Turkish Airlines profits in Africa, where others fear to fly
When Turkish Airlines (THYAO.IS) opened a direct daily route to a war-ravaged African failed state plagued by Islamist militants, industry insiders were skeptical.
“Somalia is one of our most profitable destinations worldwide,” Mustafa Ozkahraman, Kenya country manager for Turkish Airlines, told Reuters in an interview. “Because we are the only (international airline). The first and the only one.”
The Istanbul-based carrier is replicating the move across Africa, expanding to destinations shunned by others. The move comes as political unrest at home last year pushed the airline into the red for the first time in 17 years.
In 2011, Turkish Airlines flew to 14 African cities. By the end of this year, it will operate 52 routes from Istanbul across Africa, after launching a route to Freetown, the capital of Sierra Leone.
From January to June, just under a tenth of total passenger and cargo revenues came from Africa, according to results for the first half of 2017 that showed a net loss of $434 million.
Rival Emirates has less than 30 routes. Last year, the Dubai-based airline cut one African flight and reduced the frequency of several others.
It cited weak economic conditions in Africa, where many countries dependent on revenues from commodities exports have seen economic growth fall below population growth.
But Turkish Airlines, which is 49 percent state-owned, is bullish on Africa, a continent of 1 billion people.
Ozkahraman denied the growing ties between Ankara and many African states drove the airline’s strategy.
“A lot of people would think our flights to Somalia were not business-related,” he said. “(But) we do the feasibility and we have to believe the route will be profitable, either now or imminently.”
He declined to give a specific breakdown on profits for African flights, but said routes like the daily flight on a wide-body jet from the Nigerian city of Lagos were critical to the airline’s bottom line.
Despite challenges like poor security or electricity cuts at some airports, such flights feed passengers into Turkish Airline’s hub, making routes like Istanbul to London profitable.
“You have to have those destinations to make your hub busy and your profitable destinations more profitable,” he said.
Last year the company posted a net loss for the first time since 2000, after a demand slump caused by political turmoil and militant attacks at home. Ozkahraman said some of the shortfall was also due to new planes - 210 have been ordered, he said.
Load factors - a measure of how full planes are - are over 70 percent on many African routes, just below the airline’s global average of 80 percent, he added.
The wide network means that, unlike Ethiopian Airlines, Turkish does not partner with smaller African carriers notorious for poor service.
It opened a business class lounge in Nairobi’s airport in July 2016, its second international lounge after Moscow. British Airlines and Emirates began renting the Nairobi lounge for their business class travelers earlier this year, Ozkahraman said.