If you had to pick one airline in the world that you’d hate to be running right now, Turkish would be at the top of the list. (Congratulations to Malaysia Airlines for being knocked off the top spot.) With increasingly high profile bombings and now a failed coup attempt plaguing Turkey, people are scared. That’s going to be a tough situation for any airline, but for one that’s growing as rapidly as Turkish, this could be dire.
Just look at Turkey’s location on a map, and you’ll quickly see why things aren’t stable here. Turkey may be on Europe’s doorstep, but it also shares a long border with Syria, Iraq, and Iran. There is, of course, ISIS in these areas and Turkey is not only fighting them but helping the West bring the fight as well. (The US has been launching attacks from Turkey.) But there is also the fight between Turkey and Kurdish separatist groups not only in Iraq and Syria but also within Turkey’s borders itself.
Much of the instability isn’t just due to geography, of course. Turkey’s President Recep Tayyip Erdogan has been increasingly trying to consolidate power under his rule. Over the last couple of years, a fragile peace with one of the Kurdish rebel groups has fallen apart. He has focused his efforts on fighting them, and some suggest that he hasn’t done what he needs to be doing to fight ISIS.
All of this instability and anger means there have been bombings, and a lot of them. Here’s just a handful from this year.
- January 12 – ISIS suicide bomb kills 13 in Istanbul tourist area
- February 17 – Kurdish separatist (TAK) car bomb kills 29 in Ankara
- February 18 – Kurdish separatist (HPG) roadside bomb kills 6 in Diyarbak?r
- March 13 – Kurdish separatist (TAK) car bomb kills 37 in Ankara
- March 19 – ISIS suicide bomb kills 5 in Istanbul
- April 27 – Kurdish separatist (TAK) suicide bomb kills 1 in Bursa
You get the point. This isn’t even all of them. But while in same cases tourists were targeted, this didn’t get the kind of attention that would sink Turkish Airlines’ fortunes. Though people knew vaguely about potential risks in Turkey, it didn’t seem to be a huge issue for tourism. In fact, when I went Across the Aisle from Turkish Airlines CEO Temel Kotil earlier this year about whether he had any concerns about issues within Turkey, he said this.
If you know the numbers with tourism, it’s still solid. Last year Istanbul increased 7 percent, worldwide average is about 4.7 percent. And Istanbul hosted about a million tourists. It’s damaged the numbers of course, but our transit ratio is already 55 percent internationally, almost half the income. We’ve surpassed Frankfurt and we’re supposed to pass Charles de Gaulle, Paris. I believe maybe tourism is not as perfect as it used to be. In the Russian case it’s because of some restrictions between Russia and Turkey. But we have Saudis that come in big numbers on the Black Sea as a tourist. Still, the Turkish economy I think is still functioning good. We grew 21 percent. That’s a big number.
My how things have changed in the last couple of months.
First we had the bombing that killed more than 40 at Istanbul’s main airport on June 28. Even though that happened in the baggage claim area, far from where transit passengers would go, it still spooked people who were connecting.
Then just this past weekend, there was a failed coup attempt creating more instability in the eyes of foreigners. Whether you believe the rumors that Erdogan orchestrated this to consolidate his power or not doesn’t matter. The result is that he IS consolidating power. And if this means further provocation with surrounding enemies, then things are only going to get more violent. (It seems to be an unfortunate trend around the world these days.)
From an airline perspective, there is an immediate impact. Though the airport was only closed for a brief period following the attempted coup, the US became so concerned about potential security breaches that it shut down all flights between the US and Turkey. Further, US airlines can’t fly through Turkish airspace. This restriction remains in place, and may stay that way for some time.
This isn’t a huge issue for US airlines. None of them fly to Istanbul anymore (Delta’s planned summer service was canceled before it began). Sure this could impact a couple of flights that might prefer to fly through Turkish airspace today, but that’s relatively minor.
For Turkish Airlines, however, this is devastating to have to suspend all US service. But it is going to be a temporary measure, and eventually Turkish can resume US flights. The question is… what will the aftermath be?
I’m really curious to see passenger numbers, but I imagine that we’ll see some serious drops in demand for Turkish flights beginning this month. Turkish already often wins travelers over by offering cheap fares. But if even price advantages fail to sway customers in the aftermath of this month, then Turkish is in trouble. This is similar to what Malaysia Airlines faced after its two high profile crashes, but Malaysia wasn’t an airline sinking a ton of capital into expanding its reach quickly.
There is once saving grace for Turkish. About half the airline is owned by the government. So, as long as Erdogan sees fit to continue to push Turkish as a fast-growing airline, he can do it. And he can fund it. If Turkish needs to be a profitable business, however, that’s going to be a real challenge.
The bigger threat is if either a change in strategy or change in leadership in Turkey leads to a different strategy for Turkish Airlines. In a volatile situation like this, you just don’t know what could happen. This isn’t an issue for other fast growing airlines (Emirates, Etihad, Qatar) in the region today.
Here in the US, we take it for granted that we have a stable government. That’s not the case everywhere, and things look more precarious in Turkey than they have for some time. You can only feel sorry for those at Turkish Airlines who can do nothing but watch this unfold.