Introduction
The airline industry is affected by numerous factors, and it is under drastic conditions of the pandemic now. The recovery process of the greatest actors in the field seems to continue for an uncertain period. It might be assumed that the analysis of the strategic management of the industry’s leaders is relevant. Turkish Airlines is among them, and the below discussion will be dedicated to this organisation. The purpose of the paper is to evaluate the sustainability, suitability, acceptability and feasibility of the company’s current strategy through the lens of a complex SWOT analysis.
Internal Strategic Objectives
Value Chain Analysis
The value chain of Turkish Airlines may be considered as a significant system of intersected and interconnected elements. It involves a number of the firm’s suppliers and distribution channels (Tardi, 2020). In particular, primary activities include the following; first, the organisation has several activities that can be viewed as inbound logistics (Tarver, 2021). For example, the government of the country has built a new significant airport – Istanbul International Airport – that has six runaways and tends to serve about 200 million passengers annually (Horton, 2020; Caglayan, 2019). “Istanbul Airport will be a milestone for Turkey’s aviation industry… More than just a transport hub, the airport is designed as a smart complex equipped with cutting-edge technology” (Cummins, 2020, para. 18). This is a crucial resource that contributes to smooth and consistent inbound logistics.
What is more, Turkish airlines emphasises the importance of managing yields and aspires to diminish the dependence on supplies. Istanbul International Airport, which is mostly owned by Turkish Airlines, provides the organisation with competitive advantages over local and global rivals. This is mostly due to the fact that it possesses exclusive rights to utilise the major part of the facilities there.
Turkish Airlines tends to operate on its own in several fields to advance its understanding of client needs. The corporation develops a solid web-founded service provision with the purpose of satisfying customers in terms of fast and effective self-services in a number of instances. In particular, many tasks were automatised in order to allow these self-services (Olmsted, 2018). The latter ones involve check-in, service desk, the handle of baggage, etc. However, it should be noted that the work of the personnel should not be abandoned here, and the staff should always be available when they are needed. Recently, this trend has been negatively noted by the company’s clients.
It seems reasonable to say that in terms of outbound logistics, Turkish Airlines creates its value through its partnerships and subsidiaries. Specifically, Sun Express, Air Albania, We Word Express, and Turkish Airlines International Investment and Transportation are great examples of interconnected web in this vein (CFI, no date; Ant and Ozsoy, 2021). The fleet is able to service a plethora of destinations for cargo aside from those in the organisation’s network.
The company uses its reputation to develop a good impression among its actual and potential customers to ensure that it provides safe, swift, and comfortable services. Numerous advertising campaigns are transmitted globally via local, regional and international TV and Internet channels. Throughout every city that it tends to serve, Turkish Airlines has focused on continuous and successful marketing strategies. These include huge advertising billboards, mass-media appearances, and other approaches such as cooperation with Card Explorer (Kasturi et al., 2016; Luthi, 2021). Moreover, it considers safety measures essential, and the company is not impacted by considerable incidents very often. It should also be noted that Turkish Airlines has the sponsorship of prime athletic and sports entities.
Services are another important aspect of the primary activities of Turkish Airlines. It should be noted that meal, seat and overall flight quality have been viewed positively by the customers. However, according to a number of sources, the company has some issues with cleanliness in washrooms and cabins. This is an aspect that should be enhanced, given its importance in terms of sustainability (Zheng, 2019). Then, there have been some negative reviews of the organisation’s staff presentation, which includes rude communication, insignificant responding to requests, and even grooming. Personnel is a face of a company, and it is vital to avoid the listed problems.
At this point, support activities are to be presented; the first one is firm infrastructure. The main issues are resolved at the meeting of shareholders. A number of departments are involved in the forecasting and planning system. Their powers include the duties of spying on competing firms, providing information on the latest innovations, planned bills, financial changes on exchanges, suppliers, identifying errors with their subsequent elimination (Kickham, 2021). One of the merits of the company is its picky attitude to any inconsistencies. Every omission, hindrance and flaw are immediately fully checked by the Service Quality Improvement Department.
Human resource management is among the crucial aspects on which Turkish Airlines has been making an emphasis over the years. Since its foundation, the firm has been offering its personnel rewards, as well as recognising their achievements through the lens of the reward and incentives system (Kickham, 2021). The primary purpose here is to maintain staff motivation enhancing their performance. Moreover, the employees are lured by the accommodation and transport programs.
Within the scope of technology development, Turkish Airlines has a research centre and engineering department that tend to enhance the technological advancement of the organisation. What is more, the company has in-flight and scheduling systems that follow the current global technological standards. Finally, the corporation’s procurement includes catering service, fuel handling, and stock control. Food quality is an important indicator here, and, as mentioned above, Turkish Airlines has some issues in this regard, according to the customers.
Thus, it would be rational to claim that the company’s strengths in the internal framework involve developed and stable inbound and outbound logistics, which, particularly, include the significant airport and system of partnerships and subsidiaries related to cargo affairs (Beers, 2021). Then, no issues have been identified in terms of firm infrastructure, marketing, and technologies. However, crucial weaknesses seem to be cleanliness and staff presentation, which are to be enhanced.
External Strategic Objectives
Competitive Analysis
The presence of a large number of companies in the industry provides high competition and also prevents new players from entering the market. In addition, it is difficult to enter the market by the need for significant investments due to aircraft chartering and maintenance costs, flight technical support, the attraction of consumers, etc. (Turkish Airlines, 2020). Passenger air transportation is a licensed activity; high requirements are imposed on aircraft and flight personnel, airlines undergo annual technical checks. Taking into account the analysis of new airlines, the development of regional flights can be noted, but the barriers to entry are still significant (Hall, 2020). There is high price competition in the market; this is due to the same type of assortment of basic and additional services.
Turkish Airlines sells air tickets to individuals, as well as conclude charter agreements with tour operators for the implementation of charter flights. The propensity of consumers to switch to substitute products in the air transportation market is quite high due to a large number of competitors and arises in the case of air tickets at a lower price. In addition, some Turkish Airlines customers are dissatisfied with minor characteristics of the goods, such as flight delays, the rude attitude of onboard personnel, quality of onboard food, etc. However, customer purchasing power cannot be characterised high due to the fact that the demand for air travel does not show a rapidly decreasing trend and – beyond the pressing conditions of the pandemic – it is quite stable (Figure 1; Figure 2; Table 1). Therefore, it might be assumed that this force should be considered moderate.
Table 1. Total traffic figures.
Industry Analysis
It is important to show in what partnership the company is involved within the industry’s scope. “In June of 2006, the board of directors of TK decided to participate in the Star Alliance, which is a global airline alliance, and its official membership was accepted in 2008” (Mandal and Vong, 2016, p. 71). The organisation integrated its support branch (Turkish Technic), offering its services to the other actors in the region. Then, Turkish Airlines “and the catering company Do&Co established the Turkish Do&Co with a 50-50 % partnership, and the catering quality was significantly increased with this cooperation” (Mandal and Vong, 2016, p. 71).
The most important point here is that the company has many benefits from such partnerships. Particularly, “while Turkish Airlines has over 100 direct flight destinations abroad, it has achieved an opportunity to fly its passengers to more than 1000 destinations with the Star Alliance cooperation” (Mandal and Vong, 2016, p. 71). Still, customer perceptions and ratings give Turkish Airlines only three stars.
Market Analysis
Aviation transport is currently one of the most important sectors of the world economy, the technical and service achievements of which make it a highly effective tool for the development of modern society. The direct annual economic effect from the activities of the world civil air fleet is more than 700 billion US dollars. It should be noted that the next 20 years can be characterised as a period of significant structural changes for the air passenger market. Traditional leaders – Europe and North America, showing moderate growth, will gradually lose their share of the world market.
Today, civil aviation carries more than three and a half billion passengers during the year and provides one-third of interregional cargo exports. The global commercial aviation fleet currently numbers over 26,000 aircraft. About 1,400 regular air routes have been mastered. The annual growth of passenger traffic in recent years has been 6-7%. More than 50% of tourists travel by air, taking into account the factor of time and in connection with direct economic benefits (Turkish Airlines, 2020). Despite the growing cross-sectoral competition in the cargo transportation market, the civil air fleet continues to dynamically develop in this direction. This circumstance is facilitated by the emergence of new forms of doing business, in particular the so-called. “E-commerce”, the global volume of which reaches 1.5 trillion US dollars. Giant online stores are actively stimulating air travel by leasing dozens of cargo planes as contractual carriers. Overall, two-thirds of the world’s postal items are delivered by air. The significant drop in aviation fuel prices affected the economic performance of airlines.
Thus, the ever-increasing demand for various types of air transport has led to the creation of a new generation of integrated air transport systems that are flexible and cost-effective. When building a promising transport system, solving the problem of achieving maximum mobility in airspace becomes one of the main opportunities in terms of the further development of the industry. New airspace configuration requires improved aircraft design with advanced capabilities in-flight technical and operational characteristics, capable of flying along complex trajectories in conditions of heavy air traffic.
The Middle East and Latin America are likely to significantly outpace North America and Europe in terms of passenger turnover growth, but a relatively small population (in relation to the Middle East region) and significantly more modest indicators of total GDP will contribute to maintaining a significant distance in relation to the leading regions (Anadolu Agency, 2016). For the Middle East, an additional risk factor may be the persistence of low oil prices, which makes it necessary to exercise caution when considering the prospects for its socio-economic development.
Political and Socio-Cultural Forces
In general, the political situation in the country is favourable for the development of Turkish Airlines. The approved governmental programs will have a positive effect on the airline since their implementation requires increased attention to the quality of air transportation services in general. It seems appropriate to note, “The government of Turkey has significantly invested in its aviation sector, from limited sponsorship of its state carrier Turkish Airlines to building airports and funding aircraft research” (Cummins, 2020, para. 9). Such great conditions contribute to the company’s development to a great extent.
However, given the mentioned governmental support, Turkish Airlines tends to become a political sword sometimes, which hinders its smooth operations and harms its reputation. For example, there was a conflict between the United States and Turkey due to the detention of the American Pastor, which made the US administration to impose sanctions (Goldman and Harris, 2018). Then, the re-election of Erdogan with practically authoritarian powers forces Turkish Airlines to strictly follow governmental dictates (Gall, 2021). Currently, there is a ban from serving alcohol during flights and oppositional newspapers. This does not seem to lure a significant degree of customers.
Social protection and benefits are of great importance for the population – social packages, pension payments and vacation pay are very important. The company provides one of the broadest offers in this vein (Turkish Airlines, 2020). Further, the modern attitude towards education and the professional growth of educational institutions have a positive effect on the industry and on the organisation in particular. However, a number of bombings and bloodshed that have taken place across Turkey have resulted in speculations regarding safety measures in the country (Pallini, 2021). People are afraid of these factors, which is likely to reduce client inflows. Thus, macro opportunities would be the enhancement of support from the government, the current social package, and an emphasis on luring employees with a great educational background. The crucial threats here are over-dependence on the country’s administration directives and the presence of violence within Turkey.
Strategic Position Analysis
In the framework of suitability, the current strategy can be viewed as quite satisfactory, given that the organisation demonstrate significant profits, even under pandemic conditions (relatively). However, the identified weakness of cleanliness does not fit the current necessity of keeping facilities completely disinfected. Hence, it is important to address this gap appropriately and promptly.
Despite the fact that the Skytrax platform rates the organisation as a three-star airline (Skytrax, 2021), there are no major incidents that would harm the company’s reputation drastically. There is a stable customer inflow, and the current strategic approach, generally, seems acceptable. Nevertheless, the biggest macro threat that was mentioned is the over-dependence on the governmental sector (Akman and Anaz, 2017). The latter’s support significantly contributes to the strategy’s feasibility, but the corporation’s reputation suffers a lot.
Due to the latter condition, clients perceive the company mostly as a political tool rather than a great airline. Hence, it is essential to reorganise the organisation’s share structure in order to reduce the mentioned over-dependence. Finally, Turkish Airlines demonstrates a great approach in terms of its corporate social responsibility and ecology. The only aspect that prevents one from considering the current strategy completely sustainable is, again, the issue of cleanliness of cabins and washrooms. Thus, there are clear pieces of evidence that allow claiming that Turkish Airlines’ strategy is appropriate from the perspectives of suitability, acceptability, feasibility, and sustainability. However, cleanliness and the over-dependence on the county’s administration are problems that should be addressed.
Conclusion
The above report utilised the crucial theoretical frameworks – such as Porter’s forces and value chain – in order to analyse the current strategy of Turkish Airlines. The discussion on the internal and external operating environment was provided, with defined strengths, weaknesses, micro and macro opportunities and threats. It was found that the actual strategic approach – to an exact extent – can be considered suitable, acceptable, feasible and sustainable. The most pressing issues for the organisation are the cleanliness of cabins and washrooms, as well as the over-dependence on the governmental sector.
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