9. Regulation, Deregulation, and Competition in the Turkish Airline Industry

This chapter focuses on the effects of regulation, deregulation, and competition in the Turkish airline industry that has long been dominated by Turkey’s state-owned airline company, Turkish airlines (THY). Before 2003, the industry was not yet open to competition. The necessary legal environment has not yet been established to ensure that private airline firms other than THY could also operate especially in the scheduled domestic flights and cargo transport. Thirteen firms along with THY that operated in the unscheduled flights were inadequate to trigger competition, to increase demand, and to attract investments in the entire industry. The airline deregulation movement in 2003 opened the market to competition. The movement released entry to the industry. Fares are beginning to be determined by competition. This chapter analyzes the pre- and postreform structure of the industry. Accordingly, we deal with this to reveal the effects of deregulation over industry structure and quality of service. Besides, by analyzing the developments in the industry, we aim to present how the postreform structure of the industry is reshaped.