A EURO­PEAN SUC­CESS STORY

"Love your pas­sen­gers" is the motto that Turk­ish Air­lines has fol­lowed and the fruit of this sim­ple ethos is re­flected in its fi­nan­cial re­sults. Qatar To­day sits down to chat with the CEO of Turk­ish Air­lines, Dr Temel Kotil, to find out more about this bu

Qatar Today - - INSIDE THIS ISSUE - BY SINDHU NAIR

"Love your pas­sen­gers" is the motto that Turk­ish Air­lines has fol­lowed and the fruits of this sim­ple ethos is re­flected in its fi­nan­cial re­sults. Qatar To­day sits down to chat with the CEO of Turk­ish Air­lines, Dr Temel Kotil, to find out more about this busi­ness model.

An air­line's suc­cess story kicks off with a strong brand image, sup­ported by emo­tive vi­su­als that por­tray the brand's ethos. Pic­ture this new brand­ing video from Turk­ish Air­lines that has gone vi­ral: group of young kids in a small Ana­to­lian vil­lage in the Turk­ish countryside try­ing to make their dream tan­gi­ble by cre­at­ing a mini-run­way to di­rect their na­tional air­line, Turk­ish Air­lines, to land on their play­ground. To achieve this, they build a rudi­men­tary land­ing strip, which they im­prove over the course of the ad to beckon the mas­sive jet­lin­ers pass­ing by obliv­i­ously in the dis­tance. The ex­cite­ment on the kids' faces is tan­gi­ble and fi­nally when they par­tially suc­ceed in their mis­sion, their joy is bound­less. As the pilot touches down, he dips his cap at the mis­chievous lot and as the in­no­cent faces gleam in joy, the viewer's hearts miss a beat; and for the brand, the con­nec­tion is made.

With the pop­u­lar­ity of this video, Turk­ish Air­lines seems to have suc­ceeded in their brand jour­ney. But for Turk­ish Air­lines CEO Dr Temel Kotil, who has played an im­por­tant role in the suc­cess of the air­lines for more than a decade, this ex­er­cise is part of their tenet: to touch the hearts of pas­sen­gers. On the ab­so­lutely stun­ning vis­ual that re­ally cap­ture the sense of won­der that chil­dren feel about fly­ing, he says: “I

“Our strat­egy is to fly ev­ery­where, keep the price down, the brand up, the prod­uct qual­ity as high as pos­si­ble and then the most im­por­tant is of course to love the pas­sen­ger.”

DR TEMEL KOTIL Chief Ex­ec­u­tive Of­fi­cer Turk­ish Air­lines

met the kids, they are ge­niuses. I know for a fact that they are so in­spi­ra­tional be­cause they loved our brand, they were not play act­ing. It came from the heart.”

With his en­tire ca­reer fo­cused on the air­line in­dus­try, Dr Kotil has a ring­side view of the same and he ex­plains the change that he has seen in the sec­tor.

“Air travel started 100 years ago. But in this cen­tury, there has been a change in the sec­tor. Asia has be­come a sig­nif­i­cant power and peo­ple from the con­ti­nent have started trav­el­ing all over the world,” says Dr Kotil.

This has brought good tid­ings for Turk­ish Air­lines as it has in­creased its flights four­fold, to and from China.

“We might have to in­crease the fre­quency six-times or even 10-times. The de­mand is strong from Asia and we will in­crease our flights ac­cord­ingly,” he says.

He con­tin­ues: “Think of Europe, Ukraine and Turkey: it con­sti­tutes half a bil­lion of pop­u­la­tion and in GDP terms, the big­gest por­tion of the world. Europe, Asia, Africa and the MENA re­gion com­ing to­gether is like a sin­gle econ­omy. Trav­els from these sec­tors have dou­bled. In 20 years, the pas­sen­ger travel will jump from 3.1 bil­lion to 7 bil­lion of which close to half will be from this re­gion.”

Air trans­port has proved to be one of the fastest grow­ing in­dus­tries over the past 20 years, with pas­sen­ger traf­fic nearly tripling in terms of rev­enue-pas­sen­ger-kilo­me­ters (RPKs) and in­creas­ing at an av­er­age of 5.4% per year since 1994.

The busi­ness model

While the avi­a­tion sec­tor has al­ways seen growth, the air­lines have never been able to have a golden year.

“Mak­ing profit is dif­fer­ent from hav­ing a strong travel de­mand,” coun­ters Dr Kotil: “The de­mand for air travel is high but mak­ing the busi­ness prof­itable is en­tirely de­pen­dent on the busi­ness model.”

While Turk­ish Air­lines is just a small thread in the world avi­a­tion sec­tor, con­sti­tut­ing just 2% of the world­wide avi­a­tion busi­ness, it seems to have shown a growth pat­tern, with a rev­enue growth rate of 19% and op­er­at­ing rev­enue of $11.4 bil­lion (QR41.49 bil­lion) (EBTA av­er­age is 18% on av­er­age).”

Even when there is growth in pas­sen­ger traf­fic, most air­lines do not make a profit and Dr Kotil ex­plains this, say­ing it is sim­ple math­e­mat­ics: “You pro­duce but there is no one to buy it.”

He ex­plains: “The av­er­age growth of the world­wide avi­a­tion sec­tor is at 4.7% over a long-term (say 20 years). Re­gion wise, in Eura­sia, the sec­tor growth is 10% while the eco­nomic growth is 2%-3% and pop­u­la­tion growth, world­wide, is about 1%. So we see the re­gional avi­a­tion lead­ing the growth.”

That is the de­mand of the sec­tor, but the suc­cess model de­pends on in­di­vid­ual air­lines. In gen­eral Euro­pean air­lines gen­er­ate in­suf­fi­cient re­turns, that is lower the world av­er­age. Unit rev­enues of Euro­pean net­work car­ri­ers have been de­creas­ing dras­ti­cally. It is in this sce­nario that Turk­ish Air­lines have rewrit­ten the his­tory with its dif­fer­ent busi­ness model.

“It de­pends on costs, pric­ing rates etc and that has to be ad­justed to re­flect the de­mand,” he says adding, “I can­not talk about other air­lines, but we, Turk­ish Air­lines, are mak­ing profit out of the busi­ness.”

And his busi­ness model is quite sim­ple. It starts with: “Love thy pas­sen­ger.”

“Our strat­egy is to fly ev­ery­where, keep the price down, the brand up, the prod­uct qual­ity as high as pos­si­ble and then the most im­por­tant is of course to love the pas­sen­ger.”

Turk­ish Air­lines was ini­tially a sta­te­owned air­line which be­came a pri­vate en­tity in 2006 and from then, Dr Kotil says, “The pas­sen­ger has been our boss.”

“They tell us what to do, and we fol­low most of what they say,” he adds.

Fly­ing 60 mil­lion pas­sen­gers, with op­er­at­ing rev­enue of QR 41.49 bil­lion ($11.4 bil­lion) in 2014, that is a 17% growth from the pre­vi­ous year, Turk­ish Air­lines has been grow­ing more rapidly than its com­peti­tors in the same ge­og­ra­phy.

Turk­ish Air­lines has seen a growth of 19.3% growth in to­tal pas­sen­gers from 2013 that is 16.2 mil­lion pas­sen­gers this year.

Dr Kotil com­pares Qatar Air­ways' strat­egy to Turk­ish Air­lines and states that the way to ace this busi­ness is to con­tinue to be ag­gres­sive in the mar­ket.

“Any­body who con­tin­ues to be ag­gres­sive in 10 to 15 years will be suc­cess­ful,” he says.

With Africa, Mid­dle East and Asia as the des­ti­na­tion fo­cus for Turk­ish Air­lines, they are as ag­gres­sive as any air­line can get. The ad­van­ta­geous ge­o­graph­i­cal po­si­tion­ing of Is­tan­bul is the key to Turk­ish Air­line's strate­gies in main­tain­ing its po­si­tion as Europe's best air­line in years to come. Bridg­ing the world be­tween East and West and North and South, the air­line is heav­ily fo­cused on de­vel­op­ing the tran­sit niche in the avi­a­tion mar­ket - with Is­tan­bul as a des­ti­na­tion be­ing the pulling power.

The GCC fac­tor

With the ag­gres­sive growth of the GCC air­lines, there is bound to be panic in the Euro­pean air­lines seg­ment but not for Turk­ish Air­lines, claims Dr Kotil.

He says: “We do not com­pete with any air­lines but com­pete against our­selves so that we can get more ag­gres­sive. We work 25 hours a day. “

He ex­plains: “We have 1000 flights per day. If you have so many prod­ucts you have to sell ag­gres­sively, and to sell ag­gres­sively, your prod­ucts need to be good.”

All this is pos­si­ble, he says, adding that brand­ing and touch­ing the pas­sen­gers' hearts is one im­por­tant el­e­ment in the suc­cess story and that, ac­cord­ing to Dr Kotil, is art and not science.

“Our ini­tial bud­gets (com­mer­cials) were just 5 mil­lion and this year is now 180 mil­lion, but it is not only about the money,” he adds. Turk­ish Air­lines have al­ways had com­mer­cials that reached out to its in­ter­na­tional cus­tomers, like the Kobe, Messi one where the two ath­letes con­test against each other for an epic selfie con­test around the world.

This year the com­pany has de­cided to reach out to its Turk­ish cus­tomers, to touch the hearts of their own peo­ple and the ear­lier men­tioned brand­ing ex­er­cise was the fruit of this in­tent. “Till now we used to tar­get our in­ter­na­tional cus­tomers but we have de­cided to change our strat­egy to get the at­ten­tion of our lo­cal cus­tomers as well.”

That the com­mer­cial even with the lan­guage con­straint has touched the hearts of view­ers around the world was a bonus.

“But brand­ing should not just be about vi­su­als,” clar­i­fies Dr Kotil, “it should be about the prod­uct. The brand­ing ex­er­cise should not only be a com­mer­cial but it should mo­ti­vate all of us, the ac­tors and the em­ploy­ees, to bet­ter our ser­vices. It is like a prom­ise that we make to our cus­tomers.”

A teacher in the avi­a­tion in­dus­try, Dr Kotil be­lieves in giv­ing back to the in­dus­try but as a leader the most im­por­tant ad­vice he of­fers is to love what you are do­ing.

“You need to have a good feel­ing about what you are do­ing.”

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