Turkey's Pegasus Plans Major Base at New Istanbul Airport

(Bloomberg) -- Turkey’s Pegasus Airlines plans to establish a major base at the new Istanbul airport scheduled to open late next year, helping the discount specialist to attract passengers from the European side of the city where state-owned rival Turkish Airlines currently dominates.

Pegasus is likely to station a “considerable fleet” at the airport after a third runway opens in about 2020, Chief Commercial Officer Guliz Ozturk said in an interview. While the as-yet-unnamed hub will cater to 90 million travelers a year, rising to as many as 150 million, the airline hasn’t until now said it will have a significant presence, suggesting in 2014 that it wasn’t keen to fly there.

Pegasus currently bases almost 60 aircraft at Istanbul’s secondary Sabiha Gokcen airport on the Asian side of the Bosphorus, where the catchment totals about 8 million people, compared with 10 million on the European side, Ozturk said. It has no planes located at the city’s main Ataturk hub, the home base of Turkish Air, which is set to close once the new facility is fully operational.

“We plan to fly both domestically and internationally out of the new airport if we can get the slots and infrastructure,” Ozturk said in London. It’s unlikely Pegasus would be able to establish a full base until the third runway is built about nine months after the first two open, she said.

Demand continues to rebound from a 2016 slump amid a spate of terrorist attacks, the executive said. Third-quarter traffic has been strong even for the summer peak, with tourist travel from the Middle East and Russia continuing to surge and West European visits picking up, albeit more slowly.

Russia Push

Pegasus also plans to add further flights at Sabiha Gokcen, which is itself getting a second runway, as the total fleet swells from 77 aircraft now to around 125 in 2023, including 25 options it plans to convert, the CCO said.

The additional capacity will be used to add more frequencies within Turkey, while the European network will also get extra daily flights plus some new destinations. In the Middle East, Russia, Ukraine and North Africa the emphasis will be more on adding routes, so long as access rights are available, she said.

Pegasus is particularly keen to win market share in Russia, where bilateral accords often allow only one airline per country -- almost always the flag-carrier. That means that while it’s able to serve smaller destinations such as Volgograd, Nizhny Novgorod and Samara, as well as Moscow, it can’t currently fly to the second city of St. Petersburg.

The carrier will continue to depart from the low-cost norm and target transit passengers who account for 30 percent of total traffic, a consequence of Istanbul’s position at a natural crossroads, Ozturk said. The most popular transit routes are Paris to Beirut and London to Tel Aviv.

The 2023 fleet is slated to comprise 100 Airbus SE A320neo-series jets from a $10 billion order placed in 2012, 11 of which have been delivered, and about 25 older Boeing Co. 737s. Bigger A321neos from the Airbus contract will start arriving in 2019, though Pegasus will remain focused on routes within six hours’ flying time and has no interest in a long-range variant, Ozturk said.

Pegasus, which is 63 percent owned by private equity firm Esas Holding AS with the rest of its stock traded, currently bases eight planes in Izmir, four in Ankara and Antalya and one in Adana, plus two in northern Cyprus. Istanbul Ataturk has a handful of daily flights but no permanent aircraft.

Shares of Pegasus, as Pegasus Hava Tasimaciligi AS is known, were trading 1.1 percent lower at 30.16 liras as of 12:41 p.m. in Istanbul. The stock has more than doubled in price this year, valuing the company at 3.08 billion liras ($895 million).

To contact the reporter on this story: Christopher Jasper in London at cjasper@bloomberg.net.

To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net, Benjamin Harvey