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MURAT YETKİN > Turkish Airlines and Lufthansa, still allies?

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Turkish Airlines (THY) has objected to a decision from Germany’s Lufthansa taken in a Dec. 12 Vienna board meeting of Star Alliance, which both companies are members of, THY sources confirmed yesterday. A spokesman for THY told the Hürriyet Daily News that they thought what Lufthansa was trying to do was "not fair" and not in harmony with the alliance’s “spirit of cooperation.”

The THY reaction comes after a recent statement by Lufthansa that it plans to end the current codesharing agreement by the end of March 2014, and to reduce the frequent flyer miles accumulation of Turkish passengers on Lufthansa services to 25 percent. Lufthansa say the agreement with THY is no longer profitable for them.

Such a plan would have a deterrent effect on all Star Alliance passengers using Turkish Airlines, despite the CEO of THY, Hamdi Topçu, stating that his company does not think it will be affected very much." Topcu says their objection is "a matter of principles." Star Alliance is one of the three big airline clubs in the world, which link their resources, routes and capabilities with each other in order to compete better. The other two are SkyTeam and OneWorld. 

But why on earth would Lufthansa, one of the best known airlines in the world, think its interests are put in jeopardy by its partner Turkish Airlines?

The answer lies in the aggressive growth of THY over the past 10 years. The company has increased its turnover from $1.5 billion in 2003 to $14 billion in 2013, its number of planes from 61 to 233, its number of destinations from 101 to 244 (as of yesterday, thanks to a new route to Chad). It is now the world’s number one in terms of direct flights to the most destinations. From Istanbul, where it is based, the frequency of flights to those destinations has increased too. Every day there are three flights to New York, five to Moscow, and eight to London.

”When we opened our route to Houston, people teased us” Topçu said. “But as soon as the second flight was added, we were fully booked. Now it is our best business class flight. All Texans travelling to the Middle East fly with us, since our service quality is superior to many airlines in the world and our ticket prices are competitive.”

From Istanbul, New York is a 10 hour flight west. The same time east is Beijing, and the same time south is Cape Town. To have direct flights to almost everywhere from Istanbul was a major factor in the decisions of some international companies to move their regional offices to the city. This led to special deals with THY, including a number of German companies.

The unique geographical location of Istanbul caused THY to restructure its flights, and to focus on long range destinations and buy bigger planes in 2010. Then problems started to surface with Europe’s traditional airlines. As long as THY was busy only with regional flights and was leaving long range flights to its elder sisters in Europe, such as British Airways or Air France, there was no direct competition. But when German passengers started to fly with THY to, for example, Hong Kong or Tokyo, and spend the flyer miles they collected from Turkish Airlines on domestic Lufthansa flights; and with THY now having direct flights to 12 German cities (planned to go up to 17 next year); and with 30 percent cheaper ticket prices on average, things started to turn sour for the German carrier. 

The row is not only about miles, ticket prices and market shares. The European Union took special precautions in order not to let some national airlines be sold to companies of non-EU states. THY's plans to buy Polish Airlines was stopped after that. The attempts of the Portuguese to sell their national carrier to Turkish Airlines also failed because of that legislative barrier. 

Will the problem be solved in a future Vienna board meeting of the Star Alliance? Perhaps it won't be so easy. The Lufthansa-THY row is an example showing that the competition in air travel today is nothing less than political competition too.

December/13/2013

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Suhail Shafi

12/18/2013 4:02:48 AM

Turkey's successes are making Europeans shake in their boots, starting with the airlines. Go Turkey, go !

Soap box

12/13/2013 2:27:47 PM

@kibrisli: don't forget the other adjective: cheap. That will bring the corporations in. Stuff democracy and workers rights...who needs those?

american american

12/13/2013 12:23:26 PM

i wonder what turkey would do if i and a group of my friends started buying mercedes and bmws in germany, drove them to turkey, and sold them tax free?

kibrisli TURK

12/13/2013 11:37:06 AM

Poor Nyobb & others still failing to realize that Big Corporations, not Democracies rule the world...& ofcourse as Dogan Kemal has put it, Turkey alone could possibly bring down these major powers due to its willing & competent labour markets, unlike those of Greece, Italy etc...this & being Muslim is enough for EU to keep Turkey at bay & the best way is through desperate & willing sewer rats like Greece & Greek Cyprus...!

nyob nyobb

12/13/2013 9:43:32 AM

@Dogan If you read this piece properly, you can see THY is allowed to fly from any German ( and EU airport ) and can / does compete very well. There are still plenty of, non economic, reasons why Turkey can not join the EU, Gezi being just one of them.

K M

12/13/2013 3:53:56 AM

Well, of course it is. Look how much influence the government has over THY.

dogan kemal ileri

12/13/2013 1:13:17 AM

It was a largely held view that it would be a mistake for Turkiye to join the EU as its feeble businesses would not be able to compete with the EU and it would probably be annihilated. But the Turkish business community argued quite the opposite.in that it would be the EU that would be hard pushed to compete with Turkiye. The competition between Lufthansa and THY is a case in point and a good example. This is the real reason Germany, France, ets are so against full membership of the EU for Turk

euro person

12/13/2013 12:50:06 AM

This is only speculation, we will have to wait until Recep Tayyip Erdoğan tells us the truth about Lufthansa's decision.
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