Iraqi Airways is often criticised for neglect and mismanagement, and for the continued decline in its performance and services. It has become synonymous with failure to meet deadlines and constant delays and the cancellation of flights without warning, all to the detriment of its passengers. These and other matters prompted a call by the European Commission for Aviation Safety for a ban on the entry of Iraqi aircraft into European airspace because of fears over navigational safety standards. Hence, the return of the “green wings” to their erstwhile prestigious position requires us to explore what happened to their counterparts in other countries and how they overcame their problems, and in the process achieving significant improvements. This article will consider the Turkish Airlines experience as an example of this improvement.
Anyone who has been following the trends in the success of Turkish Airlines over the past 12 years, must know how the airline suffered from failure and mismanagement in the past. While Turkish Airlines owned 65 aircraft in 2003, of which 11 were unfit for aviation, the number of aircraft reached 328 by the end of 2017,s with scheduled flights to 302 destinations.
As with Iraqi Airways, Turkish flights were limited to close neighbouring countries as a result of the lack of financial and technical means to commission long-haul flights to some of the major international capitals.
How did Turkish Airlines evolve?
Coinciding with government change in 2003, a new executive board of Turkish Airlines was created in the same year, partly in response to the numerous complaints made against the old one. Following a year of concerted effort, the company purchased 61 new aircraft, to add to its existing fleet of 54 operational aircraft. By the end of 2015, the company’s fleet had grown to 299 aircraft with scheduled flights to 284 destinations worldwide.
According to the company’s website, its income was about $1 billion in 2003, rising to $10 billion by 2015. The total number of passengers Turkish Airlines carried, on both domestic and international routes, increased from 10 million passengers in 2003 to approximately 61 million passengers in 2015. Correspondingly, the number of Turkish Airlines employees increased from 10,000 in 2003 to 44,000 by the end of 2015.
Turkish Airlines was founded in 1933 as a wholly state-owned and funded company. However, after the government embarked on its privatisation programme of the public sector in the 1980s, Turkish Airlines was privatised in the 1990s. Several years after privatization, the government’s share in the company amounted to 49%, with the remaining shares being offered to the private sector.
Thanks to the incentives to boost productivity and increase capital, the government organised an IPO (initial public offering) in 1990 with 1.83% of the company’s shares being offered to the public. However, the reputation of Turkish Airlines remained very poor before and after the 1990s. The company also suffered from numerous problems, such as mismanagement, persistent delays in flights, poor services, kidnappings and poor maintenance which resulted in a number of fatal incidents.
In 2003, the AKP (the Justice and Development Party) government came to power and accelerated the privatisation of Turkish Airlines. Subsequently, two SPOs (Secondary Public Offerings) were held in 2004 and 2006, with the share of the government’s ownership in Turkish Airlines falling below 75% and 50% respectively. As a result of this privatisation process, the company ceased to be a state enterprise by May 2006 with further pushes for efficiency and productivity being among the main drivers for change.
Since 2003, the Turkish government has embarked on a series of “tough” aviation reforms, with the aim of expanding Turkish Airlines, including the deregulation of the domestic market and improving Turkish Airlines’ international competitiveness.
Coinciding with the arrival of the Justice and Development government in 2003, a new executive board of Turkish Airlines was created in the same year, which took major steps to open up new routes and improve the network, renew the outdated fleet with newer and more efficient aircraft.
It is worthwhile mentioning that the number of international civil aviation agreements signed between Turkey and foreign governments rose from 81 in 2003 to 143 by 2012, helping Turkey expand its international network.
Turkish Airlines established subsidiary companies and formed partnerships with various stakeholders to support its operations. Its subsidiaries include maintenance and overhaul centres; technical service centres, engine centres, fuel centres, catering companies, passenger and ground services centres and aircraft taxiing. These subsidiaries have helped the airline enhance the quality of service through specialisation.
Furthermore, Turkish Airlines has managed to make these subsidiaries viable and cost-effective, with fuel and labour costs accounting for the bulk of operating costs of airlines.
Over the past 15 years, the cost of fuel has become a particularly important part of operational costs. The price of jet kerosene has risen from $50 per barrel in 2004 to $126 per barrel in 2013; dropping down to $83 by the end of 2017. The use of efficient aircraft has symbolised the efforts by Turkish Airlines in its bid to reduce fuel costs. While the average age of an aircraft was 9 years in 2004, it dropped to 6.7 years by 2013 and to about 5 years in 2017.
In 2006, the company removed from its fleet all its less efficient aircraft to be replaced by the more fuel-efficient Airbus A319-100s. As a result, the average fuel consumption decreased by approximately 10% from 2005 to 2010. The company launched a joint venture with Turkey’s leading oil company, OPET, to provide storage and refuelling services.
Some believe that there is an urgent need to privatise Iraqi Airways in a way similar to the Turkish one. Iraqi civil aviation needs some “tough” measures, represented by privatisation; and the creation of a new administration to preside over and implement successful policies based on profit and loss.
Successive transport ministries have failed to take proper control of Iraqi Airways, despite significant expenditure and the implementation of various programmes and policies. This is due in large part to the overlapping policies and conflict of interests of successive coalition governments. Unfortunately, this also means that the quality of Iraqi Airways’ services will remain unsatisfactory, unless it is privatised and placed beyond the reach of warring coalition Governments.
Iraq’s strategic location
Returning to the Turkish model, it is worth mentioning that most Turkish flights do not exceed four hours between Turkey and Europe; or Turkey and the Middle East and North Africa; or Turkey and Central Asia, enabling the Airline to exploit Istanbul’s geographical location to achieve high volumes of trips against reasonable fuel costs
The Turkish government has pursued a successful policy of revitalizing tourism, drawing on Istanbul’s historical heritage, as well as the establishment of large tourist resorts on coastal cities. The Ministry of Tourism has facilitated the commercialization of holiday destinations in Turkey, benefiting from the low cost offers of Turkish Airlines.
Here, it is necessary to mention Iraq’s historical legacy both in Islamic and pre-Islamic terms. In ways similar to Istanbul, it is also possible to take advantage of Iraq’s geographical location, to turn Baghdad Airport into one of the largest aviation hubs in the Middle East for flights between East and West.
In order to transform Baghdad airport into a global intercontinental hub, a fuel complex at the airport is needed to provide jet fuel for the various airlines. This operation will not succeed unless an internationally renowned company takes charge of the design and management of the fuel complex at Baghdad airport.
When compared to Dubai airport in the United Arab Emirates, one of the busiest airports in the world in terms of international flights, we find that it meets demand and handles a capacity in excess of two billion gallons per annum – according to data from the Emirates National Oil Company. In order to meet this demand, the Emirates government has facilitated supplies through the Jebel Ali Refinery.
The privatisation of Iraqi Airways will result in the provision of far better facilities for travellers, from public transport services, taxis, information and help desks; to financial services such as foreign exchange desks and ATMs in airport buildings; restaurants, duty free, a medical centre and a shopping mall. Other facilities will also be needed, such as a 24-hour pharmacy, first-aid clinic, spaces for child care and toys, hair salons, travel agencies, as well as first-class hotels.
Labour at Iraqi Airways
Labour is the second biggest operating cost item for many airlines. Turkish airlines recorded 17% of total operating costs in 2013, which is low compared to the range of aviation services provided by the majority of international airlines.
Compared with Emirates, which also enjoys the advantage of low labour costs due to their proximity and access to cheap labour markets such as India, Pakistan, Sri Lanka and Bangladesh to perform tasks such as ground handling services, maintenance and call centres. Meanwhile, European airlines operate according to European Union regulations which demand high salaries and are backed by strong unions. The conjunction of low labour costs and Istanbul’s strategic location, has enabled Turkish Airlines to realise large profits.
Istanbul, Turkish Airlines’ main base with a huge population, is the source of low-cost labour; and with a lower cost of living compared to most European cities, and the lack of a strong union to protect workers’ rights, has made it possible for Turkish Airlines to make huge profits.
Iraqi Airways will not succeed unless the government follows new successful policies. First and foremost, the government needs to privatise the airline and appoint professional management, free from political interference, and then establish subsidiaries to support Iraqi Airways with its operations, making reliance on low-cost labour.