A Consolidated Fleet

Turkey

Economic News

22 Jul 2010
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Turkey's aviation analysts pricked up their ears this week following the announcement by Pegasus Airlines that partnership negotiations with Onur Air - a no-frills competitor - were continuing and should be completed within one month.



The two carriers are currently in the process of discussing the prospect of a commercial partnership, a share sale and buy-out options, which could pose a challenge to national carrier Turkish Airlines (THY).



"According to our calculations, if such a deal goes through then we will be a firm which would have a volume equal to THY's volume three years ago," Ali Sabanci, the CEO of Pegasus Airlines, told the press. "Turkey does not have an EasyJet. However we are close. We want to be EasyJet when we grow.''



Onur Air recently told the press that it was not for sale to Pegasus Airlines, but is clearly open to forging a deal with an ever-strengthening player in the aviation industry. However, some aviation analysts speculate that an acquisition of Onur by Sabanci Holding's Pegasus is currently being negotiated.



Based in Istanbul's Sabiha Gökçen Airport, Pegasus Air flies to 16 domestic and 16 international destinations. Compared to the beginning of 2006 when it had 200 flights per week, today's figure is close to 500 per week. While Turkey's aviation industry grew by 36% since the beginning of the year, Pegasus Air registered a growth of 64%.



With its 18 aircraft - of which three are reserved for Izair flights to and from Izmir - Pegasus Airlines holds 13% of the domestic market. The carrier aims to net 3.2m passengers in 2007, having carried 4.1m passengers between November 2005 and October 2007. Although in the red last year, Pegasus Airlines is expecting to register a profit in 2007 and has placed an order for another 18 aircraft over the next three years.



With its 27 planes, Onur Air is now aiming to buy 2 long-haul aircraft in a joint project with Saudi Arabia Airlines, as confirmed by Onur Air's General Manager Sahabettin Bolukcu earlier this year. The airline is looking to begin flights between China and Turkey.



There is no understating the significance of a business partnership between Onur and Pegasus. Unofficial aviation sources say that Onur Air registered around 4.4m passengers for domestic flights and 2.3m in international flights in 2006. Pegasus Airlines by comparison carried around 1.8m passengers for domestic routes and 1.24m for international flights.



This is not to detract from THY's own achievements of late, having increased its number of passengers by 16.6% year-on-year between January and August 2007 to hit 13m, according to ISI Intellinews. For 2006, the number of passengers flying with THY rose by 19.4% year-on-year to hit 17m, while the number of its flights rose by 21.1% year-on-year. The national carrier now has its sights set on 20m passengers for 2007. Yet, THY is likely to feel some heat in Turkey when Onur and Pegasus Air finally hook up and push aggressively forward with development plans.

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