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Turkish Passenger Market Analysis Boeing Commercial Airplanes
Network, Fleet and Schedule
Strategic Planning
Module 22 : 14 March 2014
Istanbul Technical University
Air Transportation Management
M.Sc. Program
Copyright © 2014 Boeing. All rights reserved.
Sources of Passenger Data
Macro-Level Economic Statistics Trade Data Tourism Data Census Data Demographic Data
Micro-Level Passenger Booking Data Flown Passenger Data O&D Forecasts Mid-Level
Economic Forecasts Tourism Forecasts Airport Data Regulatory Agency Data Airline Financial Reports
No one source contains
all of the answers!
Copyright © 2014 Boeing. All rights reserved.
Sources: Traffic Growth – ICAO (historical) , GDP Growth – IMF (PPP)
Relationship between Economy and Air Travel
-4
-2
0
2
4
6
8
10
12
14
16
1971 1976 1981 1986 1991 1996 2001 2006 2011-2
-1
0
1
2
3
4
5
6
7
8
Pax Airline Traffic Growth GDP
Percent Annual Change Passenger Traffic Real GDP Growth
Long-term
Traffic Growth
Copyright © 2014 Boeing. All rights reserved.
Economic drivers of regional traffic growth
Annual growth, 2012 - 2032
6.6%
6.4%
4.0%
4.7%
3.8%
4.4%
3.2%
2.6%
3.4%
1.8%
1.6%
2.5%
8.6%
6.9%
6.9%
6.7%
6.3%
5.7%
5.0%
4.8%
4.5%
4.2%
3.1%
2.7%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
South Asia China
Latin America Southeast Asia
Middle East Africa World
Oceania C.I.S.
Europe Northeast Asia North America
RPK
GDP
How do these projections impact THY’s network development?
Copyright © 2014 Boeing. All rights reserved.
Economic drivers of regional traffic growth
Source: IHS Global Insight
(4.0)
(3.0)
(2.0)
(1.0)
-
1.0
2.0
3.0
4.0
5.0
6.0
France Germany Greece Italy Spain UnitedKingdom
Russia Turkey
Year
ove
r Yea
r Cha
nge
in R
eal G
DP (2
012)
Real GDP Growth in Europe
2013 2014 2015 2016 2017 2018 2019
What implications does this data have for Turkish Airlines?
Copyright © 2014 Boeing. All rights reserved.
Travel Industry: Powerful economic driver
Source: Oxford Economics
3.0%
3.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Inbound Travel Domestic Travel
Travel Share of Turkish Gross Domestic Product (GDP)
Copyright © 2014 Boeing. All rights reserved.
Foreign and domestic travel both have large contribution
Source: Oxford Economics
Turkish Travel Expenditure
(bill
ions
USD
)
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Turks Domestic
Turks Outbound
Foriegners Inbound
+5.4%
+5.3%
+4.9%
10-year Annual Growth:
Historical Future
Copyright © 2014 Boeing. All rights reserved.
Foreign visitation vital for economic development
Source: Oxford Economics
How do modal shifts impact Turkish Airlines business?
0
10,000
20,000
30,000
40,000
50,000
60,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Sea arrivals
Road arrivals
Rail arrivals
Air arrivals
+5.1%
+8.6%
+4.9%
10-year Annual Growth:
Turkish Visitor Arrivals by Mode (th
ousa
nds)
Historical Future
Copyright © 2014 Boeing. All rights reserved.
0
10,000
20,000
30,000
40,000
50,000
60,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Other arrivals
Business arrivals
Leisure arrivals
Passenger needs will vary based on purpose
Source: Oxford Economics
How do airlines respond to passenger needs based on travel purpose?
Turkish Visitor Arrivals by Purpose
(thou
sand
s)
Historical Future
+6.6%
+2.7%
+4.0%
10-year Annual Growth:
Copyright © 2014 Boeing. All rights reserved.
Regional differences in travel demand
Western Europe: 4.3%
Emerging Europe: 7.7%
Southeast Asia: 12.4%
South Asia: 10.2%
Oceania: 5.0%
Northeast Asia: 7.1%
Mid East: 9.7%
Sub-Saharan Africa: 12.3%
North Africa: 12.5%
North America: 3.7%
South America: 15.3%
What factors help to explain these regional differences? Source: Oxford Economics
Turkey Inbound Annual Arrival Growth: 2007-2017
Copyright © 2014 Boeing. All rights reserved.
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,00020
08-1
120
09-1
2009
-320
09-5
2009
-720
09-9
2009
-11
2010
-120
10-3
2010
-520
10-7
2010
-920
10-1
120
11-1
2011
-320
11-5
2011
-720
11-9
2011
-11
2012
-120
12-3
2012
-520
12-7
2012
-920
12-1
120
13-1
2013
-320
13-5
2013
-720
13-9
2013
-11
Turkey air traffic growth by region
Source: Sabre ADI
Average Annual Growth
19.9%
12.8%
28.1%
6.7%
Middle East
Russia/C. Asia
Africa
N. America
East Asia 7.7% 9.4% SE Asia
South Asia 9.9%
Turk
ey O
rigin
/Des
tinat
ion
Pas
seng
ers
Copyright © 2014 Boeing. All rights reserved.
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
| 12
Source: U.S. Department of Commerce
Country Focus: Turkey – U.S.A. air traffic
Total Passengers
Arriving at U.S. Gateways
(millions)
Copyright © 2014 Boeing. All rights reserved.
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
| 13
Non-US Citizens
U.S. Citizens
Source: U.S. Department of Commerce
Turkey – U.S.A. passenger traffic by citizenship
What might cause shifts in nationality over time?
Total Passengers
Arriving at U.S. Gateways
(millions)
Copyright © 2014 Boeing. All rights reserved. | 14
Source: U.S. Department of Commerce, 2010
Turkish Nationals: U.S.A. visitor data
Purpose of Visit to the U.S.A
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
District ofColumbia
Pennsylvania
Virginia
Texas
Illinois
Massachusetts
New Jersey
Florida
California
New York
Top 10 Destination States for Turkish Citizens
Business24%
Other 24%
Pleasure52%
How would a network planner use this type of data?
Copyright © 2014 Boeing. All rights reserved. | 15
Source: U.S. Department of Commerce, 2010
Turkish Nationals: U.S.A. visitor data
Gender
How would a network planner use this type of data?
Female44%Male
56%
0 10000 20000 30000 40000 50000
1910s
1920s
1930s
1940s
1950s
1960s
1970s
1980s
1990s
2000s
2010s
Decade of Birth
Copyright © 2014 Boeing. All rights reserved.
Ethnic settlement may help to guide travel requirements
Is this data significant to a network planner? Why or why not?
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Turkish Citizens Abroad
Source: "YURTDIŞINDAKİ VATANDAŞLARIMIZLA İLGİLİ SAYISAL BİLGİLER (31.12.2009 tarihi itibarıyla)"
Copyright © 2014 Boeing. All rights reserved. | 17
What is demand and how is it measured?
CDG CDG SEA IST IST JNB CPT
Air France #2046 Turkish #153 Air France #049
Onboard Loads • excellent for dispatchers and caterers • of limited use for airline planners • cannot identify passenger O&D
SEA-CDG CDG-IST IST-JNB JNB-CPT
4 passengers?
Coupon Origin & Destination (O&D) • excellent for revenue accounting • of limited use for airline planners
SEA-CDG CDG-IST IST-CPT
Or 3 passengers?
Online O&D • usually available from airlines • not helpful for new route selection
SEA-IST IST-CPT Or 2 passengers?
True O&D • useful in evaluating new off-line markets • able to eliminate double-counting • difficult to determine - can be estimated
SEA-CPT Best Answer: 1 Passenger!
Copyright © 2014 Boeing. All rights reserved.
92%88% 88% 86%
83% 82% 80% 79%75%
66%
57%
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Average Segment Fare (U
SD)Pa
ssen
ger L
oad
Fact
or
Load Factor Average Segment Fare
Load factors and fares vary by airline
How useful is segment data for network planning?
Select Airline Load Factor & Fare: Turkey Operations
Source: Sabre ADI, YE 7/2013
Copyright © 2014 Boeing. All rights reserved.
Turkish Origin & Destination Markets
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Largest Turkish OD Markets
Daily OD Passengers
Average Fare (USD)
Why do these market sizes and fares differ?
Copyright © 2014 Boeing. All rights reserved.
347
316
293
175
140
68 59
50 41 40
28 28 26 18 16 16 16 11 11 11 10 9 9 9 7
-
0.05
0.10
0.15
0.20
0.25
0.30
0.35
-
50
100
150
200
250
300
350
Average Passenger Yield (USD per kilom
eter)Da
ily O
rigin
& D
estin
atio
n Pa
ssen
gers
(Eac
h Di
rect
ion)
Leading Turkish Origin & Destination Pairs- AFRICA
Daily Passengers
Yield (USD/km)
Turkey Origin & Destination demand/fares
Non-stop THY service
Source: Sabre ADI, YE 7/2013
Copyright © 2014 Boeing. All rights reserved.
Turkish Regional Market Share
Source: Sabre ADI, YE 7/2013
Turkish Airlines,
59%
Air Algrie, 8%
Tunisair, 8%
Libyan Arab Airlines, 5%
Afriqiyah Airways, 5%
Royal Air Maroc, 3% All Others,
11%
59%
8% 8% 5% 5% 3%
11%
62%
8%3% 3% 3% 4%
17%
0%
10%
20%
30%
40%
50%
60%
70%
TurkishAirlines
Air Algrie Tunisair LibyanArab
Airlines
AfriqiyahAirways
Royal AirMaroc
AllOthers
Passengers
Revenue
TURKEY <=> AFRICA
Passenger Share Revenue Share “Gap”
Copyright © 2014 Boeing. All rights reserved.
268 263
105 96 94
80 70
22 20 12 12 10 10 9 8 8 8 6 4 4 4 4 4 4 4
-
0.10
0.20
0.30
0.40
0.50
0.60
-
50
100
150
200
250
300
Average Passenger Yield (USD per kilom
eter)Da
ily O
rigin
& D
estin
atio
n Pa
ssen
gers
(Eac
h Di
rect
ion)
Leading Turkish Origin & Destination Pairs- EAST ASIA
Daily Passengers
Yield (USD/km)
Turkey Origin & Destination demand/fares
Non-stop THY service
Source: Sabre ADI, YE 7/2013
Copyright © 2014 Boeing. All rights reserved.
Turkish Regional Market Share
Source: Sabre ADI, YE 7/2013
TURKEY <=> EAST ASIA
Passenger Share Revenue Share “Gap”
Turkish Airlines,
67%Korean Air,
7%
Asiana, 7%
Qatar, 4%
Etihad, 3%
Emirates, 3% All
Others, 9%
67%
7% 7% 4% 3% 3%9%
68%
9% 8%3% 2% 4% 6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
TurkishAirlines
KoreanAir
Asiana Qatar Etihad Emirates AllOthers
Passengers
Revenue
Copyright © 2014 Boeing. All rights reserved.
79
31
24
17 13
10 8
5 5 4 3 3 3 3 2 2 2 2 2 2 1 1 1 1 1 -
0.10
0.20
0.30
0.40
0.50
-
20
40
60
80
Average Passenger Yield (USD per kilom
eter)Da
ily O
rigin
& D
estin
atio
n Pa
ssen
gers
(Eac
h Di
rect
ion)
Leading Turkish Origin & Destination Pairs- LATIN AMERICA
Daily Passengers
Yield (USD/km)
Turkey Origin & Destination demand/fares
Non-stop THY service
Source: Sabre ADI, YE 7/2013
Copyright © 2014 Boeing. All rights reserved.
Turkish Regional Market Share
Source: Sabre ADI, YE 7/2013
TURKEY <=> LATIN AMERICA
Passenger Share Revenue Share “Gap”
Turkish Airlines,
37%
Air France, 12%
Onur Air, 9%Lufthansa,
6%
British Airways, 6%
KLM, 6%
All Others, 25%
37%
12%9%
6% 6% 6%
25%
37%
13%
7% 8%4% 5%
25%
0%
5%
10%
15%
20%
25%
30%
35%
40%
TurkishAirlines
AirFrance
Onur Air Lufthansa BritishAirways
KLM AllOthers
Passengers
Revenue
Copyright © 2014 Boeing. All rights reserved.
Turkey Origin & Destination demand/fares
Non-stop THY service
Source: Sabre ADI, YE 7/2013
107
83
68
56
48 45
38
30
11 10 10 8 7 6 6 5 5 5 4 4 4 3 2 2 2
-
0.05
0.10
0.15
0.20
0.25
-
25
50
75
100
125
Average Passenger Yield (USD per kilom
eter)Da
ily O
rigin
& D
estin
atio
n Pa
ssen
gers
(Eac
h Di
rect
ion)
Leading Turkish Origin & Destination Pairs- SOUTHEAST ASIA
Daily Passengers
Yield (USD/km)
Copyright © 2014 Boeing. All rights reserved.
Turkish Regional Market Share
Source: Sabre ADI, YE 7/2013
TURKEY <=> SE ASIA
Passenger Share Revenue Share “Gap”
Turkish Airlines,
36%
Singapore, 19%Malaysian,
13%
Emirates, 11%
Qatar, 8%
Etihad, 6%
All Others, 8% 36%
19%
13%11%
8%6%
8%
31%
22%
9%
15%
7% 6%10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Passengers
Revenue
Copyright © 2014 Boeing. All rights reserved.
Turkey Origin & Destination Demand/fares
Non-stop THY service
Source: Sabre ADI, YE 7/2013 288
96
76 73 62
55
39 37 32 31 31 20 20 16 15 14 14 12 12 11 9 8 8 7 7
-
0.05
0.10
0.15
0.20
0.25
0.30
-
50
100
150
200
250
300
Average Passenger Yield (USD per kilom
eter)Da
ily O
rigin
& D
estin
atio
n Pa
ssen
gers
(Eac
h Di
rect
ion)
Leading Turkish Origin & Destination Pairs- N. AMERICA
Daily Passengers
Yield (USD/km)
Copyright © 2014 Boeing. All rights reserved.
Turkish Regional Market Share
Source: Sabre ADI, YE 7/2013
TURKEY <=> NORTH AMERICA
Passenger Share Revenue Share “Gap”
Turkish Airlines,
48%
United , 12%
Delta, 11%
Lufthansa, 11%
British Airways, 4%
Air Canada, 3%
All Others, 12%
48%
12% 11% 11%
4% 3%
12%
47%
12% 11% 13%
4% 3%9%
0%
10%
20%
30%
40%
50%
60%
TurkishAirlines
United Delta Lufthansa BritishAirways
AirCanada
AllOthers
Passengers
Revenue
Copyright © 2014 Boeing. All rights reserved.
North America: Passenger Traffic Growth Trend
Source: Sabre ADI, 12 month moving average
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2002
-12
2003
-320
03-6
2003
-920
03-1
220
04-3
2004
-620
04-9
2004
-12
2005
-320
05-6
2005
-920
05-1
220
06-3
2006
-620
06-9
2006
-12
2007
-320
07-6
2007
-920
07-1
220
08-3
2008
-620
08-9
2008
-12
2009
-320
09-6
2009
-920
09-1
220
10-3
2010
-620
10-9
2010
-12
2011
-320
11-6
2011
-920
11-1
220
12-3
2012
-620
12-9
2012
-12
2013
-320
13-6
2013
-9
Turk
ey O
&D
Pass
enge
rs p
er M
onth
Average Annual Growth
28.9% Newark
7.5% San Francisco
3.4% Miami
6.7% Atlanta
9.3% Seattle 11.4% Vancouver 6.8% Dallas
9.2% Detroit
7.7% Denver
How would a network planner use this information?
Copyright © 2014 Boeing. All rights reserved.
Market Share in Non-stop O&D Pairs
59% 56% 50% 57% 70% 61%
Turkey-North America O&D Revenue Share
How does THY maintain such high market shares? Source: Sabre ADI YE 7/2013
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
New York Los Angeles Chicago Toronto Washington
Other Airlines
Turkish Airlines
Copyright © 2014 Boeing. All rights reserved.
Yield differences between markets
Source: Sabre ADI, YE 7/2013
Turkey-North America O&D Revenue by Class
How would a network planner use this information?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Shar
e of
tota
l O&
D Pa
ssen
ger R
even
ue
First
Business
Economy
Discount Economy
Copyright © 2014 Boeing. All rights reserved.
Point of Origin impacts market planning
59% 56% 50% 57% 70% 61% 0%
10%20%30%40%50%60%70%80%90%
100%
U.S.A.
Turkey
Turkey-North America O&D Point of Origin
What implications might this data have for planning? Source: Sabre ADI YE 7/2013
Copyright © 2014 Boeing. All rights reserved.
Seasonality varies by region and/or market
How would a network planner use this information?
Turkey-North America O&D Demand by Month
Source: Sabre ADI, YE 7/2013
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Mon
thly
Var
ianc
e fr
om A
nnua
l Ave
rage
Denver
Newark
Orlando
Miami
San Francisco
Copyright © 2014 Boeing. All rights reserved.
Connecting Traffic Flows
What regions are connected via the Istanbul hub?
Copyright © 2014 Boeing. All rights reserved.
Istanbul as a crossroads of regions
Source: Sabre ADI YE 7/2013
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
Europe <->Mid East
Africa <->Europe
Europe <-> EAsia
Europe <->South Asia
Europe <->C.I.S.
Europe <->SE Asia
NorthAmerica <->
Mid East
Africa <->Asia
NorthAmerica <->South Asia
NorthAmerica <->
C.I.S
Annu
al O
rigin
& D
estin
atio
n Pa
ssen
gers
Turkish Airlines Passenger Flow Traffic
What factors might drive regional flow variations?
Copyright © 2014 Boeing. All rights reserved.
Regional Flow Market Share
Source: Sabre ADI YE 7/2013
AFRICA <=> EUROPE
Passenger Share Revenue Share “Gap”
Air France,
10%
Royal Air Maroc, 9%
Tunisair, 8%
Air Algerie, 7%
Ryanair, 5%
Turkish Airlines, 4%British
Airways, 4%
All Others, 53%
10% 9% 8% 7% 5% 4% 4%
53%
18%
4% 2% 3% 2% 4%
11%
57%
0%
10%
20%
30%
40%
50%
60%
AirFrance
RoyalAir
Maroc
Tunisair AirAlgerie
Ryanair TurkishAirlines
BritishAirways
AllOthers
Passengers
Revenue
Copyright © 2014 Boeing. All rights reserved.
Regional Flow Market Share
Source: Sabre ADI YE 7/2013
EUROPE <=> EAST ASIA
Passenger Share Revenue Share “Gap”
Lufthansa, 10%
Air China, 9%
Air France, 8%
KLM, 7%
Cathay Pacific, 6%
Turkish Airlines, 5%
Finnair, 5%
All Others, 49%
10% 9% 8% 7% 6% 5% 5%
49%
13%6%
9%6% 8%
4% 4%
49%
0%
10%
20%
30%
40%
50%
60%
Passengers
Revenue
Copyright © 2014 Boeing. All rights reserved.
Regional Flow Market Share
Source: Sabre ADI YE 7/2013
EUROPE <=> SOUTH ASIA
Passenger Share Revenue Share “Gap”
Emirates, 23%
Qatar, 11%
Jet Airways, 7%
Pakistan Int'l, 7%Air India, 7%Turkish
Airlines, 6%
Lufthansa, 5%
British Airways, 4%
All Others, 30%
23%
11%7% 7% 7% 6% 5% 4%
30%28%
9%6% 6%
3% 5%8% 8%
27%
0%
5%
10%
15%
20%
25%
30%
35%
Passengers
Revenue
Copyright © 2014 Boeing. All rights reserved.
Regional Flow Market Share
Source: Sabre ADI YE 7/2013
NORTH AMERICA <=> MIDDLE EAST
Passenger Share Revenue Share “Gap”
United, 12%
El Al, 12%
Delta, 9%
Emirates, 9%
British Airways, 6%Lufthansa,
6%Turkish, 5%
Air Canada, 5%
All Others, 35%
12% 12%9% 9%
6% 6% 5% 5%
35%
13% 12%9%
16%
5% 6%4% 4%
31%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Passengers
Revenue
Copyright © 2014 Boeing. All rights reserved.
Importance of connecting traffic flows
59% 56% 50% 57% 70% 61%
O&D Size Potential: Turkey + Other THY Flows
How might this change the way a planner evaluates markets? Source: Sabre ADI YE 7/2013
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
Pass
enge
rs D
aily
in E
ach
Dire
ctio
n
Other Flow
Turkey
Copyright © 2014 Boeing. All rights reserved.
Market stimulation from new non-stop service
Source: Sabre ADI
R² = 0.8092
0%
50%
100%
150%
200%
250%
300%
350%
400%
0 10 20 30 40 50 60
Obs
erve
d 12
-mon
th O
D s
ize
stim
ulat
ion
OD Market Size Prior to Non-Stop Service
THY New Market Stimulation
IST-IAD (11/2011) Before: 41 PDEW After: 67 PDEW
IST-BSR (06/2011) Before: 5 PDEW After: 21 PDEW
What factors might cause stimulation of these markets?
Copyright © 2014 Boeing. All rights reserved.
$-
$200
$400
$600
$800
$1,000
$1,200
-
400
800
1,200
1,600
2,000
2,400
Average One-W
ay Fare (USD)
Aver
age
Mon
thly
Pas
seng
ers (
Both
Dire
ctio
ns)
PassengersAverage Fare
New entrant effect on market dynamics
Source: Sabre ADI
THY Enters Market
Istanbul – Dacca OD Traffic and Fare Trend 12-month Moving Average
Copyright © 2014 Boeing. All rights reserved.
Passenger Market Analysis Summary Network planners must fully understand the passenger market in order to make
informed decisions
A wealth of data is available, some of it is free, some of it can be very expensive
No one data source will answer every question – the successful planner synthesizes disparate data to reach educated conclusions on the passenger market place
Macro-level economic data and forecasts can be very useful for high level planning
Market and flight level planning necessitates the use of segment or O&D level data
O&D data useful to determining airline’s strength relative to others in existing markets; most useful for new market “hunting”
Key new market data elements include local/flow OD demand size, passenger yield and variability of demand
New service has the potential to greatly increase the size of a market, planners must account for this stimulation and discounting needed to drive additional traffic
The best data is useless without the ability to understand what it means!
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