If EU/US Sanction Airports (Turkiye) And Airlines (Aeroflot And Belavia), Will Presidents Erdogan And Macron Defend Their Respective Companies? Turkish Airlines Shareholders, Passengers Benefit
If EU/US Enact Restrictions And Sanctions On Airports (Turkiye) And Airlines (Aeroflot And Belavia) With Connectivity To Russian Federation And Belarus, Shareholders (Including US Institutional Investors) Of Turkish Airlines May Benefit From Additional Revenues.
Passengers Will Benefit From A Better Product.
Will President Erdogan Defend TAV, Havas, Rights Of Aeroflot And Belavia?
Will President Macron Of France Defend Groupe ADP?
From Politico: “The EU [European Union] may do this which will impact Turkiye and Russia: If EU ambassadors agree to the plan, the bloc would also tighten the screws on the airline industry. For example, aircraft operators would have to notify the EU about non-scheduled flights from and to Russia to prevent them from transporting banned cargo or sanctioned people.”
The Bureau of Industry and Security (BIS) of the United States Department of Commerce remains poised (although the “poise” is becoming quite elongated- more than one month and counting) to implement sanctions upon operators of airports in Turkiye.
Airport operator targets include: Istanbul, Turkiye-based Istanbul Grand Airports (iGA) and Istanbul, Turkiye-based TAV Airports Holding (TAV), a subsidiary of Paris, France-based Aeroports de Paris (Groupe ADP). The French Republic is a member of the twenty-seven country European Union (EU).
Airport ground handling targets include: Istanbul, Turkiye-based Havas Ground Handling Co. (Havaalanlari Yer Hizmetleri A.S.; Havas), a subsidiary of TAV. There are four primary company servicing airports in Turkiye.
Airport targets include: Istanbul Ataturk Airport (IST); the capital, Ankara (ESB); and resort areas of Antalya (AYT), Bodrum (BJV), and Dalaman (DLM). These airports have thus far refused to suspend authorization for Moscow, Russian Federation-based PJSC Aeroflot Airlines (SU) and Minsk, Belarus-based Belavia Airlines (B2) to operate absent a license from the BIS for aircraft the two airlines operate which were manufactured by Arlington, Virginia-based Boeing Company and aircraft operated by Aeroflot which were manufactured by Leiden, Netherlands-based Airbus SE aircraft which may contain components (or a percentage of components) subject to BIS licensing.
Istanbul, Turkiye-based of Türk Hava Yolları A.O. (Turkish Airlines) of which the [Recep Tayyip] Erdogan-[Fuat] Oktay Administration (2014- ) has operational (and political) control, maintains a critical transportation lifeline for citizens (and government officials) of the Russian Federation to connect through Istanbul Ataturk Airport (IST) with other countries.
Turkish Airlines flights operating to Vnukovo International Airport (VKO) in Moscow are the only efficient means for official and unofficial conduits to engage with the [Vladimir] Putin Administration (2000-2008 and 2012- ). Turkish Airlines has not since 24 February 2022 sought to resume operations to airports in Ukraine, including those furthest to the west and from active war zones, for example Lviv Danylo Halytskyi International Airport (LWO) which is near the border with the Republic of Poland.
The government of Ukraine has closed its airspace to commercial aviation and general aviation. However, President Erdogan did secure on 20 December 2022 authorization from President Putin and Volodymyr Zelensky, President of Ukraine (2019- ), for two aircraft owned by the armed forces of Turkiye to depart Boryspil International Airport (KBP) in Kyiv where the aircraft had remained since 24 February 2022.
After 24 February 2022, Turkish Airlines suspended multi-daily flight operations to Minsk National Airport (MSQ) located in the capital of the Republic of Belarus.
If Aeroflot and Belavia no longer are permitted to operate their Boeing and Airbus aircraft to airports in Turkiye, the primary beneficiary will be the shareholders of Turkish Airlines as flights operated by Aeroflot and Belavia will be replaced by flights operated by Turkish Airlines.
Shareholders in Turkish Airlines: Publicly traded are 50.88% (Rate of Voting Right Shareholding); Türkiye Wealth Fund has a 49.12% Rate of Voting Right Shareholding; and Republic of Türkiye Ministry of Treasury and Finance Privatization Administration has a .01% Voting Right Shareholding.
The Belavia aircraft (fleet size thirteen) used on the Istanbul-Minsk route is a Boeing 737-800 absent electrical outlets, wi-fi, or proper First Class/Business Class seating- currently separating the cabin and leaving the middle of three seats empty. Belavia Airlines had four Boeing 737-Max aircraft ordered; one was delivered but remains not operational and the others remain in the United States. The government of the Russian Federation will not permit the Boeing 737-Max to operate in its territory due to a dispute with the government of the United States.
Travel time on Belavia from IST to MSQ was approximately two hours prior to sanctions upon the government of Belarus, Belarus airspace, and Belavia, implemented by the EU and United States in 2021. The current flight time then increased to four hours and then six hours with flights having to traverse country borders.
Flight path includes into Kazakhstan and then into the Russian Federation (including near the city of Moscow then a left towards Belarus). Fuel cost for a round-trip pre 24 February 2022 was approximately US$10,000.00 and post-24 February 2022 is approximately US$30,000.00. To save resources, there are two flight attendants for the fourteen passengers in Business Class and two flight attendants for 170 passengers in Economy Class. There had been three and up to four flight attendants for Economy Class.
There are occasions when Belavia pilots and flight attendants will make the roundtrip journey in one long fifteen-hour shift. Employee extra hour payments have been steadily reduced- 70% of normal. The aircraft crew receive and divided amongst themselves 8% of total revenues from onboard duty-free sales, which are obtained in currency only- Belarus Ruble, Russian Ruble, U.S. Dollar, Euro.
With Turkish Airlines operating a variety of single-aisle and multi-aisle aircraft from Airbus and Boeing, passengers would have greater comfort, flexibilities, and inflight amenities (particularly with upgraded catering), earn frequent flyer miles, have lounge access at IST. The six-hour routing might also be reduced given that Turkish Airlines is not subject to all EU airspace restrictions.
The challenges for President Erdogan include his required focus upon obtaining assistance from abroad for use to support Turkiye nationals and Syrian Arab Republic nationals impacted by the earthquakes in Turkiye. Will defending the operations in Turkiye of Aeroflot and Belavia, coupled with the continuing issues with the ascension of the Republic of Finland and Kingdom of Sweden to membership in the thirty country North Atlantic Treaty Organization (NATO) be unwelcomed distractions and possibly impact the timeliness and amount of assistance offered to Turkiye, particularly by the EU and United States.
The challenges for Emmanuel Macron, President of France, include if by requiring Group ADP to discontinue operations in Turkiye for Aeroflot and Belavia earn him goodwill amongst his head of state and head of government colleagues within the EU and other countries? Might it too derail any connectivity with President Erdogan and President Putin? Might the Erdogan Administration cancel the Group ADP contract in retaliation?
LINK TO COMPLETE ANALYSIS IN PDF FORMAT
Links To Related Analyses
3/24/22- Visiting Belarus Since 24 February 2022 Comes With Surprises… And Questions.