Türkiye's flag carrier Turkish Airlines (THY) has moved closer to its ambition of becoming the world’s largest international carrier after boosting passenger numbers in the aftermath of the Iran crisis, which impacted its Gulf rivals, the company’s new chair said.
The airline has also increased ticket prices while cutting some routes and costs as it seeks to navigate the industry-wide crisis triggered by the war in the Middle East, THY Chairperson Murat Şeker said in an interview published on Sunday.
The conflict, which started with U.S. and Israeli strikes on Iran on Feb. 28, has severely affected energy flows in the region, while also leaving the logistics and aviation industries hit hard.
Yet, while services through major Gulf hubs such as Dubai, Abu Dhabi and Doha have been disrupted, Turkish Airlines' Istanbul base has remained fully operational since the conflict erupted. This has allowed it to capture a greater share of the traffic between Europe and Asia and raised hopes it can meet its targets sooner than expected.
“The current situation, it might help us to gain that passenger growth faster,” Şeker told The Financial Times (FT) in his first interview since becoming chair last month.
“If that initial demand holds up, we will increase our growth projections for the next three to five years,” he further said, adding that the airline already had “reasonably ambitious” targets for 2033.
By then, the carrier would have up to 850 aircraft, putting it among the three largest carriers by international seat capacity.
The company, which recently celebrated its 93rd anniversary, has been in recent years pursuing a strategy, which would see it significantly upgrading its fleet in the coming decade.
“We are, of course, aiming for the top position,” Şeker said.
“But, of course, we have to see how our peers are evolving.”
Şeker, who spent a decade as Turkish Airlines’ chief financial officer, said the airline had in recent months reallocated planes from the Middle East and U.S. to Asian and African routes where demand had increased. Many of its planes were more than 90% full in March, he also said.
“With this capacity shift (we were able) to generate the revenue that we budgeted,” he noted. He went on to say that probably this year’s bottom line profit targets "might be challenging to fulfil," although he suggested it is "still a little early to make a final verdict."
In addition, he said that the company would “wait a few more weeks” before restarting scheduled services to the Gulf, with Turkish Airlines aiming to return to its pre-conflict number of daily flights to the region by October, when the peak travel season begins.
The airline had been preparing to restart operations before the war flared back up last month, he added.
Şeker also said that Turkish Airlines had so far experienced “no serious problems” with fuel shortages as a result of the war, with the bigger challenge being absorbing the costs.
The group was 40% hedged on jet fuel, but still faced buying the rest of its fuel at double the pre-conflict price.
“This cost pressure is not going to be very easy to digest,” Şeker maintained.
However, he said that with the capacity adjustment and the first round of frequency cuts, they “are able to cope reasonably well with the fuel pressure.”
On the side of demand, the executive explained that it was “still strong in certain parts of the world,” citing in particular the Far East Asia, then Africa, then Europe.
The company had also “reflected some of the pressure in surcharges on ticket prices."
“Overall, these improvements are helping us to maintain our margin,” he added.
Turkish Airlines has cut 21 routes from its network of 350 destinations, but retained some loss-making services if they supplied its hub with passengers who went on to make long-haul journeys. The approach reflects lessons learned during the pandemic, when it kept planes flying and bounced back faster than rivals.
“If you make a drastic cut in the network, we know it takes a much bigger effort to recover,” Şeker also told FT.
All airlines have had their expansion plans delayed by late deliveries from top manufacturers Boeing and Airbus.
Turkish Airlines had held talks to acquire some of the planes used by Spirit, the now-defunct U.S. carrier, which witnessed a shutdown of its operations earlier this month.
With higher fuel prices and uncertainty over conflict, both airlines and consumers are being tested when it comes to operations and bookings ahead of the summer season.
It has been in discussions with leasing companies to buy seven to 10 aircraft, although negotiations were on hold due to the “current situation,” Şeker said.
The airline will receive about 36 wide-body aircraft such as Airbus A350s over the next four years, and plans to offer more services to Asia, including China, Japan and Australia, as well as new routes in the US, Canada and Latin America.
“With our geographic location, our spacious airport hub, our globally dominating network (and) ... huge order book with both Boeing and Airbus, there are a lot of prospects where we can take Turkish Airlines in the next 10 years,” Şeker concluded.
