Turkish Airlines’ has a strategic fit between target market, business model, operations strategy, and systems and implementation. Through an ambitious brand visibility strategy, prioritizing business class over first class, maintaining a cargo fleet, working from a hub and spoke system within a nexus of countries that comprises 66% of the world international air traffic, and establishing partnerships with jet fuel companies and service companies, Turkish Airlines has strategically buffeted the turbulence of the global financial crisis and made in-roads towards global prominence in the airline industry.
Brand visibility has increased due to several agreements with world renowned ...view middle of the document...
The cost per available seat kilometer (CASK) for Turkish Airlines is one of the lowest among their competitors. At 5.1 cents CASK, Turkish Airlines are able to keep this rate with low labor and fuel costs. Fuel and staff costs are the two major cost drivers of Turkish Airlines, but they’ve been able to maintain low costs for both. Regarding labor, Turkey’s labor costs have traditionally been low. And while the airlines growth and expansions have necessitated international labor recruitment, Turkish Airlines’ management has focused on staff productivity. The airline’s managers implement training for their labor, to maximize efficiency and optimize value.
And as fuel prices around the world fluctuate, negotiation and risk hedging is common among airlines. Turkish Airlines established a jet fuel supply company in a 50-50% ownership structure with a local oil retailer OPET.
One of the biggest risks for airlines is fuel costs, and the key to Turkish Airlines profitability revolves around minimizing this risk. Airlines lose money the more time they spend on the ground. Turkish Airlines’ biggest profit driver is their flight times in proportion to ground time. Once in the air, steady flying is fuel efficient. Turkish Airlines’ “averages 12 hours per day aircraft utilization,” which is much higher than their competitors.
Turkish Airlines has two main advantages over its competitors, its hub location in Istanbul and the political and socio-economic developments in Turkey. Turkish Airlines’ key to profitability is their hub and spoke airport system at a prime nexus point between CIS countries, the Middle East, and Africa. “Sixty-six percent of intercontinental air traffic in the world takes place in the Euro-Asia corridor.” Also, their Istanbul airport does not have a night curfew. Additionally, Turkish Airlines currently has a fleet of narrow body planes, which require less fuel. Since most of their flight times are 3 – 3.5 hours, they can continue with a fleet of narrow body planes. Although they face intense price competition from competitors on European routes, Turkish Airlines provides superior service compared to many of their competitors, particularly in business class. Turkey has also recently had political and socio-economic developments that will increase their profit: deregulation, a rising GDP, a growing Turkish economy, expansion of Turkish business class, and several new agreements abolishing visa requirements for Turkish passengers.
We believe it is possible for Turkish Airlines to implement a high quality/high efficiency dual strategy in an expanding network. Skytrax ranks every airline based on the delivered front-line product and service quality. To be a 5-star airline, there must be superior service to customers staring from reservation and ticketing, then arrival to the airport, through in-flight service, until departure from the final destination. Turkish Airlines has a...