It is almost impossible to catch Temel Kotil without a smile. Walking into a room full of journalists at the headquarters of Turkish Airlines in Istanbul, the CEO warmly greets everyone before he begins an energetic and passionate presentation about the phenomenal growth of his company.

Established in 1933 with a fleet of only five aircraft, Turkey’s national airline today boasts 212 planes – passenger and cargo – that fly to 219 destinations around the world. A number, which Kotil hopes, will reach 250 by the end of this year.

“Our target is to have the strongest network in the world, with more destinations than anybody else,” he emphatically states.

But that is just one step towards his main goal: “From my first day as the CEO of Turkish Airlines, my vision was to make it the best airline in the world in all respects,” he tells Gulf Business.

And the ambitious CEO is not ambiguous about it: “We hope to achieve that objective by 2023, which is the centenary of our Republic that was founded in 1923.”

It is undoubtedly not an easy goal to achieve, considering rising oil prices, a sluggish European economy and, very importantly, mounting competition.

But Kotil is unfazed by these issues. “We are competing against ourselves, not others. If we offer cheaper and better services to passengers, they will choose us.”

Looking at figures, it would be hard to dispute the carrier’s popularity.

Along with increasing its fleet and the destinations, Turkish Airlines, a member of the global Star Alliance, has also seen its passenger numbers, and, crucially, revenues, grow.

The airline carried 39 million passengers in 2012, a 20 per cent rise compared to 2011. It further aims to boost annual passengers numbers to 46 million this year and 90 million by 2020, while also upping flight services to 2,000 per day from around 1,000 per day currently.

“We can do much more, but we are smart, and with my heart and mind telling me to stop there, we will stop at 90 million passengers per year,” he says.

NUMBER CRUNCH

The company recently announced an extraordinary jump in 2012 net profit to reach 1.13 billion TL ($632 million), up from 19 million TL ($11 million) in 2011. Sales revenues increased by 26 per cent to 14.9 billion TL, while operating profit shot up by a whopping 192 per cent to 1.04 billion TL.

Turkish Airlines added 32 new routes in 2012, with available seat kilometre rising 18 per cent and revenue per kilometre increasing 26 per cent year-on-year.

Kotil hopes to earn an estimated $9.74 billion in revenue this year and proudly adds that the airline has posted consecutive profit in the last 10 years.

“Our growth objective is to strengthen seat numbers and fleet, while cutting our costs. We have kept our costs unchanged over the last few years and they are much lower than the competition. For one, our labour costs are not high, and we also make use of the latest technology to improve efficiency,” he says.

In its 2013 forecast released in March, the International Air Transport Association (IATA) estimated the global airline industry to post a combined net profit of $10.6 billion this year, up from $8.4 billion in December.

“Stronger revenues are the main reason for this upgrade, due mostly to higher air travel volumes and a return to (modest) growth in air freight, but also because yields are no longer expected to fall,” stated the report.

However, the association also forecasts operating costs to rise by $9-10 billion, mainly due to higher crude oil and jet fuel prices.

“We now expect the fuel bill to rise to $216 billion this year, which represents 33 per cent of operating costs,” it said.

According to Kotil, labour costs currently account for around 21 per cent of THY’s total costs, new aircraft for nine per cent, food costs amount to five per cent, and the biggest chunk, accounting for 40 per cent of expenditure, is fuel.

But in his characteristic way of dismissing challenges, he says they are equipped to counter rising fuel prices.

“We are preparing our strategies to address the fuel price-rise concerns and our plans take into consideration the worst-case scenario.

“Optimising costs and resources is our way of life at Turkish Airlines – wasting is against our culture. The economies of scale that we work on will be more operative thanks to our new aircrafts, as our production costs will decrease.

“We will not face any problem as we will always follow this strategy,” he states.

BUILDING UP CAPACITY

Turkish Airlines has been on an aircraft spending spree of late, most recently placing an order for 95 Boeing aircraft, including 70 firm orders worth $6.9 billion at list prices. The order also incorporates an option to buy a further 25 aircraft from the US manufacturer between 2016-2021.

The committed orders comprise 40 B737 MAX 8s, 10 B737 MAX 9s and 20 B737-800 aircraft, with an option for an additional 25 B737 MAX 8s.

The announcement came less than a month after Turkish Airlines announced that it had placed an order for 117 Airbus narrow body aircraft, including 82 firm orders worth $9.3 billion at list prices. The order covers 25 A321, four A320 NEO, 53 A321 NEO and options for 35 additional A321 NEO to be delivered by 2015.

“I am glad to inform you that we have also already ordered 20 Boeing 777 and 20 Airbus A330,” the CEO reveals to Gulf Business.

However, the carrier is still mulling the use of wide-body next-generation aircraft such as the Airbus A380 or the Boeing 787 Dreamliner, confirms Kotil.

“We are still conducting an evaluation study and we will be able to make our final decision on the order of that type of aircraft only after the study is concluded.

“But such an order will not be placed in the near future,” he adds.

Along with strengthening its technical aspects and growing its fleet, the CEO has also been investing substantial portions of time and money in promoting his company.

Turkish Airlines plans to spend up to $120 million on advertising this year to boost its presence across the world.

“We started our advertising spend with $5 million in 2005 and have increased the amount since then,” says Kotil.

It is obvious where the money has gone.

In December last year, the airline released an advert featuring two of the world’s most prominent (and among the most expensive) sport stars – football player Lionel Messi and NBA basketball star Kobe Bryant. The two sports stars vie for the attention of a young boy, who is finally drawn to the ice cream offered on the carrier.

The advert, which ends with the tagline ‘The Best Fly With Europe’s Best Airline’, went viral on YouTube and has played out extensively in TV stations worldwide.

“We focus on strengthening passenger satisfaction and our growth benefits from the unique geographic location of Istanbul,” explains Kotil.

LOCATION, LOCATION

The Turkish capital city, located strategically in the centre of Europe and Asia, has been emerging as a business and leisure hub in recent times.

Over 838,2000 tourists visited Istanbul in the first three months of the year, according to the Istanbul Cultural and Tourism Directorate, representing a 23.8 per cent increase in numbers compared to the same period last year.

The city’s picturesque attractions drew 9.5 million visitors in 2012, 16 per cent higher than 2011, and helped it rank as the third most visited city in Europe after London and Paris, and the fifth most visited city in the world last year.

This year, authorities hope that visitor numbers will exceed 10 million.

To cater to the rising number of visitors, Turkey has announced plans to construct a new $9.3 billion airport near the Black Sea coast in central Istanbul, which will have the capacity to handle 150 million passengers when completed.

“The city is an intercontinental bridge and a well-known transfer point. The construction of a new airport will significantly benefit the aviation sector and is in line with our strategy to develop Turkish Airlines as the best in the world by 2023,” tells Kotil.

But it’s not just Istanbul’s location that is geographically ideal; Emirates, Etihad and Qatar Airways are all aiming to create transit hubs for globetrotters in Dubai, Abu Dhabi and Doha respectively.

CLASH OF THE TITANS?

With each of these cities vying for the same crowd, is a battle of the skies looming?

Kotil predictably answers in the negative. “As Turkish Airlines, we love our passengers, but we also love the competition. We believe that our major competitors are helping us succeed, as they motivate us.

“Besides, we also have commercial cooperation agreements with some of the major airlines that are perceived as competition. So, no, there is no brutal competition between GCC airlines and us.

“Also, I believe that Dubai, Doha and Istanbul will be able to co-exist as three major international hubs for transiting passengers. Each of the cities has its own features and importance in the region – their prominence depends on trade and tourism supported by the airline companies in the Middle East.

“Any increase in the capacity supply will create its own demand for these hub cities in the region. Therefore neither cannabilisation nor a clash is expected; these cities are not competitors and can work together to benefit the entire region,” he firmly states.

For the zealous Kotil, succeeding entails three key elements: positive thinking, zero laziness and zero bad intentions.

“As the CEO of Turkish Airlines, I love my business, I love my team and I love my passengers. We consider that our passengers, even the babies on board, are our bosses.

“We have to do our best to satisfy all their needs and make them forget that they are flying in the air.”