Kotil: A study in success

Dr Temil Kotil has the air of an academic. He walks into his office in the Turkish Airlines management headquarters in Istanbul with copies of graphs in hand and the demeanour of a university lecturer as he presents them.

And that is not surprising.

For until just eight years ago, the dusty halls of academia were where Dr Kotil served.

Born in 1959, he graduated from the aeronautical engineering department at Istanbul Technical University (ITU) in 1983 and received a Ph.D. from the University of Michigan in 1991. After founding and managing the aviation and advanced composite laboratories of ITU, he also served as chair and associate dean of faculty of aeronautics and astronautics engineering.

“Many of the senior managers in Turkish Airlines I have known for years,” he laughed. “Most of them were my students.”

Kotil was back in the US in 2001 as a guest professor at the University of Illinois and was committed to creating a bridge between the legacy of knowledge in the United States and the thirst for technical knowledge among his aerospace engineering hopefuls in Istanbul.

And that whole bridge concept works with Kotil today as he strives to create a role for the Turkish national carrier to act as a bridge for the world.

In 2003 he was asked to leave his university role for a post within the emerging Turkish Technik; two years later he became the chief executive of the airline. At the time he pledged to take the privatised Turkish Airlines into the world’s elite – many would say he has achieved it but Kotil still has ambitions.

“There are only a handful of true five-star airlines in the world. We are close to it.  Quality is a mind-set and we are working this right the way through the organisation,” he said.

“Our opportunity is again by being a bridge as 66 per cent of the world’s transfer passengers cross through Turkey – from Africa or Europe to Central Asia, from across the Atlantic to the Middle East or Asia. Everything goes across Turkey.”

This is nothing new. Like many Turks, Kotil has a fascination with the Silk Routes –important trade paths for goods of all kinds between merchants, pilgrims, missionaries, soldiers, nomads and urban dwellers from ancient China, ancient India, ancient Tibet, the Persian Empire, Arabia and the Mediterranean countries. The Silk Routes operated for almost 3,000 years and got the name from the lucrative Chinese silk trade, which began during the Han Dynasty several millennia ago.

“Whichever of the Silk Roads you took, you passed through Turkey,” Kotil said.

“We build our corporate philosophy on the same rules as the merchants who worked those caravans. They would sell to themselves, to the other merchants and families that were travelling with them. The quality had to be right. The prices had to be right. The trader had to have flexibility. And that is what we are trying to do now. We have 16,000 employees and they have to believe in what we are selling.”

The quality improvements brought about by Kotil and his team is already making a dramatic effect on the Turkish figures. Skytrax rated the company as providing the best food in economy, backing Kotil’s assertion that the airline is focusing on all of its passengers and not just the premium ones.

This year it has introduced its premium economy ‘comfort’ class to attract the growing number of business people drawn to Turkish for it convenience as the bridge between the different continents.

Africa is high on the agenda for Kotil. “We love Africa,” he said. “The problem at the moment is not enough passengers but the numbers are growing. We have ordered new Boeing 737-900s, which we will use to open new thin routes into Africa.”

The aircraft will arrive in the autumn and will connect African cities with Europe, Central Asia and across the Atlantic and to China.

“We are the gateway and offer greater convenience than the Gulf airports. Look, if you are travelling from Europe you are less than three hours, and then you are on a comfortable long-haul flight. We want to see Istanbul as a major hub. And that’s where the quality comes in. We want the customer to feel good from the moment of check-in. We need to sell the tickets to ourselves like on the Silk Road by knowing how good the product is. I fly on our aircraft and fly economy sometimes. We need to know how it works. We need our staff to think the passengers could be theirs or their colleagues’ wives, mothers, brothers friends. That is the philosophy of selling the product to ourselves.”

Kotil backs his belief that Turkish Airlines still has space to grow into one of the world’s top airlines with an overview of his country’s economy and the airline’s recent results. Turkey’s GDP is growing at a rate of 5.2 per cent (2010 figures) compared with 4.5 per cent across the MENA region and 1 per cent in Europe.

The airline is one of the fastest growing with Revenue passenger kilometres ( RPKs) up by 12.47 per cent compared with a global average of 3.81 per cent. It is now the sixth most profit generating airline in the world and ranks 28^th in the world in terms of operating income. It is eighth in terms of destinations and 22^nd for number of passengers carried.

“We look closely at these figures to see what we can do,” said Kotil. “We are buying new, more fuel-efficient aircraft and introducing technology and practices that add to our social responsibilities.”

The fleet renewal is key to Kotil’s strategy. “We are financing 90 additional aircraft through international funding with the banks. We have no real debt other than asset base, so we are strong.”

The plan is that the airline will have 200 aircraft in its fleet by 2015 (currently 164) consisting of 24 A330/A340 and 12 Boeing 777s, 159 narrow-bodies with 95 of the Boeing 737 family and 71 of the Airbus A319/320/321 family. The average age of the fleet is 6.5 years, making in the youngest fleet in Europe and matching those of its Middle East competitors.

Kotil is ready to take on the detractors who claim that the Turkish government’s 49 per cent stake in the airline adds to government support.

“When I took over in 2005 the government guaranteed our borrowings but as we were going private we cleared the guarantees and, since 2006, we have had nothing from the Turkish government. We are 100 per cent financed by the airline operation and not the government,” he said.

“After restructuring we have $2bn in cash. That’s enough for the down-payment for our fleet plans and with that it is easier to finance aircraft at very favourable rates. We are a strong company with cash.”

At the same time as increasing its revenues, Turkish has worked at controlling its cost. “We started cost cutting in 2002 and our staff are conscious of this. It works,” he said.

Kotil recognises the impact of the low-cost carriers like Pegasus and even easyJet, as well as Turkish’s own product, Anadolujet, which operates from Ankara.

“We have seen Turkey’s domestic growth go from five million to 15 million. That has been good for Turkish Airlines as well.”

Turkish is pushing its brand image. In May the two football teams it sponsors – Barcelona and Manchester United – met in the European Champions League final (the Manchester players appear in Turkish’s safety videos). 

Americans are impressed that Kobe Bryant, star of the Los Angeles Lakers basketball team, became a global brand ambassador to add weight to Turkish expansion in the USA. As well as sponsoring the European basketball league, Turkish made a major step across a political minefield by also signing a sponsorship agreement with Greek basketball club Maroussi.

“The emphasis is shifting and we have to work to make Istanbul, and Turkey, the great hub,” Kotil said. “The government has stopped the need for applying for visas in advance. We have made it easy to be a hub. Istanbul is a great tourist spot and we have created some Istanbul tours for passengers who have a lay-over for connecting flights.”

As you would expect from an academic, the planning and the strategies are sound. The difference with Kotil and his airline is that he is steadily turning theory into practice.