turkish airlines widen your world Case Solution
Turkish Airline had been founded in the year 1933 with 100% of the state equity as part of the Ministry of Defense. However, after the privatization efforts of the state owned companies and the liberalization of the airline industry in Turkey, the government owns about 49% share of the company. The remaining shares of the company are publicly traded on the Istanbul Stock Exchange. Between the year 2006 and the start of 2013, the airline company has experienced dramatic increase in the annual number ofpassengers, which have increased to 48.3 million passengers in 2013(Fleets.net, 2013).
The total revenues for the company have also increase dramatically and have reached a level of 9.234 billion by the end of the year 2012. Apart from this financial success, the airline company had also launched a number of low cost carriers under the various brand names such as Sun Express, Anadolu Jet etc(CAPA, 2013). This expansion has occurred after the deregulation of the domestic market in Turkey and thus the airline has now positioned itself as an international player.
There are a number of hub locations of Turkish Airline Company and the Istanbul Ataturk Airport is its primary hub. Turkish Airline Company had also been awarded as the best airline for the years 2011 and 2012. The current performance of the company as of 2012 is shown in exhibit 5 in the appendices. A number of successful initiatives by the government such as the major sponsorship deals with the giant sports clubs like Manchester United, Barcelona and Dortmund and the promotion of the tourism initiatives in Turkey have helped the airline company to expand its partnerships and the networks with the major international carriers.
So far, Turkish Airline Company has been expanding its operations successfully. The international growth success of the company, there are a number of strategies, which have been employed by the management and the CEO, Temel Kotil, of Turkish Airline Company such as strategic alliances, sponsorships, cost leadership and having new routes. Whenever, the management has thought about adding new routes, the prime focus of the management has been on the high transit passenger markets, which is very much aligned and matches with the international business model of Turkish Airline Company(Zalewski, 2013). The performance analysis of TA is performed in exhibit 6 in the appendices.
Furthermore, the position of Turkish Airline until this date, which is 2013, has been strengthened by the balancing of both the long and the short haul flights and the optimization of the frequency of the flights to various destinations within the network of the company in order to increase customer quality and reduce the total passenger transit time. The hub airport of the airline company is also conveniently located between the corridors of Middle East, Asia and Europe(Davies, 2013). Lastly, Turkish Airline Company has always been profitable because of its business model. However, the role of strict cost management and cost leadership strategy has also played a vital role in the successful expansion and sustainable profitability of Turkish Airline Company so far.
This case tracks the transformation and transition ofTurkish Airline Company from a regional player to a global powerhouse. The management and the CEO of the airline have planned to double the size of the company and become one of the top ten industry players in 2013 by placing an order of 212 aircrafts at the start of the year 2013. As the fleet of the airline grows, it would position the company differently within the international market by allowing the Turkish Airline Company to increase its aircraft utilization, increasing the number of routes, boosting revenues by flying to more destinations and also achieving a higher cost efficiency.
Along with these advantages, there would also be a number of negative factors associated with this expansion. For instance, the planned expansion would also increase the already intense competition with the other major European Giants operating in the market such as British Airways, Air France and Lufthansaand with the fast growing Gulf Airline Companies such as Qatar Airways, Etihad and Emirates(Zalewski, 2013).
There are a number of critical questions which are faced by the CEO of the company such as how would the company sustain its profitability after the expansion, how it would manage its operational complexities and other external factors and how the management would be hiring the best of the people and continuously differentiate itself in the continuously changing airline industry. Kotil has set objectives to grow the airline by 15% per year and if this is achieved then the company will have a market share of 5% to 6% over the period of the next 10 years(Hofmann, 2013). A best strategy needs to be devised for Turkish Airline Company to make this expansion a success.....................................................
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