Pegasus Airlines: Moving Further with Growth

It seems as though I have never written a blog post directly addressed to Pegasus Airlines, the market challenger in Turkey. As we all know Pegasus operates on a low-cost basis and recently gained great experience and efficiency in cutting costs to marginal levels. Pegasus achieved this through many innovative and logical measures and managed to become the second most efficient airline following Ryan Air.  I really think that this is a great accomplishment, takes so much thinking and engineering to cut costs to such low levels.

Pegasus is now implementing another measure to reduce costs drastically. The steel breaks on their 40 aircraft fleet are now being changed to carbon, which means a 550 kg decrease per aircraft, 50$ of savings per flight which adds up to $20K daily and a hefty $7 million per year. It is quite something.

Pegasus has the largest market share in the Turkish market right after Turkish Airlines; and this fact makes Pegasus the largest fully private Turkish carrier. The low-cost airline has a fleet of 40 Boeing aircrafts with another 8 B737-800 to be welcomed during 2012. Pegasus flies to a total of 50 destinations in 23 different countries and intends to grow network towards the middle-east, Russia and western Asia. Among the 50 destinations, 19 are domestic with direct operations from cities as Istanbul, Izmir and Adana. Pegasus currently has a domestic market share of 22% and an international market share of 8%.

Pegasus is really a proud LLC. CEO ‘Sertac Haybat’ stresses that among the 36.4 million passengers they transported; more than 23 million travelled paying less than TRY 100 (approx. USD 55). The revenue yield figures might seem low but fact that each flight is operated with high load-factors and low-operating costs, profit is inevitable. 2011 revenue is calculated right above TRY 1,7 billion, but due to price fluctuations in oil prices the company is expected to report a loss at the end of 2011. As we know, the prudent LLC standards of the industry make carriers such as Pegasus very prone to losses in cases of rapid economic fluctuations. This could be prohibited via financial risk management tools but it is not very hard to understand that Pegasus neglected this fact due to being highly connected to lowering costs of operations.

Pegasus is the first airline in Turkey with very successful implementation of the LLC system and thriving to be better and bigger with innovations and aggressive growth strategies. It is going to be very interesting to watch Turkish airlines grow big as the Turkish economy becomes more dominant in many places from transportation to foreign affairs.

I wish the Pegasus family all the best of success in this journey.

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