Barış Karaoğlan Ali Sabancı İş Dünyası Pegasus Havayolları 5

You come from a finance background, then you go and buy an airline company and an aircraft fleet, and you get into aviation. I remember from our previous conversation that you really enjoy doing this. Now, Barış, I could tell stories, I could say, 'I had such a vision that despite my finance background, I saw an opportunity in aviation and pursued it.' That would make a good story, but I don't need to tell it, because then I'd have to remember which story I told last time. Let me tell the truth: I've always said this. The aviation story has a history of about 12-13 years within Şevket Sabancı's vision. At Sabancı Holding, we looked at these matters a few times. When Turkish Airlines' privatization was on the agenda, we looked at it a few times, you know. But at that time, different, more urgent issues were on Sabancı Holding's agenda. When we looked at this sector from a distance back then, we saw a picture: there was a dominant Turkish Airlines and a few small players, and those small players kept going bankrupt, emerging, going bankrupt, emerging, changing names. So we thought this was not good and kept our distance. Now, what has changed from then to now? The same people, on a different platform—Esas Holding's platform—decided to invest in Pegaus Airlines or an airline. A few things changed. First, we had the opportunity to look at it closely. When we looked closely, we saw that those companies that kept going bankrupt still exist, but there's a reason for that. Because, outside of Turkish Airlines, there was no airline making medium- and long-term plans until recently—let me not be rude, but I can't say there wasn't. Until recently, there was no airline making medium- and long-term plans. Why? Because there was no capital. This is a business that is very easy to enter, but requires investment to continue. If you're thinking medium- and long-term, then yes. So now we see that there is potential. In Turkey, about 15 million of the 180 million journeys are made by plane. You know the question, 'Have you ever been on a plane?' When was the last time someone asked you, 'Have you ever been on a bus?' or 'Have you ever been in a taxi?' or 'Have you ever ridden a horse or a donkey?' There's no such question. Because you said in our conversation inside that this is a status symbol. Now, what changed from then to now? Also, civil aviation in Turkey was liberalized, starting with domestic flights. Now, there's a table from 2002. Let's project it on the screen. There's such a difference between the flight routes in 2002 and 2006 that you can't even make sense of the table. Ulaşım online magazine provided it. I thank Recep Can Puat, who sent me a lot of information. When I saw these tables, I was really surprised. Now, in 2002, domestic flight points: 25.2, top 112,385 traffic. Yes. What does this mean? It means this: in 2002, only Turkish Airlines was flying. There's a structure where only Turkish Airlines flies to domestic routes. It goes to 25 points from Ankara and Istanbul. So when you look at this, the spaghetti starts from Istanbul and Ankara. For example, there's no flight from Izmir to Trabzon. No such thing. But now, look at the other table. When we look at the other table, in 2006, those colleagues will project that table on the screen. There's a very serious change, and it brings a very serious increase in these numbers. For example, the latest figure you got... Well, such a table is already incomprehensible. It's not meant to be understood. Now, look, this time there are 6 players. Earlier, there were hubs in Adana—sorry, Ankara and Istanbul. Now Izmir and Antalya also become hubs. So the number of hubs increases. Now, there's a subtlety here. Look, it gives you chills. Two years ago, the sector started to liberalize. Who made the decision? Who led it? Everyone complains about bureaucracy. It's like gum. We have a Minister of Transport, Binali Yıldırım. Sometimes they think I'm flattering him, but let me tell you, you judge whether I'm flattering him or not. Minister of Transport Binali Yıldırım made a decision. He said, 'Turkish civil aviation will be liberalized.' In the process of liberalization... When you first look at it, you think, 'What a wrong decision at the wrong time.' On one hand, you're trying to privatize Turkish Airlines and sell it at the highest price. On the other hand, you're liberalizing the market where Turkish Airlines dances... The event... compared to being a single player, it will grow much faster. Yes, Turkish Airlines may lose market share percentage-wise, but it will carry more passengers. If I'm not mistaken, Turkish Airlines carried 115% more passengers after this step. See how important it is. The Minister takes a personal risk. Think about it. Despite that, he opens it up. When he opens it up, what do you see? You see a civil aviation sector with 18 players, even 20 players. Only six of them are a bit... You come from one of Turkey's two largest holdings, a family member of Sabancı Holding. When you look at it, let's say one of the big holdings. Let's say that. When we look at it, small businesses, or rather investors, small or large, all investors think: 'If Sabancı entered this business, there must be something in it. We should enter.' Sabancı entered the airline business. Even if you, as an individual, Ali Sabancı, own the company, even if you bought Pegasus yourself, because Ali Sabancı comes from the Sabancı family, it's considered a Sabancı investment. So the actors increase, maybe the game... What do you think about this? Now I've put the ball right on the penalty spot, Barış Bey. Let me take a shot. About 6 months ago, I visited the General Directorate of Civil Aviation, because it's the organization that audits and directs the sector, under the Ministry of Transport. They said, 'There are D more demands.' Demands for what? They want licenses to fly. So, what are these people? None of them are from this sector. Actually, one or two of them, when we asked why they were entering this business, they said, 'Sabancı entered, so there must be something in this business.' Look, we didn't enter this business thinking, 'We have our father's money, so let's invest millions of Euros, put 800-850 million dollars under the stone, order planes, and if it goes bad, we have money anyway.' This has a background of 12-13 years. There's a feasibility study. There's an airline in Turkey's private sector. Barış Bey, there's an investment plan for 2013. What day are we in today? August 2006. There's an investment plan for 7 years from now. These are things that are still not well understood in Turkey. Why? Because the sector is just being liberalized. It has happened, but the players are just finding themselves. There's Turkish Airlines, which is dominant and important despite losing market share. Now, what will happen? Calculate this: in Turkey, if I'm not mistaken, there are 230 planes. 220-230 planes. There are 19-20 airlines. Turkish Airlines has over 100 planes. Let's say 100. If you subtract 100 from 120, you get 20. Wait, no. 120 minus 100 is 20. No, let's do it properly. There are 230 planes total. Turkish Airlines has 100. The remaining 19 airlines share 130 planes. Average is about 6-7 planes per airline. The King of Saudi Arabia came to Istanbul last week. His personal fleet has 16 planes. OK? So the point is, scale matters. Pegasus also has 16 planes. There are 4 airlines with more than 10 planes, excluding Turkish Airlines. So the scales are very small in Turkey. Consolidation will definitely happen. Even the so-called very large airline companies probably have at most 100 planes. That's how it is. I'm not exaggerating. In Brazil, there's an airline called Gol. It's been around for 5 years. Last year, it ordered 120 planes. 120 units. Everyone was shouting, asking why they ordered those planes. Turkish Airlines ordered 51.