Türkiye Is Investing In Becoming The Next Hot Market

Hartsfield-Jackson Atlanta International (ATL) is the world’s busiest airport, handling 104 million passengers annually. However, Istanbul Grand Airport (IST) aims to claim this mantle, with the creation of a 200 million passenger hub and fueled by the rapid growth of Türkiye’s airlines.

This may sound like wishful ambition, but IST already has more direct routes than any other airport in Europe, up from fifth place in 2019. The timing of that shift is no coincidence. In April 2019, all of Istanbul Atatürk’s (ISL) scheduled passenger flights were transferred to IST’s brand-new facilities. By 2023, the new airport was handing 76 million passengers, making it the second-busiest airport in Europe after London Heathrow (LHR), and the second busiest in the Middle East after Dubai (DBX). Globally, it ranked seventh in passenger numbers, marking a rapid climb from 28th place in 2019.

IST CEO Selahattin Bilgen told ATW that the airport is aiming for the world’s “top spot,” in terms of passenger numbers. This will involve further network development in under-penetrated markets like North America, Asia-Pacific and the Far East. This year, IST is on track to hit 85 million passengers, against its current 90 million capacity.

“We are currently continuing our investments under phase two, where we will increase the terminal capacity from 90 million to 120 million passengers, and also add one more main runway and one more ancillary runway,” he said. “The terminal capacity expansion will most probably kick in during the coming year.”

The airport already has three main and two auxiliary runways, but IST wants to be the world’s first airport to operate five parallel independent runways by 2040, giving it capacity to handle around 150 million passengers a year.

“We will be the second airport in the world, after Atlanta, with quadruple [parallel independent runway] operations and we will not stop there. Then we will go to quintuple—we’ll have five parallel independent operations,” IST chief planning officer Ismail Polat told delegates at ACI Europe in Istanbul.

The main customer for those runways will be Turkish Airlines, which ordered 220 Airbus aircraft (150 A321neos and 70 A350s) in December 2023 and is negotiating a 225-aircraft deal with Boeing for 150 737 MAXs and 75 787s.

“Engines are the issue,” Turkish Airlines chairman Ahmet Bolat told a media roundtable in July. “I think we’re close.”

As of August 2024, Turkish Airlines operated 458 aircraft, with plans to grow to 813 aircraft by 2033. This would position the Star Alliance member as the third-largest operator worldwide. However, required inspections on Turkish’s Pratt & Whitney GTF-powered aircraft are expected to ground around 45 of the airline’s A320neo-family aircraft by the end of 2024. Despite these challenges, Bolat is still anticipating 10% growth.

This past summer, Turkish served 349 destinations, and the network is expected to grow to 400 destinations by 2033. In August, Turkish named 25 cities that it plans to serve, including eight European destinations, four in the Americas, nine in the Middle East/Africa, two in Asia-Pacific, and two domestic destinations.

Bolat has detailed plans to increase the company’s footprint in Latin America, with potential new routes to Brazil, Chile and Peru. Building on the launch of Turkish’s first Australian route to Melbourne in March 2024, Bolat is considering extra Melbourne frequencies, or a new route to Sydney, with a decision anticipated by year-end. North America is another target market for Turkish, which launched Denver as its 14th US route in July. Orlando is now under evaluation as its next US destination.

As of the second quarter of 2024, Turkish’s capacity was 38% higher than pre-pandemic levels, even with the aircraft delivery delays and groundings.

OTHER TURKISH CARRIERS

Turkish Airlines subsidiary AJet is also growing rapidly and targeting a 90% new technology A320neo and 737 MAX fleet by 2027, up from 30% today.

AJet, which replaced its predecessor AnadoluJet in April, operates a fleet of 95 aircraft, comprising a mix of A320s, A320neos, A321s, A321neos, 737-800s and 737-8s. Like Turkish, AJet has ambitious growth plans. The LCC plans to expand its fleet to 200 aircraft within the next 10 years.

However, AJet’s main base is Istanbul’s second airport, Sabiha Gökçen (SAW), on the Asian side of the city. Unlike the spacious IST, SAW is congested, leading to an average of 20% of AJet’s flights being delayed. The existing terminal hit 38 million passengers last year, close to its maximum capacity of 40 million. A second runway opened in late 2023 and a second terminal is planned for summer 2027.

Turkish LCC Pegasus Airlines, which was founded in 1990, also has a large presence at SAW. Pegasus Airlines chairman Mehmet Nane said punctuality had improved since the new runway came online, but operations remain constrained. “There’s no major improvement. It (the new runway) is a lifesaver, but major improvement will come with the second terminal,” he said.

Like the other Turkish carriers, Pegasus is expanding its fleet to keep pace with market growth. Pegasus has 10 737-800s, six A320s, 46 A320neos and 44 A321neos, and the LCC placed an order for 36 more A321neos in July 2023.

Pegasus Airlines CEO Güliz Öztürk is expecting to receive 16 aircraft in 2024, taking the fleet to 118, with a total of 64 A321neos scheduled to arrive by the end of 2029. She intends to decide on future narrowbody orders “in the near future,” securing delivery slots for 2029 onwards.

The carrier had been planning to become an all-Airbus operator from 2025, but Pegasus is hanging on to its 10 737-800s for the time being. “We need to keep up,” Öztürk said. Like other carriers, Pegasus has been impacted by Airbus delivery delays, impacting its financial results and route planning. For the time being, Öztürk said, delays of a few weeks are “manageable,” but still an issue.

Pegasus has grown its network to 138 destinations in 53 countries, including 35 in Türkiye. “We have to expand our fleet if we are to meet our growth aspirations,” Öztürk told ATW in June. “There are 67 countries and 50 destinations we can add into our network within the six-hour range. There’s still potential for significant growth.” Recent Pegasus route additions include Bratislava, Edinburgh and Lisbon, as well as Ankara-Dublin.

BEYOND ISTANBUL

Shifting the focus away from Istanbul, construction work is also underway at Antalya Airport (AYT), which was nearing maximum capacity before the pandemic.

“We are reaching close to 40 million passengers in 2023, and the capacity will be doubled to handle up to 80 million passengers over a few phases over the next 25 years,” AYT general manager Gudrun Teloeken said. This will see the airport grow from 200,000 sq m to 400,000 sq m, with the number of aircraft stands increasing from under 100 to 180.

The new facilities will be fully operational in 2025. “This capacity addition is coming at exactly the right time, given the growth plans of the airlines,” Teloeken said.

Like the other carriers, AYT-headquartered SunExpress is expanding quickly. The Lufthansa and Turkish Airlines JV airline was formed in 1989 and serves 200 routes to 68 destinations in 35 countries. In summer 2023, SunExpress flew 50 737s but that increased to 71 aircraft (59 737-800s and 12 MAX 8s) plus four wet-leases this summer, with plans to reach 150 aircraft by 2033.

SunExpress is taking MAX 8s from a 32-aircraft order placed in 2014 and 10 options firmed in 2019. And at the Dubai Air Show in November 2023, SunExpress placed a follow-on order for another 45 737s (28 MAX 8s and 17 MAX 10s) with five options and 40 purchase rights. These orders and commitments put SunExpress on track to fly 166 aircraft by 2035, when the second order is scheduled to be completed.

In the future, SunExpress CEO Max Kownatzki said the airline may consider moving to a dual fleet, including both Airbus and Boeing aircraft. “At some point, the dependency is so big and it’s a matter of risk diversification,” he said, placing the tipping point at around 150 aircraft. Kownatzki accepts that this will bring operational complexity and additional costs. However, at a certain fleet size, he said a duopoly is “worth paying for.”

“We’ve grown a 10-12% every year, despite a military coup in 2016 and an earthquake last year. Türkiye is an absolute rebound country, with average growth rates in the last 35 years of 10-12% every year,” Kownatzki said.

With this kind of resilience, strong infrastructure investment and rapid bounce-back following the pandemic, Türkiye is a market to watch.

“Türkiye is a very good example of the importance of location, location, location,” IST chief planning officer Ismail Polat said. “That growth just didn’t happen all of a sudden in 2019 or 2023. The seed was already sown quite a long time ago.”