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Dr Temel Kotil, President and CEO of Turkish Airlines

Dr Temel Kotil, President and CEO of Turkish Airlines

» Interview | Friday, December 26, 2014 • Air News Times
What’s the secret behind the rapid expansion of Turkish Airlines?

We work hard. It is as simple as that. We work hard and we are getting our reward. We are just competing with other airlines and trying to improve our market share. But we are also competing internally, against ourselves, to see if we can keep improving.

We are a family that works 25 hours a day. I have 19,000 other CEOs helping me do my job. And when people work hard it is easy to scale up. They work hard mentally and physically. When you have that you only need to give them direction. And my direction is simple: love the passenger.

Expansion is really just the end result of that process. If you love the passenger and work hard the rest will follow. And it’s the hard work that makes the success permanent. When something is given to you, it is temporary. Struggling yourself to achieve something makes it permanent.

What does loving the passenger entail?

Passenger service is everything. When we look at our budget, we have a certain percentage allocated to various areas, same as everybody. But we never say “let’s look at how we can cut passenger service”. We look at how we might get more money to spend in this area.

I want fresh juice available for everybody on every flight. That’s not cheap or easy. But fresh fruit is healthier and tastes a lot better. And I will never accept frozen food either. Passenger service is not an area where I look to save money. It’s an area where I want to spend.

Even though you’re spending money and expanding, the airline has remained profitable. How has that been achieved?

If you look at the global economic crisis in 2008-2009, Turkish Airlines did particularly well then. When other airlines were shrinking, we took the opportunity to expand. You have to be brave.

You should always grow at the industry average at the very least. If the annual growth of the industry is 5% then, whether you are big or small, the least you should grow is 5%. You can never stand still. Our productivity is up 7% over the past decade. To me, this means that every employee is serving more passengers. And that means our costs are coming down about 1% every year. I wish I could be CEO in 100 years’ time because that man or woman will have an easy job.

Seriously, it is just about enjoying what you are doing. And we are having great fun. We are not perfect and we make mistakes, but we accept this and just work that bit harder to rectify any mistake and ensure it doesn’t happen again. I was on a flight from Brussels recently, for example, and I noticed that the black pepper really didn’t taste as it should. So we looked at that and have solved the problem.

Also, historically, aviation has been dominated by the US and European markets, but it is well documented that the center of aviation gravity is moving south and east. And Istanbul is the most southerly and easterly point in Europe in terms of an aviation hub. This is our time.

Are you looking to expand in any particular markets?

We are not focusing on any one area. We want to expand symmetrically. I am an engineer, a technical person, and so I think of it in terms of fluid mechanics. The passengers are the fluid. Pressure points and outlets determine the volume and velocity of the fluid and that provides us with an idea of where we need to provide new services. But, of course, there is a business model behind it all and a lot of analysis.

We have been building up Africa for the past decade, but that growth has really accelerated in the past few years. There is a bright future for Africa and the one billion Africans. And Turkish Airlines will be part of that bright future. We are particularly proud to be serving Mogadishu in Somalia. In Algeria we have grown from serving one city to serving five. And there has been similar growth in Russia, in Central Asia, and the Middle East.

The airline now covers the world and the frequency of services is increasing too.

How important is Star Alliance to your future strategy?

Star Alliance is very important to us. There has been some mutual benefits both for the alliance and us. I think it has been especially important for our middle management. It gives them great exposure to be closely acquainted with other cultures and gain different working practices. And that exposure also provides additional value in shaping our future strategy.
So, as Turkey’s 81-year-old national flag carrier we are glad to be a part of the world's oldest, largest and most awarded airline alliance.

Are you optimistic that air freight will pick up and provide significant revenue going forward?

Cargo is doing well. Most of it, about 70%, is carried in the bellyhold of our passenger aircraft. That means we move it very quickly and efficiently. It also means we have a lot more cargo capacity coming so we have to be ambitious in this area.

The industry programs are helping cargo, but what really sets us apart is the geographical location. We are at the center of the world. Others say it, but just look at a map.

You have a number of wholly-owned subsidiaries to serve the airline. What is the rationale?

We have a big fleet and we are focused on doing the very best job for our passengers and cargo clients. Now, I am sure that third parties can perform excellently, but for me it is just not the same as doing it ourselves.

If we are maintaining the fleet then safety  and operational efficiency is under our control. If we are responsible for catering then the quality of food and beverages is down to us.

But there is a second idea here too. At the moment, Turkish Airlines is growing fast and these companies have their work cut out just keeping up with us. They do not have time to look for other contracts. But ultimately the plan is to develop these businesses so they can offer their services to other airlines and be an additional revenue stream.

What do you believe are the biggest challenges facing aviation in general and what are the potential solutions?

The biggest problem is clear. The historical profit margin of the industry is 1%. That’s not a very big number is it? It is clear that we have to increase demand significantly. For the industry to be profitable, we must motivate people to fly. So by making ourselves cheaper we can increase our profits. We must get our message across. We are safe, we are affordable, we open up the world, and we drive the global economy.

Governments tend to focus on other matters, but connectivity is crucial to a growing economy. Countries that improve their connectivity fastest will be the biggest winners. That is why we will see a different world in the years ahead.

Aviation should be the top of the agenda for governments. But they are sleeping. We must wake them up. We are not asking them to do anything for us. We will take care of everything. They just need to give us enough land and sky to build the infrastructure to grow.

Then we need them to help address the issue that if you’re in a car, you can drive across the border from Germany into France pretty much anywhere. But it’s very different in the sky. We zigzag and burn unnecessary fuel.

Does the Turkish government understand the value of aviation?

The Turkish government understands that the airline is working for the national economy. In fact, all airlines work for the economy. Any smart government should understand the value of aviation.

Governments like to build roads or rail domestically because they know that connectivity pays. And all airlines are doing is building that connectivity in the sky. And yet the rules can make it so difficult. Why? We now fly to nine additional cities in Russia after Moscow because the visa rules got a lot easier. The Russian economy is benefiting as a result, as is the Turkish economy. If you lose connectivity, you lose everything.

Of course, aircraft can’t fly without regulations, but those regulations must be sensible, clearly thought out, and aligned on a global scale. When aircraft are 10km up in the sky they belong to the world.

Tell us about the new airport in Istanbul. Will that secure your future?

The new airport in Istanbul is due to open in 2017 and we should see the benefits of full operations from summer 2018. It will serve about 80 million passengers per annum (mppa) to begin with, and my guess is it will need to expand to serve 200 mppa by 2030. It is planned to become the largest airport in the world.

The current airport is congested and the only way to deal with that is to put a lot of people on the ground to deal with the challenges. But the infrastructure in Turkey is good on the whole. The number of airports has doubled in recent years and charges are less than the European average. And taxes on tickets have just been cut too.

Following MH17, can we do more to make air corridors safer?

We have to assess the risks accurately.

As mentioned, Turkish Airlines flies to Mogadishu in Somalia. It’s a troubled region, but we assessed the risks and have received a lot of credit for flying there. But I am just an airline CEO. I am not in charge of politics in the region, nor am I aware of everything that is happening. And obviously it is a very dynamic situation. So I have to rely on somebody to tell me it is safe to fly and warn me if the risk becomes too great.

What happened to MH17 is simply unacceptable. Every nation must agree that war can never involve commercial aircraft. Every air corridor must be safe.

So what about your interests beyond being an airline CEO, including teaching a class at the University of Illinois?

Aviation is the best business in the world and I always tell my people to call me if they need me—any time of day or night. I like to be involved in every decision, big or small.

But it is good to experience some different tastes. I have a research background and I have always loved that. And I only teach one class at the University of Illinois, but that’s great too. Students always ask lots of questions, they challenge you. It helps to explain things, it gets it clear in my mind.
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