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AIRLINE TRANSPORTATION
Prepared byFunda KAYMAKSeçkin YENİELYiğit KOCAGÖZOĞLU
INTRODUCTION
newly developing sector in Turkey has important role in economies has many advantages such as security and
transportation of inputs and outputs efficienly and rapidly
has a positive effect on development of many important sectors such as tourism
Number & Size Distribution of Firms and Barriers to Entry
regulations prohibite private sector to fly in the same line with THY. The schedules which the firm can fly was decided by government
Today, in the market, there are 16 firms, 5 of them are Turkish associated and 11 of them are charters.
Name of The FirmTotal Plane
NumberCapacity of
SeatsCargo Capacity
(tone)Number of Passenger
Planes Number of Cargo
Planes
THY A.O. 84 13807 38000 83 1
Onur Hava Taş.A.Ş. 26 6227 - 26 -
Atlasjet Uluslararası Havacılık 17 3000 - 17 -
Pegasus Hava Taş.A.Ş. 14 2608 - 14 -
MNG Havayolları Taş. A.Ş. 27 2447 354341 13 14
Fly Havayolları A.Ş. 10 2338 - 10 -
Sunexpress Havayolları A.Ş. 10 1917 - 10 -
Kıbrıs Türk Havayolları Ltd.Şti. 7 1414 - 7 -
Sky Hava Taş. A.Ş. 5 863 - 5 -
Saga Hava Taş.A.Ş. 3 703 - 3 -
Inter Express Hava Taş. A.Ş. 5 702 - 5 -
Freebird Havayolları Taş. Tic A.Ş. 3 534 - 3 -
Dünyaya Bakış Hava Taş. 3 495 - 3 -
Turistik Hava Taş. A.Ş. 2 296 - 2 -
Kuzu Havayolları Taş. A.Ş. 3 - 131500 - 3
ACT Havayolları A.Ş. 1 - 42000 - 1
Total 220 37351 565841 201 19
the distribution of firms as number of seats and capacity of passenger
PRODUCT DIFFERANTION
the distance between seats. young planes different timetabling no price-cutting for cancelling or
changing the flight date
Diversification giving technical licence education to other
firms staff widen their service to other areas
Vertical Integration some firms are educating people and employ them in their firm. so they can be more effective in their operations. decrease their transaction costs.
Vertical Integration
some firms are educating people and employ them in their firm.
so they can be more effective in their operations.
decrease their transaction costs.
Business objectives &
pricing policies This is a newly developing industry So firms’ main aim is growth instead of
making profit. By growth they can increase their market
share In order to growth, their aim is to maximize
sales revenue.
Business objectives&
pricing policies changing market structure monopoly to oligopoly a price fighting has began prices fall down and the consumer’s interest increases
in airline transportation as the number of firm has increased, the number of
buyer has also increased. firms determine their pricing policy according to this
growth policy they are applying some promotions they are decreasing prices as possible as they do
Changing in Total Pasenger Number
0
10.000.000
20.000.000
30.000.000
40.000.000
50.000.000
60.000.000
1994 1996 1998 2000 2002 2004 2006
Domestic Routes
International Routes
Total
Product design and branding firms’ most important aim is to be first in their sector,
so they differantiate their products, apply some promotions and try to increase their growth
In airline transportation sector, branding is a bit difficult in respect to other sectors
airline transportation is a luxurious service as average individual income level is not very high
firms decrease prices and targeting middle class customers.
Most of this target customer has not fly before firms’ purpose is creating new brand loyalty over them
Advertising and marketing
Advertising is one of the main weapons of competition between firms
In order to branding and increasing market demand firms have to advertise their product
But in oligopolistic market, instead of non-price competition such as advertising and marketing, firms choose price competition
So they reflect advertising expenditure to price discount
but this oligolistic market is so new as the firms, thus firms need to introduce company name and their
service
Research and development In airline transportation sector is based on service
quality of service technology of planes
research and development activities mainly consist training the staff. They give education to their staff about security and technical service. Thus, by this way they increase the service quality.
research and development activities mainly consist training the staff.
they give education to their staff about security and technical service.
thus, by this way they increase the service quality.
Collusion
This sector is a very new sector as an oligopolistic market .
So firms are not in a collusion about • prices,• output levels, • advertising, • research and development.
moreover there is no constitution or any cooperation to create collusion.
we certainly say that firms act individually.
Merger
conglomerate merger private firms merge with tourism sector firms also it decreases the cost of tourism services and
increase the number of passengers vertical merger firms server in different stages of process make
merger
• Havaş and Atlasjet
Profitability
Firms have to make a certain amount profit in order to provide growth of the firm
Otherwise they could not continue to their growth The one of most important factor that affects the profitability is
increasing in fuel prices. The other one is that raising the value of YTL Although these negative effects of economy, firms’ costomer-
oriented policy, competition and price policy have earned more profit to the company’s.
government have reduced taxes increasing in demand by developing Turkish economy supported firms’ growth policy this is reflected to the firms’ profits.
Growth
We examine firms’ growth by observing number of seats, planes and flight number.
Capacity of Seats
PEGASUS HAVA TAŞIMACILIK A.Ş.7%
MNG HAVAYOLLARI TAŞIMACILIK A.Ş.
7%
FLY HAVAYOLLARI A,Ş.6%
SUNEXPRESS HAVAYOLLARI A.Ş.5%
ATLASJET ULUSLARARASI HAVACILIK A.Ş.
8%
THY A.O.37%
ONUR HAVA TAŞIMACILIK A.Ş.17%
T HY A.O.
ONUR HAVA T AŞIMACILIK A.Ş.
AT LASJET ULUSLARARASI HAVACILIK A.Ş.
PEGASUS HAVA T AŞIMACILIK A.Ş.
MNG HAVAYOLLARI T AŞIMACILIK A.Ş.
FLY HAVAYOLLARI A,Ş.
SUNEXPRESS HAVAYOLLARI A.Ş.
KIBRIS T ÜRK HAVAYOLLARI LT D.ŞT İ
SKY HAVA T AŞIMACILIĞI A.Ş.
SAGA HAVA T AŞIMACILIĞI A.Ş.
INT ER EKSPRES HAVA T AŞ. A.Ş.
FREEBIRD HAVAYOLU T AŞ. ve T İC. A.Ş.
DÜNYAYA BAKIŞ HAVA T AŞIMACILIĞI A.Ş.
T URİST İK HAVA T AŞIMACILIK A.Ş.
Growth
Nowadays firms try to increase their transport capacity so they can reach more customers. For example, Atlasjet will buy 9 planes and THY bought 5 new planes and also they have an agreement to buy 59 planes in 2006.
NUMBER OF PASSENGER
0
5.000.000
10.000.000
15.000.000
20.000.000
25.000.000
30.000.000
35.000.000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*
DOMESTIC
INTERNATIONAL
NUMBER OF FLIGHTS
0
50.000
100.000
150.000
200.000
250.000
300.000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*
DOMESTIC
INTERNATIONAL
QUANTITY OF CARGO
0
100.000
200.000
300.000
400.000
500.000
600.000
700.000
800.000
900.000
1.000.000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
DOMESTIC
INTERNATIONAL
Quality of Service
the first quality measurement is consumer satisfaction
technology, service rendered while flying, security precautions and at the right time flights
•Genel Müdür•Accountable
Manager
•Uçuş İşletme Müdürü
•Yer İşletme Müdürü
•Teknik Müdür
•Kalite Müdürü
•Eğitim Müdürü •Ticaret Müdürü
•Finansman Müdürü
•This scheme is sample scheme for the firms that published by Ministary of Transportaion and every firm have to have this kind of organization scheme
Technical progress
Technical progress is one of the most important variable in order to protect and increase their market share and continuing their activities
For that reasons firms try to obey general standards and get some certificates that have international validity
firms have to renew themselves and their services continuously.
In airline transportation sector, firms make daily and weekly checks of their planes for security.
Besides, firms give some educations about any unfortunate incidents that arise from any technical problem for their staff.
Productive efficiency
When the market is monopoly there was no competition, so there was insufficient effort for cost minimizing.
After 2003 a price war has begun between firms and it made firms more competitor.
the most effective weapon in this war is cost minimizing.
moreover, there is no collusion between firms. It also make this war heavier than it used to be. this market is productive efficiency
Allocative Efficiency In recent years we observed that the customer
population of the firms has been changing. Today this population includes the middle class
consumers. The main reason of this change is the price wars and
government policy. Due to fall in prices its more attractive to use airline
than the other alternatives. The explanation of the Minister of Transportation can
summarize the story “we make real, the fantasy of traveling by planes” So this market has allocative efficiency.
GOVERNMENT POLICIES Government applies encouragement policy over
airline transportation. Up to 2003 government policies was a difficulty for
sector to develop After 2003 government’s view has changed
reversely and allow private sector to enter the market easily.
Approximately 5 months ago, government was taking nearly the half of ticket price under the name of lump-sum taxes, consumption tax and like this.
Ministary of Transportation have reduced private comsumption tax(ÖTV) and contrubution for education tax (EKP) that is taken by consumer
GOVERNMENT POLICIES In addition, government does not apply a price floor
policy for this sector in order to create better competition ambiance
Nowadays government is preparing to put a new obligation to firms about the age of planes.
Between six months and one year, every firm in this sector have to change their 12year-old planes.
In general, planes in Turkey are 25-30-year old and it is said that a bit difficult to apply for newly entered firms to this sector.
Also there are some regulations in European Union harmonization progress.
One of these are penalty for the firm’s delayed flights.
CONCLUSION In other countries airports are managed by private
firms the help of this application, air zones, airport capacity and runway can be used more efficiently and more productive.
This is called slot application and has just began to apply in Turkey.
92% of total passengers are intense in only 8 airports. By new investments this intensity must be broaden to other airports.
It must be evaluated this developing sector’s investment possibilities by direct or indirect investments.
New airports must be founded and with other airports, they must be specialized.
CONCLUSION
There must be international partnerships between tourism agentas and this can be a positive effect on both sectors.
there must be some airline service companies such as ticketing firms, catering firms and security firms
Government must have a seperate institution by specialized staff and they put in order arrangements. Besides, THY must make private by the way competition would be more equitable
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