anna.aero meets with Pegasus Airlines’ Sales VP, Emre Pekesen, at World Travel Market to discuss the carrier’s future growth
During a visit to this year’s World Travel Market in London on 3 November, anna.aero’s Assistant Editor, Jonathan Ford, took a moment to meet up with Pegasus Airlines’ Sales VP, Emre Pekesen. While speaking to anna.aero, Pekesen mentioned how Istanbul is starting to see strains in its capacity. The result is that 2016 and 2017 could potentially be difficult years for growth for Turkish carriers until extra capacity becomes available, which will be when the new airport opens in the city during 2018. One other key area of discussion was the development of the carrier’s route network in the coming years with its fleet renewal programme, and what Pekesen thinks of Turkish Airlines’ growth in Africa and why Pegasus Airlines is struggling to compete in that market.
anna.aero: “So we have recently seen that Pegasus Airlines has just passed the 100 destinations milestone. Now that you have surpassed this figure, where is next for Pegasus to serve?”
Emre Pekesen: “We will be looking to add 5-6 new destinations from Istanbul next year. Most European trunk routes like Istanbul to London, Paris and Frankfurt are now covered. We have just applied to the Turkish Aviation Authorities to start services to Sochi in Russia which we would like to see starting in January/February of 2016. We would also like to introduce services to Manchester from our Sabiha Gökçen hub in time for the start of next year’s summer season.”
aa: “So there you have mentioned a handful of destinations that you are hoping to serve next year. Are we likely to see additional capacity on existing routes as well?”
EP: “We believe that there is always room to grow. What we would like to do as an airline is enhance our product to help suite business traveller needs. Currently we are seeing twice-daily flights into London and Paris for example. We would like to see this increased to four or five times daily on these types of city pairs from Istanbul to make the Pegasus product more appealing to business as well as leisure passengers.”
aa: “What makes Pegasus quite an interesting model in respect to other low-cost carriers in the European market is giving passengers connectivity options through the airline’s Sabiha Gökçen base. What is the current percentage of passenger traffic that connects?”
EP: “I’m glad you asked that question because as an airline we do feel that this differentiates us from other low-cost carriers although other ones are starting to develop this model. At present the percentage of traffic that we are seeing connect is approximately 28%, but this is increasing year-on-year and shows no signs of stopping. In relation to our unique model as well is that we are developing a hub and spoke system at our Sabiha Gökçen hub, going against the conventional point-to-point network. We however do focus of course on point-to-point traffic as well, especially with our other bases at Antalya, Adana and Izmir. What also makes us a ‘non-traditional’ low-cost airline is that we also distribute tickets through GDS systems. Now, as I have already said we are going to be adding around 5-6 routes from Istanbul next year, but this is not just because we want to serve them point-to-point, but also to offer passengers more options. Each new route that we open helps to further contribute to our current services. This means although we will be opening a route to Ordu-Giresun next week, loads on that route may not start off at full capacity, but they will help to grow load factors on other routes due to our hub connectivity.”
aa: “Of course one of the biggest threats to Pegasus Airlines is Turkish Airlines. In a recent interview, Dr Temel Kotil, Turkish Airlines’ General Manager and CEO announced the importance of his carrier’s growth in Africa. What is the response of Pegasus Airlines to this and will we see growth from Pegasus in that region?”
EP: “Unfortunately the one thing that holds us back in relation to Africa is the bilateral agreements between Turkey and African nations. We as an airline are always looking at bilateral agreements to serve new markets, but of course it is a very slow process and it could take months if not years to be able to get access to markets we do not yet serve. However, it is of course not just down to bi-lateral agreements. Istanbul is now becoming a congested city in relation to aviation, meaning Sabiha Gökçen and Atatürk as well are not allowing airlines slots into Istanbul. One thing that is important for Turkish Aviation as a whole is being able to increase this capacity in order for us to grow further. That’s why it is important for Istanbul to get this new airport in time as otherwise Istanbul’s growth could become very troubled in relation to competition markets.”
aa: “So there you have mentioned Istanbul’s New Airport which is scheduled to be in operation by 2018 and you have also mentioned that growth in the meantime will be tough for Turkish carriers. In relation to the new airport, how will Pegasus Airlines’ operations be distributed when the new airport opens?”
EP: “Sabiha Gökçen has been and always will be our home base, therefore when the new airport opens Pegasus will not discontinue flights from there. What we also need to think about is that the new airport is in a completely different part of Istanbul which will also mean a new catchment area. We will be there at the new airport as with our aircraft order we cannot base them all at just one facility, so it will be a positive to have a dual hub strategy in Istanbul. What the route distribution will be at the moment I cannot tell you. What we also need to consider is our fleet expansion. Fundamentally the main goal with the introduction of the A320neo into the Pegasus fleet is to keep the fleet age low, but with our older aircraft we would like to keep some of them as the additional capacity will help us to grow into new markets once Istanbul’s additional capacity becomes available. We will also of course use our new fleet in new markets as well.”
aa: So you have mentioned that Pegasus will soon be taking delivery of next generation A320s. With this allowing Pegasus to extend its range in relation to the destinations that it can serve, where is the next big step for Pegasus internationally when these aircraft arrive?
EP: “With this new Airbus fleet it most certainly does extend our range in comparison to our current Boeing 737s. Again in relation to new markets there is of course the bilateral issues we will face. One area that is of considerable interest to us is India and being able to offer European passengers a low-cost fare to reach India. Of course at this time the bilateral agreements and country relationships that Turkey has with other nations are becoming more liberal year-on-year, so by the time additional capacity arrives with the freeing up of space in Istanbul, the timings will be just right in order for us to potentially open routes to India in around 2018. What we will also be able to do possibly with the new fleet is extend our range in Russia and Africa. What makes this fleet perfect for Pegasus is that a majority of the world’s population will be reachable from Istanbul using this aircraft. Geographically, Istanbul is a perfect location for this type of low-cost hub.”
aa: “So there you have mentioned Russia, which at the moment is having a tough relationship with the rest of Europe, especially the EU. With Turkey not being part of the EU, could this mean that Istanbul would be a great hub for connecting passengers between Russia and the rest of Europe?”
EP: “Last month in Antalya there was a civil aviation discussion between Turkey and Russia. Nothing came about from this and the agreement discussion has now been delayed until May of next year. Of course Turkey as well has bilateral agreements with Russia and this is close to its maximum capacity so it would be tough to grow significantly in Russia until there has been an update to this agreement. We do envisage that we could be a good option for passengers travelling between the two markets currently with what is happening in the external environment but one place where we would not be the best option is for Moscow. Moscow is very close to Europe already and is very well connected with many major European cities. So mainly for this type of strategy to work at the moment it would be to rural parts of Russia wanting to connect to the rest of Europe.”
aa: “So we have looked at fleet renewal and developing low-cost links between potentially India and Europe. Has Pegasus ever considered enhancing its operations to incorporating wide-body aircraft to gain access to more distant markets?”
EP: “Over the past year or so the low-cost long-haul model has become very strong and is proving to be strong in competition against full-service carriers and the head-to-head competition in long-haul has developed vastly. Istanbul is in the middle of Europe, Africa and the Middle East meaning short-haul aircraft can reach the routes we want to serve no problem. While we still see room to grow in these markets there is no need currently for Pegasus to consider adopting wide-body aircraft. But never say never.”
aa: “Another big area for growth at the moment is the Turkish domestic market. Why is this? And how is Pegasus Airlines expanding domestically?
EP: “Currently the Turkish economy and GDP are growing at a very healthy and sustainable rate which is fantastic for us. In Turkey at the moment a majority of cities are connected by bus which can take nearly 24 hours or more for people to go between cities. Within Turkey we have developed a more enhanced point-to-point network. Recently our domestic strategy was all about connecting east to west but now we are also connecting north to south Turkey. Domestic connection growth is one of our leading markets at the moment within Turkey and we are still continuing to see this. With this economic growth as well we are also starting to see the possibilities of adding more European point-to-point routes becoming options from regional Turkey. For instance we now offer a year-round service between Ankara and Vienna for instance. We do offer some seasonal point-to-point routes at the moment but with the way the economy is going they could become year-round operations. What we need to be careful of with our current fleet is that if we do strengthen this part of our network, it could mean we lose opportunities to grow further at Sabiha Gökçen if new slots become available.”