Turkey

Natural resources and economic growth draw Turkish Airlines to Africa

Turkish Airlines’ bullish African expansion plans will see the carrier launch service to several destinations in 2012 and upgrade many existing routes to twice daily. The carrier’s focus for 2012 is on expanding in emerging markets, primarily Africa, as further network expansion in the US is on hold and plans for launching service to Australia will likely not materialise until at least 2013.

Turkish currently operates 18 destinations in Africa, including Misrata in Libya which was launched in Dec-2011. Turkish CEO Temel Kotil told CAPA in Dec-2011 that the carrier plans to launch in 2012 Abuja and Kano in Nigeria; Kigali in Rwanda; Abidjan in Cote d’Ivoire; and Mogadishu in Somalia.

The carrier has since also announced plans to launch in 2012 Kinshasa in The Democratic Republic of the Congo, which could give Turkish an African network of 24 destinations by the end of this year.

Poland’s LOT and Turkish Airlines highlight Eastern European flag carriers investor/seller shortfall

Several Eastern European flag carriers are clearly struggling as competition in their markets, particularly from low-cost carriers, continues to increase, threatening their survival as independent entities. Many of these carriers are reliant on regular capital injections from their respective governments simply to maintain operations. In an effort to ensure their long-term survival and a more sustainable future, several are seeking to secure strategic partners in 2012.

Being acquired by, or partnering with, larger airlines from Turkey and the Middle East is proving to be the most likely of scenarios for these Eastern European operators as Western European airline groups are attempting to reduce expenditure significantly in 2012. While Turkish Airlines and the three major Gulf carriers have the cash and interest to pursue investments in Eastern European carriers in 2012, such investments do not appear to be on the radar at all for Western airlines.

DGCA Report blunder compounds India’s airline industry problems

In light of the financial difficulties being experienced in the Indian aviation sector, industry regulator, the Directorate General of Civil Aviation (DGCA), recently commissioned an audit of the nation’s carriers to assess whether safety was being compromised. (A similar initiative was undertaken in 2008 at the time of the fuel price spike but nothing emerged from that.) The clumsy handling of the contents of the Dec-2011 report has only served to aggravate an already critical situation for the aviation industry.

Aviation safety-related matters are extremely sensitive, given the public concern – and the resulting commercial impact on airlines. In this case, the findings of the audit should have been handled in one of two ways: (1) If there were areas of concern requiring rectification, but not posing an immediate safety risk, the regulator should have issued private notices to each of the airlines concerned to seek clarifications and to demand a clear, time-bound plan to remedy any shortcomings, with appropriate action should the airline fail to do so; or (2) if the audit findings indicated an imminent risk to public safety the airlines concerned should have been grounded immediately.

Key decisions loom in 2012 for Avianca-TACA as integration effort nears completion

The spotlight in Latin America this year will primarily be shone on LAN and TAM as the two airline groups complete their landmark merger and begin the integration process. But it is also a key year for Avianca-TACA, which completed their merger in early 2010 and has completed about 90% of its integration process.

The integration of Avianca and TACA will be wrapped up this year as the carrier formally joins the Star Alliance, completing two major milestones for the fast-expanding airline group. Several major decisions also loom for the group in 2012 related to its corporate structure, branding and fleet.

Structurally, a decision will likely be made by the end of this year on whether to bring Avianca Brazil into the publicly traded holding company Avianca-TACA. The Brazilian carrier is still owned by the Synergy Group, the holding company controlled by the Efromovich family which also owned Avianca prior to its merger with TACA (the Efromovich family now has a majority share in Avianca-TACA Holding). As a result, Avianca Brazil remains separate although it has a co-branding arrangement with Colombia-based Avianca.

Avianca-Sky tie-up and LAN-TAM alliance selection could lead to further consolidation in LatAm

The rivalry in Latin America between leading airline groups LATAM and Avianca-TACA has increased another notch following the establishment of a new alliance between Avianca-TACA and Chilean carrier Sky Airline. While relatively small, the tie-up forged this week between leading Colombian carrier Avianca and Sky could be a precursor to further consolidation in the region. Such consolidation will almost certainly follow alliance lines as LATAM, which will be formally established in late 1Q2012 once LAN and TAM complete their merger, is poised to opt for oneworld while Avianca-TACA is now in the process of joining Star Alliance.

Atlasjet order for CSeries continues Bombardier's push into new growth markets

Altasjet has become Bombardier’s 10th CSeries customer, announcing a Letter of Intent (LoI) for 10 of the larger CS300 variant at this week’s Dubai Airshow. The announcement is another fillip for Bombardier’s CSeries sales campaign and a strong order from the relatively small Turkish regional carrier. The LoI also includes options for five more CSeries aircraft. The LoI is expected to be firmed up within the next two months.

The LoI is Bombardier’s first sales success for the CSeries in Eastern Europe. Bombardier has been pursuing sales among European regional carriers, but the economic climate in Europe has not been conducive to aircraft orders. Slowness in the US economy has also had an affect on regional jet ordering. As a result, more than 50% of CSeries orders have been placed by airlines outside of North America and Western Europe.