I like how Turkish Airlines has operated its business.  Over the past decade, the airline has transformed itself from a primarily government owned entity to a primarily private owned entity that is earning an impressive profit. Turkey has focused itself on supporting its airline business by promoting growth through the development of new airports that could serve as “Middle Eastern Hubs”.

The Turkish government has managed itself well in these economic times and considering their strong desire to enter the European Union, you have to give them credit for being aggressive.  It’s notable that they are not suffering economic crisis despite the fact that their mediterranean neighbors largely are bankrupt and in smoking heaps presently.

Turkey committed itself to modernizing how it interacted with its airlines and realized that by making themselves an attractive country for international hub operations, it would attract investment into other segments of the nation’s economy.

Contrast that to how Italy has behaved with Alitalia or Ireland with Aer Lingus.  Both of these supposedly more modern, more liberal and more free nations have worked exclusively towards protecting the employees of those airlines by propping up those airlines with support.

As a consequence, the airlines operate poorly (Aer Lingus is OK on the long haul front but that amounts to 7 aircraft presently) and are shoved around by their own unionized employees.  If someone suggests selling the airline, particularly to an aggressive company, or doing anything to improve productivity, the unions call a strike to teach the government and airline managers a lesson.

Why would anyone do business within such a framework?  The answer is that no one does.  Many may have disapproved of Ryanair taking over Aer Lingus but there would have been some pretty strong benefits to Ireland.

Alitalia is simply once again on the path to a merger with a larger, better run European airline.  Unless the Italian parliament can find a way to preserve domestic ownership without running afoul of EU regulations.

I can’t think of a government run airline or airline industry today that is running successfully.  I can think of many which are jobs programs but that’s it.  What’s crazy about this is that the countries suffer massively as a result.

Countries like Ireland, Italy, India or Argentina all suffer far worse economic impacts overall from a failure to address the “airline problem” within their countries than they benefit from providing a jobs program.  Those jobs programs are heavy concrete shoes for those nations economies and they signal that those countries aren’t prepared to do business in a fair and equitable manner.

Yet the supposedly backward and inferior Turkey and its airline get out front and decide to make something of itself.  The contrast is remarkable.

Filed under: Airline Service, Deregulation, Mergers and Bankruptcy by ajax