CEO of Turkish Airlines Temel Kotil 

“We want to be the leading airline in Europe this year” 

He does not regard the term ‘regional leadership’ as suitable for Turkish Airlines (THY) insisting on global leadership instead. When the difficulties that arise in this year are mentioned he comments, “A rolling stone gathers no moss; it is an opportunity for us.” THY’s CEO Temel Kotil “who likes difficult conditions” talks about the company’s successes, vision and global progress.

 The balance sheet performance of Turkish Airlines is quite impressive. To what factors do you attribute this improvement on the balance sheet? 

We have worked both on income and expenditure sides in order to improve the balance sheet. Competition in your business encourages you to produce at a low cost securing quality. In this respect, you have to reduce costs without sacrificing quality. In aviation sector your sale has a definite date; if your seats are empty when the plane takes off, there is no compensation. So, we think it is more appropriate to fill the plane more instead of focusing on the price. We try to sell the whole product. While we are reducing the costs on the one hand, we are also increasing our incomes on the other hand. 

Can we say that THY reached its financial targets last year?

 The financial results for 2007 were quite good. There are very successful airlines in Europe, America and the Far East as we all know. However, we compare ourselves rather with those in Europe with respect to profitability and service quality. When we look at the profit rates in Europe in 2007, we rank second after Ryan Air. While easyJet ranks third, British Airways ranks fourth. Ryan Air and easyJet are in a different class. They are low cost airlines but we offer full service. In this sense, it is more appropriate to compare our company to British Airways. It is fantastic to obtain such a high profit rate despite being a network carrier. But we still ask ourselves, “Why do we come after Ryan Air?” We want to rank first in Europe in terms of profit rates.

 What are the other targets that THY set for this year? What kinds of works are carried out at THY in terms of targets? 

In 2008 we primarily try to further expand the difference between incomes and costs. Last year we carried nearly 20 million passengers and this year we want to end the year with 23.5 million passengers. Our turnover was 3.7 billion dollars last year and the target for this year is 4.5 billion dollars. We know that this is a very assertive target. 

So, you basically say your performance will not change despite the difficulties in this year… 

Even in the times of crisis we obtain the same performance as we do in other times. Since THY continuously expands and competes with itself, it keeps on growing at every period and is not affected by crises. 2008 is an opportunity for us, because crises mean change. Attitude of passengers may change in these periods. Our company can turn such situations into an opportunity and we can make huge leaps in these times. 

Negotiations for the sale of Bosnia Herzegovina Airlines (Air Bosna) started. Is there any development in this issue? 

We presented our letter of intent to Air Bosna, but we were not called for negotiation yet. There is a certain process and we are waiting for it. Air Bosna is a small airline but it has a strategic importance for us. If we become a shareholder at the company, this will greatly contribute to THY’s activity in the Balkans. On the other hand, since Turkey is not an EU member yet we do not have the right to fly to every point in the EU. Considering Bosnia Herzegovina’s possibility of joining the EU before our country, this move will bring huge benefits to us. 

Will you attempt a consolidation with another airline for regional leadership?

 Let’s call it global leadership instead of regional. THY does not have to be modest. Our components all improve. Our service philosophy, employees and technical service are at a very good level in every respect. So, there is no obstacle to our becoming a big player in the global market, but we only need time. After all, we set the target of 40 million passengers for 2013. We do not have any plan to merge with another company. Consolidation is not on our agenda. Large companies in Europe and America have to resort to consolidation in a sense. Because companies in these regions have already reached a certain degree of saturation. However, we grow by almost 20% every year.

 Oil prices continue to rise all over the world. What kind of effects oil prices will have on aviation sector and on THY? 

Doubtless to say, fuel is a large expense item for aviation sector. It is possible to say that it constitutes nearly 50% of costs for long-distance airlines. This rate, however, was 28% last year and will be approximately 30% this year. Indeed, large airlines derive a considerable portion of their incomes from long-distance flights. Therefore, it may have a “deadly” effect on our rivals. Speaking on THY, we obtain significant profits also from short-distance flights. The others can not obtain income from economy class seats, but it is just the opposite for us. We are an airline that can perform also in challenging conditions. When compared with our rivals, the effect of the increase in fuel prices is low on us. 

It is talked across the world that subsidies in the aviation industry regarding fuel may be removed. How do you evaluate this situation? 

In fact, there is no subsidy to aviation sector in the world. In Turkey no private consumption tax is imposed on the fuel that is used by planes. We thank the Ministry of Transport for this. In this way we obtain competitive power against rivals. Top managers of the large airlines say they are in a difficult position regarding this issue.