2003 Annual Report - Turkish Airlines

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Initiatives to Lower Expenses/Call CenterThe Call Center reorganized and redesigned accordingto changing economic conditions is now able to offer agreater variety of services, capacity and quality. To offerits customers better service, Turkish Airlines moved its stafffrom other branches to the Call Center. It has closeddown Call Centers in Izmir and Ankara and redirecting itsstaff to the Call Center in Istanbul in an effort tostandardize services. The explanations menu (444 0 THY- 444 0 849) has been simplified, working conditions forthe Call Center staff have been improved and investmentshave been made for state-of-the-art technology. TheCenter’s capacity was upgraded from 40 trunks to 45trunks as of July 8, 2003. In order to support the CallCenters assigned to existing offices both in the US andEngland, Turkish Airlines has redirected calls originatingin these countries to the Istanbul Center.Based on initial results after the application of theaforementioned changes, the number of answered callshas doubled even as the number of incoming calls hasincreased.Effective Crisis ManagementThe airline industry was shaken by crises in 2003. Thewar in Iraq, so close to Turkey and the SARS epidemic,originating in the Far East that subsequeutly became aglobal crisis, had negative effects on all airlines duringthe first half of the year. Turkish Airlines took precautionsto minimize the damage as it anticipated what couldhappen worst and exercised effective crisis managementtechniques. During the war in Iraq, Turkish Airlinescancelled flights to many destinations in the Middle East,avoiding empty flights and minimizing loss. In that period,848 international and 1,850 domestic flights wereterminated. Similarly, flights on the routes most intenselyaffected by SARS were also cancelled; between April 16and June 30, 2003 Hong Kong flights stopped andbetween May 14 and July 15 the Beijing/Shanghaiflights did not take place.During the ensuing crisis period caused by the Iraq warand SARS epidemic, Turkish Airlines implemented aproactive strategy by canceling flights on low-incomeroutes and channeling the existing capacity to routes witha higher rate of return. This strategy was structured attimes by employing temporary flight cancellations andadding extra flights or by increasing or decreasingfrequency; at other times the strategy was to reorganizethe schedule according to customer demand. As a result,on routes where an expansion capacity was employed,there was an average increase of 50% in income perlanding with respect to the previous routes on which thementioned capacity was used; the unit income value22
As part of the Regional Aviation Project, we beganscheduling flights between cities with high passengerpotential in addition to flights to or from Istanbul andAnkara.A Stronger Network StructureGlobal competition in the airline industry continues to bemore and more challenging. It has led Turkish Airlines tobecome a global network carrier within the world marketserving passengers on an international level rather thansimply an airline that limits itself to the local market. In thisrespect, the Corporation has come a long way in pursuitof its goal to ‘provide a bridge between the Turkiccountries, the Balkans, Near East and Far East, Americaand Europe.’ Turkish Airlines’ schedule has beenrevamped to provide more connections between thesegeographical regions and to establish Istanbul as animportant international hub.when the effects of the crises had dissipated, TurkishAirlines’ efforts paid off and the total transit passengerrate increased by 2.1%.As part of the Regional Aviation Project, Turkish Airlinesbegan scheduling flights between cities with highpassenger potential and flights to or from Istanbul andAnkara. October 2, 2003, scheduled flights with twofrequencies in a week on the Izmir-Adana route started,serving passengers who previously flew via Ankara orIstanbul.Despite all efforts, unfavorable developments during thefirst six months of 2003, i.e. the war in Iraq in theMiddle East and the SARS epidemic in the Far East,prevented an increase in the number of transit passengersduring that time. In the next six-month period however,23
Page 1 and 2: T o w a r d n e w h o r i z o n sAn
Page 3 and 4: Turkish Airlines’ Mission Stateme
Page 5 and 6: Board of Directors(as of December 3
Page 7 and 8: The fact that the United States was
Page 9 and 10: Financial FiguresProfit/Loss (TL mi
Page 11: 1994-2003 Revenue Passengers1994-20
Page 14 and 15: By the end of the year, the number
Page 16 and 17: In 2003, a total of 10.4 million pa
Page 18 and 19: While scheduled domestic flightcapa
Page 20 and 21: In an effort to meet cargo demands
Page 23: We have continued to add newdestina
Page 29 and 30: HUMAN RESOURCES1999-2003 Developmen
Page 32 and 33: 30Among the services accessible via
Page 34 and 35: Miles&Miles members who purchased t
Page 36 and 37: INFORMATION TECHNOLOGYPROJECTSProje
Page 38 and 39: CAPITAL REVIEWTurkish Airlines adop
Page 40 and 41: FOREIGN CURRENCY TRANSACTIONS(ACCOR
Page 42 and 43: TURKISH AIRLINES INC.DETAILED BALAN
Page 48 and 49: TURKISH AIRLINES INC.FINANCIAL STAT
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Page 52 and 53: TURKISH AIRLINES INC.BALANCE SHEETS
Page 54 and 55: TURKISH AIRLINES INC.STATEMENTS OF
Page 56 and 57: TURKISH AIRLINES INC.STATEMENTS OF
Page 58 and 59: TURKISH AIRLINES INC.NOTES TO THE F
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TURKISH AIRLINES INC.NOTES TO THE F
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TURKISH AIRLINES INC.NOTES TO THE F
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TERMS AND ABBREVIATIONSAvailable Se
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ASIAAlmatyAmmanAshkhabadBahrainBang
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Our FleetA340-300Number of Aircraft
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2003 Annual Report - Turkish Airlines

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