A Study of the Strategic Responses of Turkish Airline Companies to the Deregulation in Turkey: Atlasjet

Atlasjet used to operate charter flights within its tour operating system, but later started its activities in scheduled domestic transportation following deregulation; Atlasjet made all the changes required by the scheduled airline transportation business after having started operating in domestic routes and formed its organizational structure accordingly.
Atlasjet was the first private airline in Turkey to become a member of the International Air Transport Association – IATA. It benefited from this advantage and focused on ‘interline’ transportation in the domestic market. For this purpose, Atlasjet signed interline traffic agreements with many other airlines members of IATA, became member of global distribution systems and migrated to electronic ticketing. Thanks to these agreements and to the technological infrastructure investments it has made, Atlasjet undertakes domestic transportation of international passengers that come to Istanbul. This strategy which developed after deregulation is regarded as a conscious action taken to ensure a competitive advantage against the other airline companies.
Atlasjet always preferred to be an operator that emphasizes service quality since from its entry into the domestic market, and in order to keep its service quality at a high level, it has undertaken significant investments in technology. Technologies such as electronic ticketing, membership of CRS’s, Direct Control System, Self-Check-In, giving passengers PNR numbers with Short Message Services, specific loyalty programs for all customer groups, and i-phone ticket sales application used in service delivery, so that passengers’ access to services is facilitated and a comfortable flight is promised. In addition to this, services that create a perception of high level service quality, such as food and beverages being free of charge on board, passengers being transferred to their final destination by shuttle buses again free of charge, are offered. Customer requests, needs and complaints are also systematically and continuously measured in order to evaluate and improve service quality. Financial services markets

Atlasjet’s price strategy is not about offering low prices to passengers such as low cost carriers, but rather to sell its service at relatively high prices in return for the service quality it offers. However, it can be seen that Atlasjet’s high prices are still more affordable than those of Turkish Airlines which follows the same strategy. For this reason, passengers travelling generally with Turkish Airlines for business purposes prefer to fly with Atlasjet when they travel for personal reasons because passengers’ sensitivity to price increases on such trips. Atlasjet executes yield management within the context of price strategy, but against this yield management, Atlasjet does not exhibit a great discrepancy between its lowest and highest prices in a given market. Instead, it is able to make a more balanced pricing when compared to other airlines that also operate yield management.
With this strategy, Atlasjet is targeting customers that do not have high price sensitivity, but attach importance to quality. Basically, Atlasjet carries passengers from its own tour operator. Since it serves various customer groups that travel for tourist purposes, business purposes and VFR (Visiting Friends and Relatives), Atlasjet has two different classes, business and economy, for the Istanbul-Bodrum route. Atlasjet is actually the only airline among all private companies that has two different classes on board. For its business class passengers, Atlasjet offers special services, such as airport lounge services that make them feel privileged, provides inner-city transportation with shuttle buses and allocates these passengers dedicated check-in desks. As it provides services to business class passengers, great importance is attached to on-time performance. On-time performance is one of the most important airline service delivery components for these passengers. Atlasjet sees this as an important competitive tool used to attract and retain business class passengers.
With these practices, Atlasjet aims to create the perception of an airline that is of high quality and different in the eyes of passengers, and by using its service quality, it aims to compete with other airlines in the domestic market. In this context, it can be said that since deregulation, Atlasjet has entered the market with a differentiation strategy of its own.
As Atlasjet has entered the market for the first time with a differentiation strategy, it followed an extensive network structure and growth strategy in the domestic airline market like Onur Air. For this purpose, it entered many new markets where there previously had been no operations as domestic airlines and added regional jets to its fleet that are more capable of operating effectively at airports in the eastern part of Turkey. However, it could not ensure sustainability of its operations in these markets. The reason for its resigning from these mentioned markets is regarded as being a lack of an effective differentiation strategy implementation because the economies of the routes Atlasjet was trying to operate in were not ready to afford the high prices offered within the framework of a differentiation strategy. Thus, Atlasjet moved from operating an extensive geography and instead decided to be more focused. Markets it started concentrating on afterwards are rather tourist markets and their economies are relatively higher when compared with other domestic airline markets. Currently, Atlasjet seems to be an airline focusing on flight destinations to which it can carry passengers from its own tour operator. In conclusion, it may be said that Atlasjet developed a differentiation strategy as a response to deregulation as it entered the market. However, after this it started concentrating on a specific geographical market and started implementing a focused differentiation strategy.