Erdogan to Make Turkish Airlines Small Again

Star Alliance member Turkish Airlines saw an unprecedented traffic growth in recent years with its fleet and network expanding constantly, including TK’s freight business. This could be over now, after a narrow majority of the electorate gave Erdogan their okay for sweeping constitutional changes turning Turkey into an authoritarian state. For Turkey’s airlines the political decision is worrisome.

It is almost certain that the outcome of the referendum will have a deteriorating effect on the country’s entire aviation sector. The result exacerbates worries of state-owned carrier Turkish Airlines (TK), leisure airline Pegasus (PC) and other local airlines that times are ahead in which they have to fasten their belts even more tightly as already practiced in 2016 and continued doing in the first months of this year. Since Erdogan ran his scrupulous campaign, denouncing some European states for Nazi practices, banning Turkish government officials from running one-sided pro Erdogan election campaigns in the Netherlands, Germany, Austria or Switzerland to motivate the local Turkish communities in order to support the referendum, the number of European passengers booking a TK or PC flight has dropped dramatically.
 
Lack of tourist flows
Particularly Germans increasingly avoid spending their holidays in Turkey. While in 2015 as many as 5.6 million visited the country, their number went down 1.6 million to 4 million last year. Early bookings in 2017 show the continuation of the downward spiral. Travel agencies in northern and central EU countries also confirm this ongoing trend. “People increasingly fear terrorist attacks, political unrest and growing repression against individuals who exercise their right of free expression,” stated a manager of the London-based Thomas Cook Group prior to the referendum. Meanwhile, first hotels along Turkey’s Mediterranean coastline were forced to close their doors due to the lack of guests. Now Erdogan’s narrow victory as result of the voting, immediately followed by his announcement to restore the death penalty, tend to make things even worse than before.
All in all, the latest political development is a harsh setback for the Turkish economy where tourism contributes as much as 13 percent to the GDP.

Turkish leisure carrier Pegasus is suffering from declining passenger numbers, as does Turkish Airlines  -  courtesy: Christian Brinkmann
Turkish leisure carrier Pegasus is suffering from declining passenger numbers, as does Turkish Airlines - courtesy: Christian Brinkmann

TK slid into the red
Those most hit by Erdogan’s strategy to split with the West and establish a one-man regime are the country’s airlines. Latest financial figures presented by Turkish Airlines reflect the general economic decline, showing an operative loss of nearly €280 million in fiscal 2016, sharply contrasting their 2015 profit of €847 million.
As a reaction, TK took capacity out of the market by sidelining dozens of aircraft, reducing their long-haul fleet to currently 92 units. Accordingly, the intercontinental network was thinned out. Should the economic situation further deteriorate in the near future, the management has plans in the drawer to cut the fleet to 68 wide-body units by 2023. This, market experts believe, might not be the end of the line.
 
Oversized new airport
When confidentially speaking with local aviation managers they increasingly express doubts about the role of the new Black Sea airport, claiming that it is a “widely oversized project” seen against the ongoing downfall of Turkey’s aviation sector. The still nameless airport is currently under construction, scheduled to welcome first passenger and cargo flights in 2018. In its initial phase it shall accommodate up to 90 million travelers and be in a position to handle more than 2 million tons of air freight annually. Wishful figures !

Heiner Siegmund 

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