Turkish Passenger Market Analysis Boeing Commercial...

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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!


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


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?


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?


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)


Foreign and domestic travel both have large contribution


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


Foreign visitation vital for economic development


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%


Turkish Visitor Arrivals by Mode (th

ousa

nds)

Historical Future


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


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%



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


-

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


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)


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?


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


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)"


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!


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


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?


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



Turkish Regional Market Share


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”


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


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 <=> EAST ASIA


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


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


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 <=> LATIN AMERICA


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





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


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)




TURKEY <=> SE ASIA


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


Turkey Origin & Destination Demand/fares


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


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)




TURKEY <=> NORTH AMERICA


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


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?


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


Yield differences between markets


Turkey-North America O&D Revenue by Class


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


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


Seasonality varies by region and/or market


Turkey-North America O&D Demand by Month


-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


Connecting Traffic Flows

What regions are connected via the Istanbul hub?


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?

http://en.wikipedia.org/wiki/File:Turkish_Airlines_logo.svg


Regional Flow Market Share


AFRICA <=> EUROPE


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




EUROPE <=> EAST ASIA


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




EUROPE <=> SOUTH ASIA


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




NORTH AMERICA <=> MIDDLE EAST


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


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


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?

http://en.wikipedia.org/wiki/File:Turkish_Airlines_logo.svg


$-

$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


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!


Questions?

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