TURKISH

DEFENSE & AEROSPACE

INDUSTRY
J AN 2 0 18
Agenda

• Snapshot

• Turkish Defense Industry

• Turkish Civil Aviation

 Snapshot Turkish defense and aviation industry offers lucrative opportunities…

SPENDING

$ $15BILLION
CLUSTERS
DEFENSE & AEROSPACE
TURNOVER

$20
DEFENSE EXPENDITURES
(2016)
BILLION
CIVIL AVIATION TURNOVER
(2016)

TURNOVER

$6 STRONG SUPPORT
FOR JOINT VENTURES
540
AIRCRAFT
BILLION WITH FOREIGN FIRMS AIRLINE FLEET
DEFENSE & AEROSPACE (2016)
INDUSTRY TURNOVER
(2016)

EXPORTS PASSENGERS

$2
BILLION
HUB
AVIATION HUB
INCREASING CONNECTIVITY WITH
286 INTERNATIONAL DESTINATIONS
(as of 2016)
193
MILLION
DEFENSE & AEROSPACE AIRLINE PASSENGERS
INDUSTRY EXPORTS (2017)
(2016)

Source: SIPRI, SASAD, DGCA, DHMİ, Ministry of Transport, Maritime Affairs and Communications
Agenda

• Snapshot

• Turkish Defense Industry

• Turkish Civil Aviation

Turkish Defense
Turkish defense industry has important advantages with a globally-competitive edge..
Industry

Well-developed
industrial and
human resource
ecosystem

Strong government
support to joint
Globally-
ventures,
competitive
international
national defense
partnerships and
companies
defense
Strong cooperation

government
support to
Cost-competitive
the defense
High number of
defense products industry strategic
vis-a-vis Western-
agreements with
manufactured
international
equivalents, suiting
partners, facilitating
budgets of the
defense industry
governments with
collaboration and
financial
trade
constraints
Among the largest
defense budgets
globally
Transformation of the Turkish defense industry has been undergoing a profound transformation from a sole procurement
Defense Industry to design and manufacture..

Pre-1990 1990-2000 2000-2010 2010-2020 2020-2030

Indigenous
Direct Partial Design Basic & Advanced
Co-Production Design
Procurement (Main Platforms) Technologies
(Local Production)

Armoured Combat Altay (Tank) Indigenous Helicopter Complete Localization

Cobra AH-1 W
Vehicle Program
(Attack helicopter)
Milgem (Warship) Life Cycle Management
Light Transport Aircraft Indigenous Fighter Jet
AB-412 Helicopter
Anka (UAV-MALE Class) Project Performance-based
Basic Trainer Aircraft Logistics
MLRS (Rocket system)
Hürkuş (Basic trainer Göktürk-3 Satellite
Cougar Helicopter aircraft)

Source: SSM
Transformation of the
Turkey’s decisive policies have yielded significant results in transforming the defense industry..
Defense Industry

Local Content in Turkey’s Defense Procurement

68.5%

24%

2002 2016

Source: SSM
Transformation of the Turkey has introduced industrial participation (IP) / offset (O) policies in order to facilitate long-term
Defense Industry cooperation with international partners in the field of defense, aerospace and homeland security..

BASELINE CATEGORIES MULTIPLIERS

Indicator Requirement Category A Transaction Multiplier

Threshold to Require Offset $5 Million Design & Engineering Works
2
Performed by SMEs (Cat-A)
At least 70% of the Contract Direct Industrial Participation
IP/O Commitment All other IP Works (Cat-A) 1
Price
30% of the Category-A IP&O Export of Platforms 4-5
Subcontractor / SME Portion
15% of SME share Category B
Domestic Net Added Value Export of Systems / Subsystems 3
Crediting Basis Export of products/services in
(DNAV)
the areas of defense, Export of Structural Parts 2
Separate IP&O Agreement
Type of Agreement aerospace and homeland
with the Contractor SME Portion in Export (+ 1)
security
Bank Guarantee 6% of IP&O Commitment
Export to Prior Market (+ 1)
Period of Performance Program Duration + 2 Years
Category C Technological Collaboration (Cat-C) 3-5
6% of Unfulfilled
Penalty Enabling technology/ability that is
Commitment ▪Acquire technology / capability 6-8
requested particularly by SSM (Cat-C)
Temporary Crediting Allowed (Conditional) ▪New investment in the areas
Foreign Direct Investment (Cat-C) 4
of defense, aerospace and
Banking of Credits Allowed (Valid for 5 Years) homeland security Transfer of Hardware / Software
to University / Research Institute 3
Transfer of Excess Credits Allowed (Causality) (Cat-C)

Source: SSM
 Defense
Turkish defense expenditures have significantly expanded over the past two decades..
Expenditures

Top 20 Countries by Defense Turkey's 5-year Average Annual Defense Spending Distribution of defense expenditure
Expenditures in 2016 ($ Billion) ($ Billion, current prices) by main category (2016)
1 USA 611.2
2 China 215.2
3 Russia 69.2 16.8 17.0
Infrastructure
4 Saudi Arabia 63.7 2.6% Other
5 India 55.9 16%
6 France 55.7
7 UK 48.3
8 Japan 46.1 11.1 34.5%

9 Germany 41.1 23%

10 South Korea 36.8 8.7

11 Italy 27.9
12 Australia 24.6 6.5
13 Brazil 23.7
14 Israel 18.0 4.0
40%
15 Canada 15.2 2.5
16 Spain 14.9
Personnel
17 Turkey 14.8 59%
18 Iran 12.7
19 1982-1986 1987-1991 1992-1996 1997-2001 2002-2006 2007-2011 2012-2016
Algeria 10.2 Outer Circle: Turkey
Inner Circle: NATO
20 Pakistan 10.1
Equipment expenditure includes major equipment expenditure and R&D
devoted to major equipment. Personnel expenditure includes military and
civilian expenditure and pensions. Infrastructure expenditure includes
NATO common infrastructure and national military construction. Other
expenditure includes operations and maintenance expenditure, other R&D
expenditure and expenditure not allocated among above-mentioned
categories.
Source: SIPRI, NATO
 Turkish Defense Turkish defense industry turnover has doubled over the past seven years with an annual average
Industry growth rate of 10%.

Defense Industry Turnover Exports ($ Billion) Logistic Support $335 million

($ Billion)
CAGR
13%
MRO (Military) $202 million
CAGR
10% 2.0 Other $873 million
6.0
Land Platforms $1,702 million
28% Air Platforms $888 million
15%

0.8 Weapon-ammunition & Missiles

3% $844 million
6%
TURNOVER Products for Civil Aviation
2009 2016 $585 million

9%
$6
3.1
Orders ($ Billion)
BILLION Naval Platforms $539 million

(2016)
15%
12 10%
11
14%

8.0 7.7

2009 2016 2013 2014 2015 2016

Source: Defense and Aerospace Industry Manufacturer Association of Turkey (SASAD)

 Turkey’s growing and diversifying exports have explored new opportunities in Middle East, Africa,
Exports
Central Asia and South America

11

167
75

171
46
($916M)

TOTAL 446

EXPORTS 3

$2
31 18

209

BILLION 16
($585M)

(2016) 308

6
25
26
67
124
($448M)
200

Source: SASAD
 While Turkey has considerably increased its domestic capacity in the defense industry, it continues to
Imports
import a significant amount of aerospace products..

$92M 112
$128M 51
($143M)
138
$280M 103

$435M

($307M)
TOTAL 2,100

IMPORTS
~$5 $4,030M

BILLION
101
128
220

(2016)

($485M)

1,896

Source: SASAD, Turkish Statistical Institute

 Turkey is located in proximity of lucrative markets with a significant trade volume of defense and
Trade
aerospace products..

Global Imports ($Billion) Regional Imports ($Billion, 2016)

European Defense European Imports
259.1 Spending (2016) ($bn)
119

$337 62
116
billion 59

2.7 2.8
152.4 2007 2016

248.6 MEA Defense MEA Imports

Spending (2016) ($bn)
26

145.2 $173
billion 8.9 24

8.4
1.3
0.5
2007 2016

7.2 10.5

2007 2016
Arms & Ammunition Aircraft & Spacecraft

Source: SIPRI, ITC

 Orders in the defense industry have significantly increased, amounting to ~$12 billion in 2016, with
Orders
90% coming from domestic clients.

✓ Land platforms/systems = $5,920 m.

✓ Air platforms = $3,391 m.
✓ Weapons & Missiles = $1,080 m.
Geographic Sources of
✓ Naval = $640 m.
Orders in 2016
✓ Civil aviation = $293 m. ($ Million)
✓ Security systems = $254 m.
✓ MRO (Military) = $210 m.
✓ Other = $125 m.
✓ TOTAL = $11,913 m. Domestic 10,611

2016
Source: SASAD, 2016
 Major
Leading players represent a significant portion of the Turkish defense & aerospace industry..
Players

Rank Turnover Rank Turnover

Company Company
(2015) ($Million) (2015) ($Million)

1 ASELSAN 985 14 NUROL MAKİNA 40

2 TURKISH TECHNICS 928 15 PROBIL 34

3 TAI 786 16 DEARSAN 33

4 TEI 309 17 HST AUTOMOTIVE 28

5 ROKETSAN 277 18 ÖZTEK TEXTILE 23

6 FNSS 188 19 AYDIN SOFTWARE 22

7 MKEK 178 20 ISTANBUL SHIPYARD 21

8 STM 170 21 YAKUPOĞLU TEXTILE 20

9 OTOKAR 158 22 SAMSUN YURT SAVUNMA 16

10 HAVELSAN 133 23 ÇAN JOINT VENTURE 15

11 BMC 77 24 SAVRONİK 15

12 ALP AVIATION 62 25 YONCA-ONUK 15

13 SEDEF SHIPBUILDING 42
Source: Undersecretariat for Defense Industries, turnovers as of end-2015 and cover defense and aerospace production revenues only
 Major
Turkish defense companies, Aselsan, TAI and Roketsan are among world’s top defense players.
Players

2009 2010 2011 2012 2013 2014 2015 2016 2017

57th
58th

Ranking of Turkish
61st
Companies Among World’s
62nd
Top 100 Defense
Companies 67th 72nd
74th

78th 78th

80th 80th
83rd
86th 85th

93rd 98th
Source: DefenseNews, Annual rankings based on preceding years' financials.
 Turkish defense industry has developed a strong culture of partnerships which have successfully
Partnerships
implemented important projects..

1988 2010 1985

FNSS, a joint venture owned 51% by Nurol Holding and Kale Pratt & Whitney, a joint venture owned 51% by Kale Group TEI, a joint venture of TAI, GE, Turkish Armed Forces
49% by BAE Systems, is a leading manufacturer and and 49% by Pratt & Whitney, use state-of-the-art technologies Foundation (TAFF) and Turkish Aeronautical Association (TAA),
supplier of tracked and wheeled armored vehicles and critical to the production of the F135 engine powering the F-35 has been a key player in manufacturing, assembly and testing
weapon systems for the Turkish and Allied Armed Forces. Lightning II fighter aircraft. technology of aircraft engine parts and modules.

2014 2017 2017

Qatar Armed Forces
BMC, which is a Turkish-Qatari partnership, manufactures Rolls-Royce and Kale Group, established a joint venture
tactical armored vehicles for the defense industry, in addition BAE Systems and TAI signed an agreement, worth £100m, to
collaborate on the first development phase of an indigenous company owned 51% by Kale and 49% by Rolls-Royce 49%, to
to buses for public transportation, light and heavy weight develop aircraft engines for Turkey, initially targeting the TF-X
trucks for transportation and logistics industry. fifth-generation fighter jet for the Turkish Air Force – TF-X.
National Fighter Jet Project.
 Global Supply Developing a domestic competitive supply chain base has also integrated Turkish companies into the
Chain global value chain..

Global Supply Chain of A400M

Airbus A400M Program

A400M is the first program that enabled TAI to gain capability and
responsibility of a whole life cycled aerospace product starting from
concept design studies to after sale logistics support activities. TAI's
workshare in A400M Program includes design and manufacture of
structural components as Forward Center Fuselage with Emergency Exit
Door, Section 17 Upper Shell with Rear Hatch Door, Paratroper Doors,
Tailcone, Ailerons and Spoilers. TAI has also manufacturing
responsibility of all fuselage harnesses. TAI has first level design and
procurement responsibility on lighting system (except cockpit) and
water and waste system.

1-Ratier-Figeac, 2-AM Seville, 3-AF Saint Eloi, 4-AUK Filton, 5-DENEL, 6-AF Nantes, 7-AD Stade, 8-AM Seville, 9-AD Stade, 10-TAI, 11-SOCATA, 12-TAI,
13-AD Bremen, 14-AD Bremen, 15-TAI, 16-AF Saint Nazaire, 17-Messier-Dowty, 18-PAG,19-SOGERMA, 20-SOCATA, 21-Messier-Dowty, 22-SONACA,
Source: Airbus Military 23-AD Stade, 24-AUK Filton, 25-SONACA, 26-Aerolia, 27-TAI
 Global Supply F-35 Production Industrial Participation opportunities for Turkish companies are expected to reach
Chain more than $12 billion..

Manufacturing F-35 Developing manufacturing approaches Currently is the Manufacturing 40% of the F-35 Electrical Havelsan has been
production airframe for advanced optical components, which sole source supplier Wiring & Interconnection System (EWIS) instrumental as the Turkish
structure and assemblies, are part of the F-35 Electro Optical for two major F-35 and will also deliver and support TAI lead for developing the
production landing gear Targeting System. They are also working components – with all center section wiring systems. construct of the future Turkish
components and over 100 with Northrup Grumman on the F-35 missile remote Fokker Elmo is also developing the EWIS F-35 Integrated Pilot and
F135 production engine CNI Avionic Interface Controller and will interface unit and for the F135 engine, for which a major Maintenance Training Center
parts to include titanium initiate full scale production activities in the panoramic share is produced in Fokker Elmo Turkey (ITC) and associated training
integrated blade rotors. the near term. cockpit display. in Izmir. systems in Turkey.

TAI has been strategically supporting the F-35 Program since In conjunction with Turkish Aerospace Industries, ROKETSAN and Tubitak-SAGE are the Turkish joint leadership
2008. The company currently supplies production hardware they manufacture and produce F-35 airframe team who strategically manage the development, integration,
that goes into every F-35 production aircraft. In conjunction structures and assemblies. Kale Aero also supports and production of the advanced precision-guided Stand-off
with Northrup Grumman, TAI manufactures and assembles Heroux Devtek as the sole source supplier for all Missile (SOM-J) which will be carried internally on the 5th
the center fuselages, produces composite skins and weapon three variants landing gear up lock assemblies. Generation F-35 aircraft. Additionally, Lockheed Martin Missiles
bay doors, and manufactures fiber placement composite air Additionally, Kale Aerospace has also established a and Fire Control has partnered with Roketsan, through a
inlet ducts. Additionally, TAI is strategically manufacturing 45 joint venture in Izmir with Pratt & Whitney and is teaming agreement, to jointly develop, produce, market and
percent of the F-35’s including Air-to-Ground Pylons and manufacturing production hardware for the F135 sell the advanced, precision guided Stand Off Missile – Joint
adapters which is Alternate Mission Equipment (AME). engine. Strike Fighter (SOM-J).

Source: www.F35.com
 Domestic In addition to international partnerships, Turkish companies have developed strong domestic
Capabilities capabilities with cutting-edge technologies.. UAVs are a key area where Turkish companies excel..

ANKA BAYRAKTAR TACTICAL UAS KARAYEL TACTICAL UAV

ANKA, advanced Medium Altitude Long Endurance class Bayraktar Tactical UAS is a Medium Altitude Long KARAYEL Tactical UAV System is the first and only
Unmanned Aerial System, performs day and night, all- Endurance class system developed for tactical Tactical Unmanned Aerial Vehicle designed and
weather reconnaissance, target detection / identification reconnaissance and surveillance missions. Prototype produced according to NATO’s STANAG-4671 for
and intelligence missions with its EO/IR and SAR payloads, Development Phase started within 2007 based on reconnaissance and surveillance purposes. With its
featuring autonomous flight capability including Automatic competition model. Bayraktar Tactical UAS with its capable Payloads on board, KARAYEL can not only
Take-off and Landing. ANKA incorporates a heavy-fuel critical all subsystems - including Flight Control, INS- detect a target but also mark it with its laser
engine and electro-expulsive Ice Protection System with an GPS, Automatic Take Off-Landing systems developed in designator. KARAYEL can take off, land and fly a
Advanced Ground Control Station and dual datalink house demonstrated fully automatic taxi, take off, designated mission fully autonomously without
allowing operational security and ease. The system is cruise, landing, parking phases - was selected as the assistance from a pilot. Payload capacity and
expandable with a Transportable Image Exploitation winner of the program in 2009. variations are available for both civil and military
Station, Radio Relay, Remote Video Terminal and SATCOM. applications.
Technical Specifications
Technical Specifications ▪ Wing Span: 12 m Technical Specifications
▪ Wing Span: 17.3 m ▪ Length: 6.5 m ▪ Wing Span: 10.5 m
▪ Length: 8 m ▪ Powerplant: 100 HP ▪ Length: 6.5 m
▪ Powerplant: 150 HP ▪ Payload Capacity: >55 kg ▪ Powerplant: 97 HP
▪ Payload Capacity: 200 kg ▪ Endurance: >24 hours ▪ Payload Capacity: 70 kg
▪ Endurance: 24 hours ▪ Service ceiling: 24,000 ft ▪ Endurance: 10 hours
▪ Service ceiling: 30,000 ft ▪ Data range: 150 km ▪ Service ceiling: 22,500 ft
▪ Data range: 200 km ▪ Cruise Speed: 70 knots ▪ Data range: 150 km
▪ Cruise Speed: 110 knots ▪ Cruise Speed: 60-80 knots
 Indigenous In order to meet Turkish Air Force (TurAF) requirements beyond 2030s, Turkey has introduced an
Design indigenous design and development program (TF-X) to replace the aging F-16 fleet of TurAF..

TF-X Program
Within the scope of TF-X Program, Turkey will become one of the few countries to possess the necessary
technologies, engineering infrastructure and production capabilities, once the engineering activities on all
the critical technologies are accomplished (e.g. increased situational awareness, sensor fusion, low
observability, weapon bay, …etc), which are needed by a 5th generation (or beyond) jet fighter aircraft.

TF-X aircraft is planned to be kept operational in the TurAF inventory until 2070s and will be interoperable
with other critical assets of TurAF such as F-35As.

The TF-X indigenous design and development program prime contract between Undersecretariat for Defense
Industries (SSM) and Turkish Aerospace Industries Inc. (TAI) has been signed on 5th of August 2016.

The timing of this signature alone, is a key demonstrator of Turkey’s determination of running mega-
projects uninterruptedly, even under extraordinary conditions.

Currently, the prime contract covers the initial four (4) years (starting after signature of major subcontracts)
which will end up with completion of preliminary design phase. Within this period beyond the design and
development of TF-X Aircraft, engineering capabilities, technology development activities (for key sensors
like radar, electronic warfare..etc.), test infrastructures establishment and certification processes will be
performed and extensive capabilities for a new generation jet fighter design, development and production
will be gained by Turkish industry. TF-X aircraft will be a multi-role aircraft, it will be designed mainly for air-
to-air role with a consideration to air-to-surface roles as well. Upon engineering analysis, TF-X aircraft will be
a multi-role aircraft, it will be designed mainly for air-to-air role with a consideration to air-to-surface roles
as well. Upon engineering analysis, preliminary calculations, based on received information of suppliers of
candidate engines, TF-X aircraft is decided to be a twin engine configuration.

In this regard a Heads of Agreement (HoA) was signed between TAI and BAE Systems on 28th of January
2017, in the presence of the Prime Ministers of Turkey and the United Kingdom. In addition, the Letter of
Agreement (LOA) was signed during the IDEF 2017. The TAI-BAE Systems Collaboration Agreement was
signed and entered in to effect on 25th of August 2017.

One of the key ambition and consideration of SSM and TurAF, which is shared by the Turkish industry as
well, is the exportability of TF-X aircraft to key allies and friendly countries. In this regard, Turkey also
welcomes any opportunities for participation of interested countries in a win-win model.
 Turkish defense industry has an attractive ecosystem supported by a qualified workforce, incentives
Ecosystem
and know-how…

Product & Technology Engineer: 30% Incentive Schemes

Development Expenditures ($million)

Strategic Investments
Incentives for Priority

Incentives for Large

Technician: 30%

Regional Incentives
General Incentives

Scale Investments

Project-Based
Incentives for
Investments

Incentives
Incentives
1254 2016 University Graduates

R&D
Employment (other fields): 11%
in the Industry:
35.502 Other11% Main Incentive
Tools
Corporate Tax
741 Reduction
✓ ✓ ✓ ✓ ✓ ✓

VAT/Custom Duty
Exemption
✓ ✓ ✓ ✓ ✓ ✓ ✓

Motor Vehicles, Ships & Aircraft Social Security

Premium Support
✓ ✓ ✓ ✓ ✓ ✓
Chemical Engineering & Processes
Income Tax
Withholding Support
✓ ✓ ✓ ✓ ✓ ✓ ✓
367 10,456
2,175 Interest Support ✓ ✓ ✓ ✓
Electronics & Automation
513 Land Allocation ✓ ✓ ✓ ✓ ✓
247
2016 Partnership (Equity
Engineering Mechanics & Metals
Investment by Govt.)
✓
15,435
120 Graduates in Guarantee of Purchase
1,245 Turkey by Govt.
✓
2007 2016
Financed by Equity Financed by Incentives
Energy Cost Support ✓

Financial Grant ✓

Source: SASAD, Higher Education Council, Ministry of Economy, Ministry of Science, Industry and Technology
 Turkish defense and aerospace investments are eligible for a wide range of incentives offered by the
Incentives
government, lucrative incentives schemes boost project economics substantially…

Manufacturing investments in defense and aerospace Research, Development, and Design activities are backed
receive incremental benefits by generous support programs

✓ Corporate Tax deductions (up to 100%) ✓ 100% deductible R&D expenditures

✓ Tax credits (up to %90) ✓ Corporate Tax exemptions
✓ Land Allocation ✓ Income Tax exemption for R&D personnel
✓ Project Financing Support ✓ VAT exemptions on final products
✓ Social Security Premium Exemptions ✓ Dedicated Technology Development Zones
✓ VAT and Customs Duty Exemptions ✓ Early stage financing for start-ups
✓ Training support ✓ Export support

Lowering upfront costs, Grants, incentives, and

improving cash flow, and supports are available at
accelerating returns on all stages of new product
investment development life cycle
✓ Industry Participation / Offset
✓ Product based supports/loans
✓ Industry development programs
✓ Exemptions for duties
Clusters As the industry developed, important aerospace clusters have emerged across Turkey..

220 companies
www.teknoparkistanbul.com 400 companies

www.hab.org.tr
Defense and Aerospace Cluster Association

sahaistanbul.org.tr
173 companies 125 companies

İstanbul www.ostimsavunma.org
www.tssk.org.tr

Bursa
75 companies
Ankara Kırıkkale
Eskişehir silahosb.org.tr
Bursa Aerospace and Defense Cluster
www.basdec.org

İzmir www.esac.org.tr

29 companies

www.hukd.org.tr

45 companies
Industry Events Turkey hosts important events with significant international participation…

April 25-29, 2018

Antalya
www.eurasiaairshow.com

12th International Civil Aviation & Airports Exhibition &

Aviation Industry Supply Chain Platform

www.istanbulairshow.com

14th International Defense Industry Fair

April 30 – May 3, 2019
Istanbul
idef.com.tr
 Industry The business environment for the industry is well-organized with a strong cooperation between
Organizations the public and private sector..

UNDERSECRETARIAT FOR DEFENSE INDUSTRIES (SSM) DIRECTORATE GENERAL OF CIVIL AVIATON (DGCA)
SSM was established in 1985 with a mandate to develop DGCA is in charge of regulating the civil aviation industry in
policies establishing a modern defense industry infrastructure in accordance with the national and international regulations and
Turkey and has the authority and responsibility to implement standards in order to ensure flight safety and security of the civil
these policies. As per its mandate, SSM carries out major aviation. Its main duties, among others, are: to issue relevant
systems procurement, industry policymaking, localization documentation and to register aircraft; to audit licenses of flight
strategy, R&D and international industry relations. SSM is crew; to determine the licensing terms of personnel working in the
responsible for reorganizing and integrating the existing civil aviation; to regulate the terms and conditions for the
national industry in line with defense industry requirements; permissions to be granted to real or legal persons to perform air
supporting new enterprises; exploring the opportunities with www.shgm.gov.tr transportation activities in or out of Turkey; to regulate and audit air
www.ssm.gov.tr foreign investment and technology contributions; supporting navigation of commercial aircraft, as well as traffic communication
enterprises to partner with foreign investors. services in Turkish airspace.

DEFENSE & AEROSPACE INDUSTRY MANUFACTURERS

GENERAL DIRECTORATE OF STATE AIRPORTS AUTHORITY
ASSOCIATION (SaSaD)
(DHMİ)
SaSaD was established in 1990 with a mission to contribute to
DHMİ is a state-owned enterprise in charge of the management of
the development, strengthening, and competitiveness of the
Turkish airports and controlling Turkish airspace. It main activities
Turkish defense and aerospace industry. As the representative
are; management of airports, ground services at airports and air
of the Turkish defense and aerospace industry, both in Turkey
www.sasad.org.tr traffic control services, establishment and operation of air navigation
and international platforms, SaSad aims to facilitate the
systems and facilities and other related facilities and systems, and to
business environment for the industry players in coordination
www.dhmi.gov.tr maintain them at the level of modern aeronautics.
with the procurement authorities and contractors. Having
started the business with 12 founding members at the
beginning, SaSaD currently has 113 full members and 75
special members in the communication network as of 2017.
Agenda

• Snapshot

• Turkish Defense Industry

• Turkish Civil Aviation

 Civil Aviation Turkey is a key player in global air transportation..

rd
3 European Passenger Ranking

11th Worldwide Passenger Ranking

TURKEY

th Worldwide RPK Ranking

10

th Worldwide RTK Ranking

10

14th Worldwide FTK Ranking

th Worldwide Air Traffic Ranking

12

th
5 European Air Traffic Ranking
Source: ICAO 2016

RPK: Revenue Passenger-Kilometers

RTK: Revenue Ton-Kilometers
FTK: Freight Ton-Kilometers
 Civil Aviation Turkey’s civil aviation has been rapidly growing…

Aircraft* (# of Aircraft) Airline Passengers (million) Airline Cargo Capacity (Ton) General Aviation (# of Aircraft) Turnover ($ Billion))
126% 467% 501% 114% 809%
1,417 193 1822 347
20

626 162

34 303

2003 2016 2003 2017 2003 2016 2003 2016

Airline Fleet (# of Aircraft) Airline Seat Capacity Air Taxi (# of Aircraft) Business Jets (# of Aircraft)
(Thousands of Seats)

233% 277% 76% 256%

540 100.4 231 114

131

162 27.6 32 2.2

2003 2016 2003 2016 2003 2016 2003 2016 2003 2016

Source: Director General of Civil Aviation (DGCA), *Airline, air taxi, general aviation, business jets, aerial agriculture, balloon.
 Airlines 13 airline companies are operating in Turkey as of end-2016..

Airline Companies Passenger Aircraft Seat Capacity Cargo Aircraft Freight Capacity Total Aircraft

300 59,679 8 552,000 KG 308

49 9,261 49
70 12,930 70
25 6,349 25
7 353,000 KG 7
25 4,944 25
8 1,440 8
3 121,575 KG 3
11 2,079 11
7 795,025 KG 7
8 1,488 8
5 840 5
14 1,335 14
TOTAL 515 100,365 25 1,821,600 KG 540 Source: DGCA
 International Turkey’s convenient location makes it a natural hub for aviation, as such, Turkish government has
Connectivity significantly invested in airport infrastructure to develop Turkey into an international hub..

2003 2016
50 countries 118 countries
60 international
destinations 286 international
destinations

2 domestic hubs 7 domestic hubs

26 55
domestic domestic
destinations destinations

Source: DGCA
 Civil Aviation Improvement in the airport infrastructure has been a major boon to the Turkish civil aviation..

Domestic Passengers (million)

Number of Domestic Passengers THE BUSIEST AIRPORTS IN TURKEY
(MILLIONS OF PASSENGERS AS OF 2017)

110
102
AIRPORT CODE DOMESTIC I N TE R N ATI O N A L TOTA L

97
0 1 I S T A N B U L I S T 1 9 . 5 4 4 . 3 6 3 . 7

85
0 2 I S T A N B U L S A W 2 1 . 1 1 0 . 3 3 1 . 4

76
0 3 A N T A L Y A A Y T 7 . 5 1 8 . 5 2 5 . 9

65
58 0 4 A N K A R A E S B 1 3 . 9 2 . 0 1 5 . 8
51

0 5 İ Z M İ R A D B 1 0 . 5 2 . 4 1 2 . 8
41

0 6 A D A N A A D A 5 . 0 0 . 6 5 . 6
36
32
29

0 7 T R A B Z O N T Z X 4 . 0 0 . 2 4 . 2
21
14

0 8 M U Ğ L A D L M 1 . 4 2 . 3 3 . 7
9.1
8.7

0 9 M U Ğ L A B J V 2 . 6 0 . 9 3 . 5
2006
2002
2003
2004
2005

2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
1 0 G A Z İ A N T E P G Z T 2 . 6 0 . 3 2 . 9

International Passengers (million)

Number of Inernational Passengers THE BUSIEST AIRPORTS IN EMEA REGION
(MILLIONS OF PASSENGERS AS OF 2016)
84

83

AIRPORT CODE DOMESTIC I N TE R N ATI O N A L TOTA L

80

0 1 D U B A I D X B 0 . 5 8 3 . 1 8 3 . 7
73

71
66

0 2 L O N D O N L H R 4 . 7 7 7 . 0 7 5 . 7
59

0 3 P A R I S C D G 5 . 5 6 0 . 4 6 5 . 9
52

0 4 A M S T E R D A M A M S 0 . 1 6 3 . 5 6 3 . 6
44
44

0 5 F R A N K F U R T F R A 7 . 1 5 3 . 7 6 0 . 8
38
35

33
31

0 6 I S T A N B U L I S T 1 9 . 0 4 1 . 3 6 0 . 2
25
25

0 7 M A D R I D M A D 1 4 . 3 3 6 . 1 5 0 . 4
0 8 B A R C E L O N A B C N 1 1 . 8 3 2 . 3 4 4 . 1
0 9 L O N D O N L GW 3 . 9 2 9 . 3 4 3 . 1
2006
2002
2003
2004
2005

2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017

1 0 M U N I C H M U C 9 . 7 2 2 . 6 4 2 . 3

Source: DHMİ, Airports Council International (ACI)

 Hub
Over the past decade, Istanbul Atatürk Airport has rapidly developed into an international hub..
Connectivity

HUB CONNECTIVTY: 15 FASTEST GROWING AIRPORTS IN EUROPE

2007 2017 Growth

2007-2017
01. FRA 61657 01. FRA 69930 13%

02. CDG 47528 02. AMS 56535 70%

03. AMS 33280 03. CDG 47217 -1%

04. LHR 28734 04. IST 33908 591%

05. MUC 23747 05. LHR 32407 13%

06. MAD 17911 06. MUC 28599 20%

07. VIE 13918 07. SVO 17990 291%

08. ZRH 12411 08. MAD 17979 0%

09. FCO 7855 09. ZRH 15157 22%

10. CPH 7759 10. VIE 13803 -1%

11. MXP 7459 11. FCO 12427 59%

12. HEL 5084 12. HEL 9982 96%

13. IST 4907 13. BRU 6665 141%

14. SVO 4600 14. LIS 5805 176%

15. BCN 3718 15. CPH 5404 -30%

Source: ACI Europe Airport Industry Connectivity Report 2017 *Connectivity is a composite measure of the number of destinations, the frequency of services and the quality of the connections (in the case of hubbing or indirect services).
 Airport Turkey is building world’s largest airport in Istanbul...

HUB

200 million 350 500 Airplane 2,000 daily 6

Runways Operational
passenger capacity Destinations Parking Capacity landing & departures
in 2018
 With more than 4 billion new passengers, global aviation market will grow to 7.8 billion passengers
Global Aviation
by 2036, around one-third of the growth will come from countries around Turkey..

Turkey is set to be 9th largest

aviation market in the world
over the next 20 years..
The Largest 10 Passenger Markets
(Ranked by passenger numbers to, from and within each country)
Europe
2016 2036
0 1 U S A C H I N A Annual average growth : 2.3%
0 2 C H I N A U S A North America 2017 2027 Additional
2017 passengers
2027 : 550 million
0 3 U K I N D I A Overall market size (2036): 1.5 billion
0 4 J A P A N I N D O N E S I A Annual average growth : 2.3%
0 5 S P A I N U K Additional passengers : 452 million
0 6 G E R M A N Y J A P A N Overall market size (2036): 1.2 billion
0 7 I N D I A S P A I N
0 8 I T A L Y G E R M A N Y Asia-Pasific
0 9 F R A N C E T U R K E Y MEA
Annual average growth : 4.6%
1 0 I N D O N E S I A T H A I L A N D Annual average growth : 5.4% Additional passengers : 2.1 billion
Additional passengers : 596 million Overall market size (2036): 3.5 billion
5 Fastest Growing Markets Overall market size (2036): 917 million
(In terms of annual additional passengers in 2036 compared to 2016)
Additional Passengers (million)
1 C H I N A 9 2 1 Latin America
2 U S A 4 0 1
Annual average growth : 4.2%
3 I N D I A 3 3 7
Additional passengers : 421 million
4 I N D O N E S I A 2 3 5
Overall market size (2036): 757 million
5 T U R K E Y 1 1 9

Source: IATA
 Turkey is also well-positioned to benefit from Maintenance, Repair, and Overhaul (MRO) business in
MRO
the region that hosts 34% of World in-service fleet and accounts for 40% of global MRO market..

Europe
24.4 7,704
1,511
21.1 3.3
North America 6,193

8,295
20.7 7,674 621
18.7 2

2017 2027 2017 2027

MRO ($B) Fleet

World Asia-Pasific
2017 2027 2017 2027

35,508 MRO ($B) Fleet 43.2 13,846

109.2
MEA
3,367 20.8 6,496
10,140
33.6
25,368 13.4 994 22.4 7,350
75.6 2,373
4.5
8.9

Latin America 2017 2027 2017 2027

MRO ($B) Fleet

7.3 2,296
2017 2027 2017 2027
1,778 518
2.8 MRO ($B) Fleet
4.5
2017 2027 2017 2027

MRO Market In-Service Fleet

($B)
2017 2027 2017 2027

MRO ($B) Fleet

Source: Oliver Whyman

 Partnerships Competition and cooperation go hand in hand in the Turkish aerospace industry..

2009 1989 2011

SunExpress was founded as a subsidiary of Turkish Airlines and
Lufthansa. Today, SunExpress has a fleet of 70 aircrafts with A joint venture owned 51% by Turkish Technic and 49% by
13,950 seats capacity, flying to more than 100 destinations. It TAI, the company manufactures galleys and their inserts
The Turkish Engine Center is a joint venture with Turkish (like trolleys, std. containers etc.), crew rests, cabin
Technic specializing in CFM56 and V2500 engine overhaul carried around eight million passengers in 2016. With its 26 years
of experience and thus the long-term commitment in the traffic dividers, wind screens, miscellaneous stowage, coatrooms,
and repair. The Turkish Engine Center unites the long video control compartments, aircraft textile, leather and
histories of engineering and maintenance excellence of its between the home markets of Turkey and Germany, the airline
has acquired the reputation of the holiday specialist even beyond most of other cabin interior parts except for the aircraft
parent companies. Established in 2009, the facility is seats.
located at Istanbul's Sabiha Gokcen Airport and has Turkey.
performed more than 400 engine overhauls.

2010 2011

Established in 2008, acquired by HNA in 2010 myTECHNIC A joint venture owned 60% by Goodrich Aerostructures and 40% by TSI Aviation Seats was established as a joint venture
is World’s first lean greenfield MRO with a total closed area Turkish Technic, Goodrich Turkish Technic provides services for owned 50% by Turkish Airlines and 50% by Assan Hanil,
of 48,400 m² and one of its kind in the region with a nacelles, thrust reversers, related parts and rotable support. with the target of designing, producing, repairing and
15,788 m² hangar area, 12,115 m² office area and 20,500 marketing all types of aircraft seats and supplying their
m² warehouse and shop area under one roof. Located in spare parts.
Sabiha Gökçen Airport, myTECHNIC has established
business with 130+ customers in 10 regions.
 Turkish Airlines has shown incredible growth over the past decade, taking competition to a higher
Showcase
level..

250% 1873% 223% 74% 81% 186%

68.6 21.7 250 10.4

329 120

69 138

3.7
19.6 102

1.1
2007 2017 2007 2017 2007 2017 2007 2017 2007 2017 2007 2017

Millions of Passengers Int’l Transit Passengers Fleet Countries Served International Destinations Revenue* ($Billion)
(million) (Number of Cities)

Source: Turkish Airlines *2017 annualized as of September 2017

 Showcase The visionary leadership of Turkish Airlines is committed to expanding..

“We will increase

our fleet to 500
aircrafts and
revenues to 30
billion dollars by
2023”

Mr. İlker AYCI

Chairman
Turkish Airlines
 Growth Drivers of
Turkey’s macro fundamentals have been a key driver of civil aviation…
Civil Aviation

$ PROXIMITY TO
5.6 MAJOR MARKETS
10,833
%
1.5 BILLION PEOPLE, $24T GDP AND 45%
GLOBAL TRADE AT A 4-HOUR FLIGHT DISTANCE

AVERAGE ANNUAL INCOME PER CAPITA

Russia
REAL GDP GROWTH AS OF 2016, UP FROM Europe GDP: $1.3T
OVER THE PAST 14 YEARS $3,581 IN 2002 GDP: $19T Population: 144mn
Population: 673mn Central Asia & Caucasus
GDP: $0.3T
Population: 87mn
MENA
GDP: $3.2T
Population: 501mn

$
391 30+
billion million
FOREIGN TRADE VOLUME AVERAGE ANNUAL NUMBER OF
AS OF 2017, UP FROM $88 TOURISTS VISITING TURKEY
BILLION IN 2002 OVER THE PAST 10 YEARS

Source: Turkstat, IMF and World Bank

What can ISPAT do
ISPAT will assist you before, during and after your entry to Turkey
for you?

A governmental body attached Private sector approach with Acting as your

to the Prime Ministry public sector capabilities solution partner

General & customized Site selection support to find Arrangements of meetings

business information & appropriate location/land for with governmental bodies
sectoral analysis & reports your investment and other stakeholders

Facilitating your Matchmaking with local partners Project launch & Facilitating your visit
investment at all stages & establishing business linkages Press release Services to Turkey
THANK YOU

Contact: nkaymaz@invest.gov.tr

www.invest.gov.tr