Turkish Airlines: yields and passenger mix in the Australia-Turkey market mean Australia is not currently in the network plan

2 May, 2017

While it seems unlikely that Turkish Airlines will launch services to Australia to, it is aiming to grow its presence in this market through new and stronger partnerships with Asian carriers and more capacity on the Istanbul-Singapore route. Over the years, Turkish has looked as though it would serve Australia with direct flights, primarily one-stop service via Indonesia or Singapore, but its new management team has no plans to operate flights to Australia in at least the short to medium term.

Turkish Airlines' previous CEO, Temel Kotil, talked up the possibility of launching services to Australia, including Melbourne and Sydney via Bali, Jakarta or Singapore using its existing widebody fleet, which consists of A330s and 777-300ERs. However, Turkish's new CEO, Bilal Eksi, says one-stop flights to Australia are not currently in the network plan.

In the Australia market, Turkish is mainly targeting ethnic tourism in the local Australia-Turkey market and leisure passengers heading from Australia to Europe. A nonstop flight to Istanbul would improve its position significantly in the highly competitive Australia-Europe market as it would give Turkish a one-stop product from Australia to more European destinations than any other airline. Turkish currently serves more than 100 destinations in Europe. It has the largest airline network in the world - based on number of passenger destinations - and Australia is an obvious white spot.

Turkish currently does not have any aircraft in its fleet or on order that are capable of operating to Melbourne or Sydney nonstop from Istanbul. Regardless, the yields and passenger mix in the Australia-Turkey market - and the Australia-Europe market - are likely not sufficient to support the cost associated with a nonstop operation.

Turkish Airlines network: as of 30-Apr-2017

Source: CAPA - Centre for Aviation & OAG

However, with its current fleet (and, so far, with its future fleet) Turkish can only operate nonstop flights to Perth. Turkish is not keen to launch Istanbul-Perth as this is a much smaller market than Istanbul-Melbourne or Istanbul-Sydney.

Australia has a large Turkish community which is almost entirely concentrated in Melbourne and Sydney. Most Australians holidaying in Turkey, a small market segment that has been impacted over the last year by security issues, also reside in Melbourne and Sydney.

Turkish Airlines currently uses Singapore as its main gateway for Australia and New Zealand. It codeshares with Star Alliance partner Singapore Airlines (SIA) from Singapore to Adelaide, Auckland, Brisbane, Melbourne, Perth and Sydney. It also has interline agreements with Jetstar and Qantas, giving Turkish passengers another option from Singapore to Brisbane, Melbourne, Sydney and Perth.

Currently 5% to 10% of Turkish's Istanbul-Singapore passengers originate or are heading to Australia or New Zealand, with the ratio varying depending on the time of year, according to Turkish Airlines VP sales of Asia and the Far East A Harun Basturk. This equates to more than 10,000 passengers per annum as Turkish carried 180,000 passengers on its Istanbul-Singapore route in 2016.

Turkish has the largest airline network in the world - based on number of passenger destinations - and Australia is an obvious white spot.

Turkish aims to carry 200,000 passengers on Istanbul-Singapore in 2017 as it increases capacity by up-gauging the current daily service from 289-seat A330-300s to 349-seat 777-300ERs. The change of gauge will be implemented in Jun-2017, resulting in a 20% increase in seat capacity, including a 15% increase in economy and a 75% increase in lie flat business class seats from 28 to 49 per flight. Some of this additional capacity, particularly the economy capacity as the local Singapore market has strong premium demand, is intended to support growth from Australia and New Zealand.

Turkish is now seeking to improve cooperation with SIA, which could result in better access to seats on the existing codeshares to Australia and New Zealand as well as new codeshares in other markets. Turkish also plans to continue working in Singapore with Qantas and Jetstar - the latter relationship includes Jetstar Airways and Jetstar Asia.

Turkish plans to continue relying primarily on Singapore as the transit point for its Australia passengers but is also looking to increase Australia traffic via other online points in Asia, in particular Kuala Lumpur. Turkish began interlining in 2016 with Malaysia's Malindo Air on the Kuala Lumpur-Perth route.

Mr Harun said Turkish plans add an interline with Malaysian Airlines covering routes from Kuala Lumpur to Australia and New Zealand "very soon". This will provide passengers in Adelaide, Auckland, Melbourne, Perth and Sydney another option for accessing the Turkish network. Turkish currently operates one daily flight on the Kuala Lumpur-Istanbul route, which is already served with the 777-300ER.