foreign carrier with the largest African network - flying to 43 destinations spanning 27 countries - Turkish Airlines will have undoubtedly become the object of envy among some of the larger carriers it has surpassed in cornering the Saharan and sub-Saharan regions.
"Because of Turkey's strategic location and connectivity to Africa from other continents, we have been successful in this area. It is based on one of our main mottos - 'Go beyond'," says Turkish Airlines' CEO Temel Kotil.
"As opposed to other airlines, we are not just flying to some specific countries in Africa; we are looking to reach every point of Africa as a whole continent. We are achieving this through a combination of using our wide network, powerful fleet, and quality business and economy-class services."
Bursting at the seam
With more than 261 destinations in its schedule itinerary - which also covers Europe, Asia and the Americas - and a 272-strong fleet, Turkish Airlines' growth over the past decade has been nothing short of remarkable. This is thrown into sharp relief by the fact that it started from a relatively nominal baseline: in 2003, it had only 65 aircraft and flew to 104 destinations.
Its progress hasn't gone unnoticed either. In 2013, it was voted Europe's best airline at the Skytrax World Airlines Awards for the third successive year, while it is commonly accepted to be one of the world's fastest-growing carriers by industry analysts. However, it is Turkish Airlines' foray into Africa that has arguably been its greatest success story.
As Kotil says, Turkey's location - or more specifically, Istanbul's - at the seam of Europe and Asia makes it ideal for passengers looking to connect to Africa from the east and west. This has even led some aviation analysts to review Turkish Airlines' status as a member of the Association of European Airlines, given that it vies with Gulf carriers for much of its custom.
The secret behind its success in penetrating the African market is more geopolitical than simply geographical, however. Diplomatic ties between Turkey and the African Union have gathered in strength in recent years, with the latter officially declaring the former a strategic partner in 2010.
Under Prime Minister Recep Tayyip Erdogan, Turkey's economic and diplomatic expansion in Africa has been substantial. Today, it has more than 35 embassies across the continent - there were 12 in 2009 - and exports to Africa now equate to roughly $13 billion a year.
As Serhat Guvenc, a professor at Istanbul's Kadir Has University, told the Financial Times in 2013: "It's been something of a rule of thumb that wherever there are Turkish investments and interests, Turkish Airlines should fly to that destination."
Kotil corroborates this. "It's true that Turkish Airlines follows an effective strategy of turning industry-related opportunities to its advantage. This is due to our robust commercial characteristics," he says.
Somalia is perhaps the best example of the direct correlation between the Turkish Government's progressive brand of foreign policy and Turkish Airlines' expansion into Africa.
In 2011, the Erdogan administration contributed more than $201 million in humanitarian aid to parts of the country affected by the civil war, and also reopened its embassy in Mogadishu. Less than a year later, in March 2012, Turkish Airlines became the first European airline to offer a direct service to the Somali capital.
Likewise, strengthened economic and diplomatic ties between Turkey and Nigeria are likely to have precipitated the creation of the aforementioned Istanbul-Abuja service, which complements existing flights to Lagos and Kano. According to the Turkish Ministry of Foreign Affairs, bilateral trade between the two countries has tripled over the past decade - that the two nations should want bolster connectivity is no mystery.
According to Kotil, demand for the new service has been positive and is expected to consolidate the airline's already favourable position in the Nigerian market.
"The rationale behind commencing flights to Abuja was about realising our competitive connectivity in the region," he explains. "Players in the market, such as agents, are now becoming more familiar with the idea of Turkish Airlines in Abuja, as well Lagos and Kano, where we already exist."
Other destinations added this year include Bamako in Mali, where flights began at the end of May, and Maputo in Mozambique, where they are scheduled to start at the end of October.
The carrier is also set to announce openings in Juba in South Sudan and Conakry in Guinea, although no set dates have been announced yet. Securing a route to the latter is likely to be contingent on the Ebola virus - or being free thereof - which has had a dramatic impact on air traffic to the country over the past year.
As Kotil says, "Growth will also be contingent upon aircraft availability and flight authorisations."
In North Africa - which accounts for approximately 56% of Turkish Airlines' African capacity - the strategy is likely to be focused upon ramping up existing business in Egypt and Algeria, where the carrier serves nine cities in total, including Alexandria, Cairo and Algiers.
Given the airline's relatively close proximity to Istanbul, the basis for expansion in the Maghreb is a sound one. Kotil has also hinted that it may look to spread its tentacles to smaller secondary airports, to be tagged onto existing destinations.
Again, this will be dependent on how quickly the region's tourism sector - particularly in Egypt - recovers from the geopolitical tumult of recent years.
Despite recently announced plans to commence daily direct flights to Cape Town from October, penetration of southern Africa, on the other hand, has traditionally been a weak spot for Turkish Airlines, totalling less than 5% of its total African capacity. There is just one daily Istanbul-Johannesburg-Cape Town rotational flight.
In a bid to rectify this, Turkish Airlines may look to turn Maputo into a potential tag destination for Johannesburg or Cape Town. Angola's capital, Luanda, where the airline plans to open up a route later this year, may also serve as an efficient tag location.
If Turkish Airlines is to truly become an efficient carrier to southern Africa, it will most probably need to make appropriate investments in bolstering its fleet. Currently, its selection of aircraft is predominantly composed of narrow-body 737-900ERs, better suited to short and medium-haul flights of under six hours, and unsuitable for lengthier flights to the region.
Aside from Casablanca and Lagos, Johannesburg and Cape Town constitute Turkish Airlines' only two African destinations to be served by wide-body aircraft. Will it step up to the plate and look to augment its wide-body fleet? Despite rumours of plans to do just that - the airline is reported to be weighing up an order for Boeing 777X and 787 aircraft - Kotil remains tight-lipped and declines to comment.
In spite of the spate of new destinations, it will no doubt surprise people to learn that Africa still only accounts for 10% of Turkish Airlines' global seat capacity - and is roundly trumped by domestic and Asian flights. This, however, shouldn't detract from Africa's blossoming aviation sector.
As Tewolde Gebremariam, CEO of Ethiopian Airlines - recently usurped by Turkish Airlines as the carrier flying to greatest number of African destinations - declared in a speech at the UK's Aviation Club last year: "Africa is rising, and the 21st century is an African century."
So, while the region may currently constitute a niche market going by capacity, it undoubtedly has the potential to grow and become more high yielding in the future. Looking to build on its reputation as one of the fastest-growing carriers in the world, Turkish Airlines can surely be expected to continue adding to its list of African destinations for some time to come.