Turkey: The Impact Of Competition Law On Aviation Industry

Last Updated: 5 February 2016
Article by Serap Zuvin and Lotus Tuzun

Competition law is an area of law that seeks to maintain the competition in the market. The aim of competition law and Turkish Competition Authority ("Authority") accordingly is to prevent agreements, decisions and practices preventing, distorting or restricting competition in the market. The main reason for this is to protect the consumers because competition brings out more qualified service and good along with affordable prices. Competition creates diversity in the market which makes people's lives easier by giving them the right to choose.  If the undertakings make secret agreements such as fixing the market price or sharing the market then the consumers have no chance to choose between the goods and services. Thus, those kind of agreements between the companies are forbidden by the Authority. The aviation industry in Turkey started in 1933 with the establishment of Turkish Airlines ("THY").[1] THY, a public corporation and national flag carrier, has a core importance in the market and had been a monopoly until 1990 and is still holding its powerful position among other enterprises since then.[2] In 1990, liberalization of the Turkish aviation industry has been kicked off by the new airline enterprises entering into the market such as Pegasus, Sunexpress and Onur Airlines and therefore protection of THY from the competition by the government policies has been concluded. Along with the liberalization of the market and emergence of the new airline enterprises, competition finally has started in this area.[3] According to the statistics of 2015, Turkey's aviation industry involves 55 airports[4], 489 aircraft[5] and 150 million passengers with a %14 growth rate in the last decade.[6]

Competition Law Violation in the "Air"

Turkey does not have a specific competition regulation concerning aviation industry and Turkish Competition Act ("Act")[7] is the main source to resort on this matter. Along with the increased competition in the aviation market after 2000s, cartels between the enterprises started to occur. To give an example, in 2001, 2006, 2008 and 2009 Condor Flugdienst GmbH Airlines ("Condor") and SunExpress Airlines ("SunExpress") fixed the prices of Turkey – Germany flights through some secret agreements.[8] In November 2009, Authority conducted an investigation on these two enterprises and in October 2011 a penalty was imposed against those enterprises. However, since SunExpress declared its regret to the Authority and made conciliation through helping them in the process of investigation, SunExpress recovered from the fine. Condor also declared its regret but it was a late application so the Authority did not cancel the fine but reduced the same by 50%.[9] Horizontal agreements which are made for market sharing, price determination etc. are considered as substantial core breaches according to the competition law. Important point in this issue is that, these agreements do not have to affect the market specifically in order to be considered as a breach. The mere existence of the agreement is enough to get a penalty from the Authority, so the Authority only investigates on an existing agreement not on its effects.

Hard to Compete for: Slots

Airport slot rights are given by the airport operator to the airline enterprises in order them to schedule their landings and departures for a specific time period. Experienced airline companies, which have already reserved their slots for one period, have grandfather rights on these slots. These grandfather rights give such airline companies the right to reuse the slots that they have used in the previous period.[10] According to "use it or lose it policy", airlines only lose their grandfather rights, if they do not use the most part of their reserved slots in the previous period. On the other hand, when entering the aviation market, it is important for new enterprises to execute short and more frequent flights in order for them to compete and survive within the market.[11] However, even though the aviation market is getting bigger and bigger, many airports are not big enough and very busy in terms of the slots for the new airline companies. For all these reasons, ineffective operation of the slot systems in the aviation industry downgrades the competition in the market. In Turkey, the slot system is still not being executed with the right competitive rules and the reliability of the slot system is questionable. Slots had been coordinated by THY from 1993 to 2005. After 2005, Slot Coordination Center within the General Directorate of Civil Aviation ("GDCA") has executed the slot practice and after 2010, the execution of the slot practice was given to State Airports Authority ("SAA").[12] Hence, the strong relationship between SAA and THY puts some questions in minds about the competitiveness of the market. It is important for slot practice to be given to an independent and objective institution in Turkey in order to increase sufficiency of the competitive landscape.[13]

More Competition Brings More Quality in the Air

Aviation industry in Turkey is still developing; in order to keep the development alive in this market, a competition law regulation focusing on the aviation industry should be prepared by having the opinions of the nongovernmental and governmental organizations and jurists who are experts in this area. When competition is involved, enterprises get better at what they do such as THY honored Turkey by being chosen the best airline of Europe for the last 5 years.[14] Since the uniqueness of the market requires specific competition regulations applied by liberal policies, EU competition law regulations on aviation sector should be adopted by Turkey. 

[1] http://mdk.anadolu.edu.tr/sites/mdk.anadolu.edu.tr/files/files/6.pdf


[3] https://earsiv.anadolu.edu.tr/xmlui/bitstream/handle/11421/398/448248.pdf?sequence=1&isAllowed=y

[4] http://www.dhmi.gov.tr/havaalanlari.aspx

[5] http://web.shgm.gov.tr/tr/kurumsal/4547-istatistikler

[6] http://www.atig.com.tr/arastirma/raporlar/tr/havayolu-sektor-raporu-17-02-2015-09-33-17.pdf

[7] Competition Law dated December 7, 1994 and numbered 4054, published in the Official Gazette dated December 13, 1994 and numbered 22140.

[8] 11-54/1431-507 numbered and 27.10.2011 dated Turkish Competition Authority decision / http://www.rekabet.gov.tr/File/?path=ROOT%2f1%2fDocuments%2fGerek%25c3%25a7eli%2bKurul%2bKarar%25c4%25b1%2fkarar4819.pdf

[9] Turkish Competition Authority decisions can be found in its website: http://www.rekabet.gov.tr/

[10] http://www.rekabet.gov.tr/tr-TR/Rekabet-Yazisi/Turk-Havayolu-Tasimaciligi-Sektorunde-Adalet-Problemi-Slot-Tahsisleri


[12] http://www.rekabet.gov.tr/tr-TR/Rekabet-Yazisi/Turk-Havayolu-Tasimaciligi-Sektorunde-Adalet-Problemi-Slot-Tahsisleri

[13] http://www.rekabet.gov.tr/tr-TR/Rekabet-Yazisi/Turk-Havayolu-Tasimaciligi-Sektorunde-Adalet-Problemi-Slot-Tahsisleri

[14] http://www.turkishairlines.com/tr-tr/kurumsal/basin-odasi/oduller

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Serap Zuvin
Lotus Tuzun
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