COMPARISON OF MARKETING WAYS BETWEEN PEGASUS AND TURKISH AIRLINES

Till 2003, subvention for airline industry was only availiable for Turkish Airlines which led to unfair competition. That was a barrier preventing private airline companies from entering into market.
After the amendments regulated by Ministry of Transportation in 2003, competition in domestic flights was allowed and the barriers that inhibited private airline companies from entering into market was removed.
Not only the market was liberalized but also some additional taxes were cancelled and some airport service charges were reduced. The cost of arilines reduced which led to noticeable reduction of ticket prices. Afterwards total number of passengers increased year by year.

ABOUT TURKISH AIRLINES

Turkish Airlines is the national flag carrier airline of Turkey. It is centered in Turkish Airlines General Management Building on the grounds of Atatürk International Airport, İstanbul. It operates scheduled services to 163 international and 41 domestic cities (38 domestic airports), serving a total of 204 airports, in Europe, Asia and the America. It has four hubs in Atatürk International Airport, Esenboğa International Airport, Sabiha Gökçen International Airport, and Adnan Menderes Airport.

The mission of the organization is to become the preferred leading European air carrier with a global network of coverage thanks to its strict compliance with flight safety, reliability, product line, service quality and competitiveness, whilst maintaining its identity as the flag carrier of the Republic of Turkey in the civil air transportation industry.
The vision of the organization is to become an air carrier with; a continued growth trend over industry average, zero major accidents/crashes, most envied service levels worldwide, unit costs equating with low cost carriers, sales and distribution costs below industry averages, personnel constantly developing the qualifications with the awareness of the close relationship between the benefits for the company and the added value that they contribute, an entrepreneurship that creates business opportunities for fellow members in the Star Alliance and takes advantage of the business potential provided by them, a staff well adapted to modern governance principles by observing the best interests of not only shareholders but also stakeholders. (THY, 2012)

ABOUT PEGASUS AIRLINES

Pegasus Airlines was founded in Istanbul in 1990 as a joint venture by three companies – Aer Lingus, Silkar Investment and Net Holding - with the belief that everybody has the right to fly. Pegasus has been flying for 20 years and is Turkey's most established private airline. They operate an affordable and flexible pricing policy that considers quality and customer satisfaction. The company carries out ‘low cost’ policy. It is Turkey's only private airline whose wide network of domestic and international flights depart from Istanbul’s Sabiha Gökçen Airport.
Pegasus aims to protect its passengers from the expensive parking and heavy traffic that plague other Istanbul airports and they aim to decrease the total cost of not just the ticket, but the entire journey.

It is a member of IATA. The mission of the organisation is to to demonstrate that everybody has the right to take a flight. The Pegasus Family, their suppliers and their partners work together in cooperation to achieve this goal.
The vision is to be the leading low-cost airline in their region with their innovative, rational, principled and responsible approach. (Pegasus,2012)

SWOT ANALYSIS OF THE AIRLINES

SWOT ANALYSIS OF TURKISH AIRLINES

Strengths

*Membership of Star Alliance
*Strategic alliances with national flag carriers
*Overall market coverage strategy
*Close relationship with Lufthansa
*Substantial cost advantage over rivals
*Rising market share in the global scale
*Differentiating, comfortable and quality travel service enhancing customer valuation
*Strong brand image
*IOSA certificate concerning airport security management given by IATA
*Subsidiaries to generate income and reduce the risk of operations
*Strong domestic presence
*The only airline with 4 star service quality in all service classes
*World’s second catering service in economy class

Weaknesses
*No use of enterprise resource planning software (Torlak, 2007)
*Higher risk of organic growth strategy
*Massive fleet growth to fund
*Under-utilising the potential of a strong alliance
*Decreasing fleet utilisation reduces the efficiency of fleet deployment.

Opportunities

*Participation in growing industry
*Global expansion potential due to effective sponsorship dealings and advertisements
*A popular tourism destination
*Growth potential of additional services such as catering, ground services etc. to contribute to revenues of the airline
*Growth potential of cargo to increase income of Turkish Cargo
*Investment of government in air transportation infrastructure would help TA improve it’s services.

Threats

*Less profit margin due to irrational prices determined by competitors(Torlak, 2007)
*Ambiguity in the future of the organization due to potential privatization process
*Currency shifts may inhibit profitability
*A slump in the economy would negatively affect the airline more than competitors due to it’s overall marketing strategy
*The negative effects of the rise of fuel prices

SWOT ANALYSIS OF PEGASUS AIRLINES

Strengths

*Low-cost pricing strategy by minimizing operational costs
*Lower ground handling and service charges by basing on Sabiha Gökçen Airport
*Higher growth rate compared to competitors
*Useage of web-site as the main sales channel to decrease expenditures
*Frequent promotions
*Highest on-time departure performance

Weaknesses

*Alliances between national flag carriers in aviation industry restricting more scheduled services
*Missed opportunity for extra income through business, first class flights due to a single segmentation
*The low-cost policy is not enough to get a long-term competitive advantage.
*Poor services prone to bad press on the customer valuation.

Opportunities

*Organizational and environmental changes creating customer-oriented and competitive market structure
*New campaign named Pegasus Plus to increase customer loyalty
*Integration of new softwares such as remote control management and flight safety project
*Growing demand for low-cost airlines.
*The companies using low-cost model have cheap and short distance flights and cause the airline sector to gain a different structure.

Threats

*National flag carrier status of Turkish Airlines
*Heightened competition due to penetration of AnadoluJet into target market of Pegasus Airlines
*Less profit margin due to operational expenditures
*A slump in the economy would negatively affect leisure travel as well as business travel
*The negative effects of the rise of fuel prices

4P OF THE MARKETING MIX

4-P STRATEGIES OF PEGASUS AIRLINES

Price strategy
Pricing strategy of the corporation is the model of low-cost policy application. The airline using low-cost model has cheap and short distance flights. They seek to enable everybody to travel by airplane and force Turkish Airlines to adapt their operations and plans in a more flexible, careful way. (Kılınç, 2012)

In exchange for excluding other services, low fare is offered to customers. The corporation focuses on generating income from additional services such as pre-order of in-flight service, optional seat selection. Also yield management rewards early reservation with discount rates which is determined by financial analysists. Pegasus Airlines has carried more than 36 millions of customers, 27% of them have paid less than 50 TL and 74% of them less than 100 TL.

Product strategy
This is another P of 4P – marketing mix referring to services in this sector. The airline excludes passenger classes such as business, comfort class. The fleet only consists of two type of airplanes which are Boeing 737-800 and Boeing 737-400. This limited variety of airplanes enable reducing maintenance and service charges. Less inventory and a limited variety of spare parts would be meeting the demands of technical service.

Recently the organization plans to add 100 airplanes to it’s fleet which would be the greatest purchasing of Turkish civil aviation industry. It is a member of the IATA and in possession of ISO 9001:2008 Quality Management Systems, ISO 14001:2004 Environmental Management Systems, TGA accredited OHSAS 18001:2007 Occupational Health & Safety Management Systems certification.

Pegasus Airlines decreases unit costs by designing seat placement in order to maximize seat capacity of the airplane. Moreover employees in different roles, flight attendants cleaning the aircraft or working as gate agents, decrease the staff costs.

The airline prefers short-haul destinations, short flights and fast turnaround times. Flights to cheaper and secondary airports would prevent possible air traffic delays and landing expenditures would be lower by preference of these airports.
The airline offers all-in-one serivces by having dealings with BUDGET – car rental firm and booking.com for hotel reservations.
The airline plans to form a joint venture with Air Berlin for entrepreneurship of Air Berlin Turkey which would benefit from brand image of Air Berlin and attract Turkish origined people living in Germany.

Promotion Strategy
The key promotion strategy of the airline is to intensify sales promotions frequently via communication channels. Varied discount rates for different destinations are standing out in the efforts of the company.

Due to it’s limited promotion budget, company sponsored activities or sponsorship dealings are restricted compared to Turkish Airlines. Pegasus Airlines PWA World Cup, Pegasus Golf Challenge are company sponsored activities. The company has a sponsorship dealing with Galatasaray A.Ş to name the southern side of TT Arena as Pegasus Tribune.

Another way of marketing communication in the company is useage of interactive marketing by sponsorship dealing with Çok Gezenler Kulübü which consists of bloggers and artists who tour around cities which are in destination netwrok of Pegasus Airlines and share their experiences on web-site.

The most recent promotion strategy is Pegasus Club which aims at creating customer loyalty with a differenatiated rewarding system. The mobile phone number will be used as membership number and no other card would be required. Instead of promoting miles for a free flight, this campaign will enable return of 2% of ticket fare which would be spent for next flights, additional services, ground taxes etc. It would offer a dynamic system compared to Miles&Smiles camiapgn of Turkish Airlines.

Place Strategy
Focusing on e-ticket sales and direct distribution channel is the main approach of Pegasus Airlines. In this way, the airline avoids fees and commisions paid to travel agencies and corporate booking systems which reduce the costs. More than 85% of ticket sales are realized via e-commerce.

4-P STRATEGIES OF TURKISH AIRLINES

Price strategy
After organizational changes in 2003, Turkish Airlines has found itself in a changing pricing environment with the existence of competitors. Within the range of prices to be determined, the organisation must take into account the price strategy of the competitors. Turkish Airlines is operating together with it’s subsidiaries.

In it’s own structure, perceived-value pricing is the key point of Turkish Airlines. Due to strong brand image, high brand awareness and customer satisfaction, the airline retains it’s leading position in the market share. In Turkish Airlines’ own structure, customer-segment pricing is applied for three different classes: Economy, Comfort and Business Class. The services offered would be enhanced in accordance with higher classes. Instead of focusing on single segment, Turkish Airlines seeks to cover all the market. Therefore the corporate benefits from it’s subsidiaries in competing with competitors and spreads the risk of dealing with low-cost based competitors by it’s subsidiaries such as SunExpress and AnadoluJet. Through this strategy, the airline retains brand equity and differentiation.

Product strategy
The fleet of the airline consists of 202 airplanes within a variety of 13 models. Due to it’s leading status and experience, the airline is succesful at handling maintenance service or flight training for this fleet.

Turkish Airlines has a large variety of busines partners including car rental firms hotels, airlines, sports clubs, members of Star Alliance. Within the concept of Miles&Smiles campaign, the airline offers prices discounts in agreement with car rental firms such as Avis, Budget, Europcar, Hertz, Interlimousine, National&Alarmo, Sixt. Within the same concept, price discounts are also offered in agreement with Dedeman, Divan, Hilton, Kempinski, NG, Radisson, Swissotel, The Marmara, Elite World, Mövenpick, Rixos, TAV Airport, Zorlu Grand Hotels. In comparison with Pegasus Airlines, the diversity of the service offerings are doubtlessly more attracting.Moreover, the company benefits from the membership of Star Alliance by which a broader destination network and prive promotions of the alliance could be offered. In recent years, the agreements between ministries have led to rise of direct flights between Turkey and different destinations around the world and Turkish Airlines as the national flag carrier benefitted from it’s status.

The corporate has some subsidiaries for different air transportation fields. Sun Express is a joint venture of Lufthansa Airlines and Turkish Airlines targeting passenger segment in the network of Germany and Turkey.

AnadoluJet is another subsidiary focusing on low-cost policy and targeting the market share of Pegasus Arlines with it’s promotion pricing strategy. THY OPET is another joint venture for refueling services between TA and OPET. Turkish Cargo is the air cargo division of the corporate including scheduled cargo flights with cargo aircrafts. TA Technic is the division to handle maintenance services.

Turkish Airlines uses network transportation system operationally. It aims at serving in all kinds of important air transportation fields including handling, flight training, maintenance, cargo and refueling by preserving the identitiy of global airline and extending long distance flight network. Also it aims to preserve it’s leadership in domestic flights and continue providing comfortable and quality travel service. The competitive strategies are differentiating product/service , innovation towards technological investments and strategic alliances.
TA has reached desired level in the services and criteria about brand image of airline , on time performance, attitude and behavior of the staff, safety, baggage service, flight safety, cabin cleanliness and convenience of schedule.

Promotion Strategy
In restructuring phase of TA, the company focuses on promotional activities with a high concentration. A large variety of sponsorship agreements, dealings with corporations, strong presence on Internet, Miles&Smiles campaign are just a part of the whole activities.
The prinicples and values that Turkish Airlines has aimed to promote through their sponsorship services are reflected in their advertising campaigns. The most strategic campaign is ‘Globally Yours’.

The importance of sponsorship deals in sports marketing is noticeable in TA’s present recognition and success. TA signed sponsorhip deal with FC Barcelona and Manchester United FC in 2010 and became official sponsor and transporter of these giant clubs. Also the airline is the official air transporter of five Turkish football teams with championship titles, Turkish national football team. Also the company made a name on basketball courts and signed a sponsorship deal with Valencia Basket, Turkish national basketball team.

Within the concept of organizational agreements, the company has acquired ofifical sponsorships of European top basketball tournament as Turkish Airlines’ Euroleague; WTA Championship; Turkish Airlines Golf Challenge etc. Along with all these steps, Turkish Airlines has struck deals with globally renowned celebrities such as Caroline Wozniacki, Kobe Bryant, Lionel Messi to conduct marketing process in accordance with ‘Globally Yours’ campaign. The company’s sponsorhip agreements also takes place in different fields such as Albert Long Hall Classical Music activities, Management or Marketing Summits, Aviation Symposiums...
Another recent campaign is Corporate Club which offers additional services, price discounts and allowances to target market of TA, corporate business. The corporations need to have a minimum amount of yearly air travelling expenditures to benefit from this privelege.

Miles&Smiles campaign is the key promotion strategy aiming at creating and improving customer loyalty with mile-earning system. This system is in cooperation with business partners of TA and the expenditures for the partners would be included in the system. Four different classes of cards are offered to benefit from the services and a credit card of this campaign is avaiable with partnership of Garanti. Discounts and allowances are offered frequently within this campaign.

Place Strategy
Focusing on e-ticket sales, online reservations, online check-in, mobile applications are remarkable impromevements of direct marketing approach of Turkish Airlines. Secondly, a wide network of travel agencies is the second distribution channel through which the brand awareness is retained in accordance with availability. The company also focuses on advertising in leading corporate and travel magazines as well as outdoor advertising to announce promotions or new destinations etc. The strong presence of TA in business trade fairs enable providing on-site marketing and significant exposure.

BRAND EQUITY and CUSTOMER CONNECTION

EVAULATION IN TURKISH AIRLINES

TA has restructred brand management via brand reinforcement strategy. The brand name of the airline is likeable within the domestic market addressing national flag carrier status. The logo of the airline reveals the wild goose which can fly to the furthest distance. The logo has been re-shaped with a shaded style in a round red circle and blue fonts which is complying with global brand identitiy.

In competitive environment, TA moved away from localness to market penetration. In this sector, advertising is used to create brand recognition. TA, a member of Star Alliance, was awarded as the best airline at ‘Skytrax Southern Europe Airline Awards’. TA has a promising international recognition and voice. The priniciples and values that Turkish Airlines has aimed to promote through their sponsorship services are reflected in their advertising campaigns. The most strategic campaign is ‘Globally Yours’ . The slogan reflects global vision of TA. Turkish Airlines has used sports market to reach out to target audience through ‘Globally Yours’ campaign. It emphasizes transformation of TA into a global brand. This strategy may be accepted as effective and succesful.

The fact that TA has been a flag carrier airline and always delivers improved services to its customers leads to its strengthened brand image. Wihin brand personalization concept, TA has a responsible and self-trusting character, TA is the leading airline in the survey of brand awareness and brand knowledge in the domestic market. TA benefits from both of customer loyalty programs. Frequency program is used within Miles&Smiles campaign to reward the passengers who fly frequently and club membership program is promoted via Corporate Club for a limited number of corporations who promise a particular amount of yearly expenditure.

Customer Relationship Management is directed through free catering service, online check-in, reservations, car rental services, entertainment services, lounge services, hotel services. All these additional services are included in the ticket fares in contrast with optional services excluded from ticket fare of Pegasus Airlines.

Strong brand image of TA provides greater customer loyalty, less vulnerability to competitors in it’s own target segment. The main components of TA’s brand equity would be named as esteem and knowledge which creates ‘brand stature’.
Brand portfolio of TA including three more different airlines such as SunExpress, AnadoluJet and B&H Airlines. AnadoluJet is a flanker brand to be positioned against Pegasus Airlines in low-class segment whereas Turkish Airlines could retain it’s positioning as flagship brand.

EVALUATION IN PEGASUS AIRLINES

Pegasus Airlines’ brand element is a memorable and meaningful brand name which is a winged horse accepted as sibling of Hercules in Greek mythology. It refers to corresponding industry with a strong effect. Also the logo of the airline shows up the mythical winged horse to reinforce the brand image. The slogans of the airline such as ‘We didn’t initiate aviation in Turkey, but we changed’, ‘It’s your turn to fly’, emphasizes the innovative side of the company in the domestic market and low-cost policy to enable anyone to take a flight.

Permission marketing is active within the marketing structure of Pegasus Airlines which communicates with consumers who agree to receive info e-mails from the company. Pegasus Airlines has named the new airplanes with names of daughters of it’s employees so that the airline could improve brand promise.

Within brand personalization concept, PA reflects a yound and dynamic character. Pegasus Airlines is the follower coming up in the second rank in the survey of brand awarenss and brand knowledge among airlines in the domestic market. As a strategy of retaining customers, Pegasus Airlines reveals on-time performance on web-which is a significant factor affecting perceived customer value.

Customer Relationship Management is directed through optional online check-in, reservation, car rental services, hotel services, catering services on condition of additional fees. Although the additional fees would be seen as a lack of acquiring customer satisfaction, customer perceived value depends on total cost and awareness of this cost and benefit policy wouldn’t decrease perceived value of the brand. Frequency program is used as customer loyalty program within Pegasus Club campaign to reward the passengers with a return of 2% of ticket fares as flight points. Moreover, CepFly campaign, a partnership with Vodafone, is a supportive promotion to reward the passengers with flight points which could be used as sales discounts afterwards. The main components of Pegasus Airlines’ brand equity would be named as differentiation and energy.
The flanker brand positioning will be followed by Pegasus Airlines within a partnership of AirBerlin to position Air Berlin Turkey, a joint venture between Air Berlin and Pegasus, against Sun Express.

DEALING WITH COMPETITION

Within the domestic scale, identifying competitors is relatively easy because of limited number of airline firms. Within the global scope, that would be comparedly harder.
Turkish Airlines would be identified as an ‘emerging giant’ which competes with international airlines and gets to become a global force. Pegasus Airlines would be identified as a rising threat with higher growth rates than the average of the industry in domestic flights.
Pegasus Airlines has followed the way of blue-ocean thinking by determining unoffered factors to the public and created value innovation.

When analyzing the competitors, the variables reveal that;
• Pegasus Airlines’ market share in target market is to surpass the competitors soon. According to last surveys, total market share of PA in the domestic flights has risen to 24%.
• Pegasus Airlines has come up in the second rank of brand awareness survey following Turkish Airlines.
• The issue Pegasus Airilines has to face is that customer loyalty is not as desired in the target segment of the company. On the other hand, Turkish Airlines has a high degree of customer loyalty for higher classes of pasengers and thrives to focus on target market of PA through the fighter brand of AnadoluJet.

Both of these companies have selected each other as competitors in the domestic scale with an approach of ‘strong vs. weak’.

Customer base of PA is not valuable as the customer base of TA and vulnerable against strategy of AnadoluJet whereas the customer base of TA is much more valuable but the vulnerability is existent for economy class of passengers.
Turkish Airlines would be classified as market leader in the domestic scale with 50% market share and Pegasus Airlines is the market follower with 24% market share.

Total market expansion has been realized through the period of liberalization removing the barriers for new entrants into airline industry. New customers have been attracted with price discounts, the frequent consumption of current customers has been provided by offering additional services and priveleges. Promotion factor of marketing mix has been the key point in both of these efforts.

Turkish Airlines has been aware of retaining market share in the domestic industry whereas expanding market share in the global industry. Club membership priveleges such as Corporate Club, Miles&Smiles promotional campaign have been developed to increase competitive strength and customer value.
Flank defense is applied against Pegasus Airlines by placing AnadoluJet as a low-cosr carrier and mobile defense is applied by broadening destination network around the world which would reinforce Turkish Airlines to improve possible future centers.
Pegasus Airlines has applied flank attack in a segmental dimension targeting low-cost positioning and excluding different classes.

APPLICATION OF PORTER’S FIVE FORCES ANALYSIS

Bargaining Power of Supplier

Airplane manufacturers are limited with Boeing and Airbus. Due to limited options in the market, the suppliers have a great impact on the airline indutsry. The impact is even greater on Pegasus Airlines due to the limited variety of airplane types. Only two types of Boeing airplanes are used in air transportation services of Pegasus Airlines. That strategy is in compliance with low-cost strategy of the company which seeks to reduced maintenance, flight training and spare parts’ cost. According to recent developments, PA plans to add Airbus airplanes to it’s fleet to acquire dealing conditions with both of the manufacturers.
Another point has been fuel suppliers which has led to arising of THY-OPET which is a joint venture of Turkish Airlines and OPET fueling facility to offer refueling services to both of domestic and international airplanes.

Bargaining Power of Buyer

Communication channels which notice sales promotions, advertisements etc. increase bargaining power of buyers. Through the new period of heightened competition in the domestic airline industry, the companies are seeking to retain and expand market share from which buyers benefit by taking flights with lower costs. But the bargaining power would be less influent in global flights.

Potential New Entrants

Turkish Airlines has faced competitors since organizational changes were initiated in 2003. Competitors such as AtlasJet, Pegasus Airlines has held positions in the market. On the other hand, government regulations, alliances between national flag carriers in disfavour of private companies, government incentives reinforcing the position of Turkish Airlines within global scale through trade agreements, high capital requirements would decrease the possibility of new entries into the market.

Threat of Substitute Products
High-speed rail system would be a strategic substitute of air transportation within closer destinations but the level of substitution of this rail system would be lower on the global scale. Moreover technologic developments such as video-conferencing, NetMeeting has become a threatening substitute of business traveller’s flights which saves time and money.

Competitive Rivalry
The competition in the industry was initiated with liberalization policy in last decade. The intense competition has led to shrinking revenues and declining ticket fares compared to the past years.
The rival of Turkish Airlines may be seen as Pegasus Airlines in the domestic market which has followed market penetration as growth strategy and targeted on economy class of passengers of Turkish Airlines as well.
Competition in low-cost airline industry has heightened due to penetration of Anadolu Jet into target market of Pegasus Airlines as a response to existence reason of Pegasus Airlines. As a fighter brand of Turkish Airlines, AnadoluJet will reinforce the company to retain it’s brand equity as well as penetrating into target market of Pegasus Airlines.
Within this intense competiiton, both of the airline companies offer sales promotions, sales discounts and allowances, advertisements, sponsorships, club membership priveleges to improve customer loyalty, brand equity, brand knowledge etc.

THE NEXT STEPS TO BE TAKEN BY TURKISH AIRLINES

The current issue Turkish Airlines facing is negative impression of recent lay-off of a huge amount of employees. That has contributed to the efforts of competitors to name the airline as oligarchy. It is essential to create an open environment and remove the governmental pressure to retain the leading position among competitive forces.
The airline needs to have a more dynamic structure to deal with frequent promotions of Pegasus Airlines.
Corporate Club is a critical factor to gain customer loyalty among higher classes of passengers. It would reinforce to retain the target market of the airline through private offerings for the corporations. This campaign would be directed through two divisions; one for business class, the other for comfort class. The minimum annual flight expenditure rate required to benefit from club membership priveleges would seem to be relatively high for smaller sized enterprises. They would be involved in this campaign with a less range of offerings and promotions and a less annual flight expenditure rate would be demanded to broaden the network consisting of small and medium sized companies.
Miles&Smiles campaign would be surpassed by Pegasus Club initiative of Pegasus Airlines. The system requiring to gain the miles to take a free flight will be functioning so slowly against dynamic structure of the competitive campaign which offers to use the flight points for sales discounts at any time. For that reason, Turkish Airlines would need to take a step to transform the current membership strategy into a practical program offering innovative priveleges.
Within the vision of becoming a global force in the airline inudstry, Turkish Airlines would emphasize on cultural values to increase the recognition of Turkey as a tourist attracting destination. The remarkable advertisements would refer to cultural values which would reveal the impression of dignified national flag carrier.
Also special event pricings would be offered for El Classico, Wimbledon Tenis Torunament or Euroleague Final Four Torunament etc. through sponsorship dealings.(Erciş, 2012)
Within the domestic scale, Turkish Airlines has taken the right step through AnadoluJet enterprise as a low-cost carrier. That would prevent Pegasus Airlines from becoming a market challenger directly against Turkish Airlines and force them to deal with the subsidiary. But AnadoluJet has to follow an offensive strategy to compete increase of remaining stable. Till now, promotion strategy of the airline has not met the expectations. The growth potential of this subsidiary would be presumed through additional services provided by Turkish Airlines which would turn it into a more cost-effective airline. Brand recognition is to be increased as well which would be obtained with sponsorship dealings, membership camgaings, all-in-one services.

THE NEXT STEPS TO BE TAKEN BY PEGASUS AIRLINES

Pegasus Airlines should conceive that low-cost policy wont be a long-term competitive advantage. (Kılınç, 2012) For that reason, the airline has initated to expand the fleet. The firm would broaden destination network and expand the domestic share. It would be a significant movement to add some free services included in ticket fares since they are among significant factors affecting personal choices of the customers. (Atalık,2007)
On the other hand, the strategy for global expansion is ambiguous due to regulations. Pegasus Airlines needs to gain permittence for international flights and the period of this procedure is unpredictable. That’s why Pegasus Airlines has to focus on expansion within the domestic market at present. In addition, top management would strive to remove current barriers with lobbying activities.
Pegasus Plus campaign is a succesful attempt against Miles&Smiles which would be affecting the whole market with it’s practical solutions and usefulness. The dealings with different companies to improve the recognition of the campaign should be taken into account. CepFly promotion by Vodafone and Pegasus Airlines would be a pattern for the next ones. The dealings with hotels, car rental firms should be diversified to attract new customers to compete with Turkish Airlines.
The biggest threat against Pegasus Airlines seems to be Anadolujet. The low-cost policy followed against Turkish Airlines would be replaced with differentiation policy against AnadoluJet. That’s why exclusion of the whole services would be a vulnerable situation to retain the current market share and included services such as free water / snack would be an effective factor. Improved service quality, emphasis of comfort would be critical factors to be increase perceived value by the customers.
Improved customer satisfaction could lead to improved profits, lower marketing expenditures and positive word-of-mouth communication. (Atalık, 2009)

CONCLUSION

Following the organizational changes since 2003, monopolistic status of Turkish Airlines has been transformed into a competitive force against domestic and global competitors. In this period, domestic airlines such as Pegasus Airlines, AtlasJet, OnurAir have been new entrants in the industry.
Pegasus Airlines has been initiator of low-cost policy and the firm has acquired a rising growth rate, a bigger fleet through this strategy and may be accepted as a rising threat against Turkish Airlines.

On the other hand, Turkish Airlines has focused on forming subsidiaries in additional services such as catering, refueling, ground, training, maintenance services to decrease the expenditures and create additional resources to fund the airline and two more airlines have been added to brand portfolio. Turkish Airlines seeks to retain market share by differentation emphasizing on comfort and Anadolujet, the subsidiary of Turkish Airlines as low-cost carrier, has been a new entrant to capture the market share of Pegasus Airlines.
The other subsidiary, SunExpress, mainly focuses on expatriates living in Germany and the high potential of tourist attraction from Germany has been noticeable as well. In order to compete with this airline and target group of customers, Pegasus Airlines will found a joint venture named AirBerlin Turkey with the partnership of AirBerlin.
In addition to these efforts, Turkish Airlines has broadened global sponsorship dealings to reinforce the brand equity and awareness around the world. Through this vision, dealings with giant clubs, celebrities of the sports world have been carried out.
Both of the airlines have been pushing high in promotion efforts by offering club cards, priveleges, sales discounts with brand new campaigns.
As it seems, the airlines will be in search of the ways to increase brand equity, to acquire customer loyalty, to attract new customers, to expand market share of air transportation, to lead the market.
Due to broad experience in the industry, higher customer loyalty and customer satisfaction, availability in different classes within a broad range of destinations, Turkish Airlines would be evaluated as the leading airline ar present, but the rising growth rate compared to the others of Pegasus Airlines is a signal to view a different table in the future.

REFERENCES

[1] Turkish Airlines, Corporate, Vision and Values, www.turkishairlines.com/en-tr/corporate/visio-and-value, Access Date: 15.12.2012,

[2] Pegasus Airlines, About Pegasus, Corporate Information, www.flypgs.com/en/about-pegasus/our-mission-and-vision.aspx, Access Date: 15.12.2012,

[3] Torlak, N. G., Şanal, M., David’s Strategy Formulation Framework in Action: The Example of Turkish Airlines on Domestic Air Transportation, İstanbul Ticaret Üniversitesi Fen Bilimleri Dergisi, Vol:6, Iss:12, Page: 81-114, 2007

[4] Kılınç, İ., Öncü, M.A., Taşgıt, Y.E., A Study on the Competition Strategies Implemented in the Airline Companies in Turkey, Tourismos: An International Multidisciplinary Journal of Tourism, Vol: 7, Iss:1, Pg: 325-338, 2012

[5] Erciş, M., S., Pazarlama İletişimi Kapsamında Sponsorluk Faaliyetlerinin Önemi ve Bir Sponsorluk Uygulaması: THY, Marmara İletişim Dergisi, No: 19, Pg:112-124, 2012

[6] Atalık, Ö., Özel, E., Passenger Expectations and Factors Affecting Their Choice of Low Cost Carriers: Pegasus Airlines, Northeast Business&Economocis Association, Central Connecticut University, USA, 2007

[7] Atalık, Ö., Wisdom of Domestic Customers: An Empirical Analaysis of the Turkish Private Airline Sector, International Journal of Business and Management, Vol:4, No:7, 2009