21 November 2024 
I wonder if you knew Turkey or not? Did you know the sector, the market. You worked at the same company at the same sector for many years and you changed both sector and company. How was it to adapt in the new market? It is not easy to accommodate into these conditions.
Yes actually it is the main reason why I did it. I spend 25 years in TNT. In Singapore, as CEO for Asia. And Çelebi offered me a role in a growing company, in an ambitious company, that is in a growing market, in a profitable market in Turkey. A new adventure, a new adventure in a new sector and in a new country. And I am and adventurist person, I am also entrepreneur, so when I met the family, who are the entrepreneurs and founders of this company, it was an easy sell.
Turkey is in a situation which might fear. It might hesitate you because of your status, because of the sector's status. Wasn't it intimidating that moving in Turkey?
No not at all, no not at all. Actually I personally feel that most people know Turkey either from the media or they know Turkey as a tourist going to Antalya, Bodrum or Dalaman. And that's the image of people about Turkey. But the real image of Turkey is that it is a huge country with a huge population, very Culturally diverse, and an extremely rich history . Yeah. It has mountains and it has seas. It has everything to offer and it is fairly unknown outside of Turkey. And I think there is a role for your government to promote a much broader view of Turkey, rather than just the beach in Antalya. And, so, did I hesitate? Not really, as I told you I am an adventurist person. And I, you know, I like building things, and, and this new adventure in Turkey is one of them.
So this diversity in population is so resembling with the diversity in the commercial relations, commercial activities. So Turkey is in the middle of geographically in the middle of traffic. So it is a hub. How do you evaluate the aviation sector on hub issue? How do you evaluate the hub issue? Do you think we are making good use of this hub issue? .
I think there is still much to improve upon First of all, Turkish culture is much more closer to the Asian culture than the western culture. So, adapting for me was very easy. Yeah? So culturally it is relatively easier. In terms of your question about the hub, I have a vision for Çelebi, I have a vision for Turkey. And that vision comes from my experience in Singapore. Singapore is a very diverse country as well. It has a third Indian population, a third Malay, largely Muslim population and a third Chinese. Very nice blend. So on the basis of a very blended society, what Singapore did as a tiny little country is that it created a platform for the government, ministry of economic affairs, tourism, the transport sector, the logistics sector, the airports, the ground handlers, theairlines, all working to achieve the vision of Singapore. That created the second biggest hub in Asia. This is an example that in my view Turkey should follow. It is so. We should not look at it as a new airport only.
What can we do at this point?
First of all we should not look at it as an airport in isolation. We should have a vision of becoming the largest passenger and cargo hub as a country. In order to achieve that, you need to have everyone work in harmony, supported by the government to attract passengers and trade flows. Trade flows mainly, because its most flight chains start in Asia and reach the markets in Western Europe. That way, you attract passenger and trade flows, which create more jobs for Turkey, not just for the airport or for the airline or for ground handling, but for Turkey. More income for everyone. Yeah? It creates more trade flows and traffic flows into Turkey either transit or destined for Turkey. That benefits the logistics sector, the transport sector the secondary tier suppliers. It benefits for everyone. My view should be, one plus one should be three. Not two. And that's what I think is the challenge to create Istanbul as the largest hub in, on the south of the edge between Europe and Asia. Geographically, Istanbul should be a larger hub than Dubai. A very larger. But you can only achieve it if you all start working together to promote Turkey as the hub for passengers and cargo.
I have got a question in parenthesis now. That's, when you say Çelebi, ground handling services are coming in mind. But, do you have a new vision which is focusing on the cargo services more nowadays? Do you have another tendency? Are you changing your vision, from not only ground handling services but also to cargo services?
Okay, our core business is ground services and cargo services? Yeah. That was maintained. But, cargo flows particularly in the East Asia Pacific region are growing. Cargo is growing and cargo is very profitable. And so, hence, Çelebi should focus itself on building more cargo flows. And this is in line with the hub function that I mentioned you earlier. There are large cargo hubs in Europe. For example in Frankfurt, Paris, London, Amsterdam. But it makes more sense for these hubs to move more to Turkey logistically . And provide comprehensive infrastructure solutions so that Turkey attracts the hub function rather than that in Western Europe. It makes more sense. Yeah? So, we all focus on cargo because it is growing and because it is profitable. We all focus on cargo towards the Middle East and the East. That's where the growth is. In terms of ground services, it's the same thing. Now it is slightly different because the Turkish market in the next five years has a compound annual growth between 11 and 15% of organic traffic growth in Turkey alone. So, we will continue to expand in Turkey, and to grow in Turkey. At the same time we have a second tier strategy to develop Asia Pacific and Middle East as part of our network that we are trying to build. You may know that Turkey is our home market but India is our second home market already, and growing in excess of 35% a year. So we will build on that and then further build through the east. That's our strategy..
So, Çelebi is not only serving for ground handling services but also cargo handling services will be into your second area of activities that whenever people say about cargo services, Çelebi will be coming in mind?
Yes definitely. Our vision internally that we developed is that Çelebi aims to become the most recognized service provider for ground services and cargo handling. That's our vision. So you're right. When people say Çelebi, I want them to say ground handling and cargo handling.
Okay, I will go back to the general points. The central commerce is moving towards east. And as you mentioned, from east to west, there is a movement of goods. And, here, in Turkey, is Turkey really taking the essential steps? For example transit, laws, cargos? Is Turkey taking enough share from the global market at the moment? If we are not taking the essential amount, then what should we do?
Okay. I think the answer is very easy. I don't think you are. But I think you have the single, largest opportunity to make this happen in the next few years with Istanbul new airport. That's why I said, if we can get all to work together, as a community of industries in Turkey, sharing the same vision, then Turkey would benefit far more trade flows. Right now, most of the trade flows bypass Turkey. Yeah? What you should develop is a vision that they don't bypass Turkey but they hub in Turkey. And from there on you have finest distribution to the consuming markets in Europe. And you have a relatively good infrastructure, road infrastructure for example, into Western Europe already. You have relatively cheaper labour costs, more flexible labour laws, so you have all the reasons to compete much better. But everyone must work together.
Ok, for example the companies, for example Turkish Airlines has opened a new cargo terminal. Çelebi, you have also opened a new cargo terminal. How should we read this? What is the tendency? Are you going to make good use of the potential in terms of turning this opportunity into a very good benefit for yourself, for the cargo sector?
Well yes. I told you before cargo business is growing and we need to accommodate the growth. And the Ataturk Airport is heavily congested. And so, in order to provide room for growth in the next two years until the new airport becomes ready, we need to invest in expanding, and so did Turkish Airlines. Yeah? So, to accommodate our growth in the very near future in the next two years, we have to do this. But taking a big step now looking at the new airport, there is need to be on different concepts. More hub concepts, cargo city concepts, cold chain, security services for high value goods. Bonded services, road trucking service networks from Istanbul into the Western Europe. A very different concept. Now we are only servicing the growth that we currently have today..
Çelebi's grounding services and cargo services, when you compare them, what is the amount, what is the ratio of these services. What is the present ratio and what are you estimating to make an increase? What is your estimate of trade for the future?
Well in our business, mainly numbers are not very exact. But it is roughly about seventy-thirty split. But, we have a very strong cargo presence in India, which is growing in excess of 35%. So, on a relative term, cargo will start to take a significant part of Çelebi's overall revenues in the future. At the same time, our ground handling business is also growing with roughly about 15%. So, although the split will change to a more balanced split, the ground services will obviously still be dominant because it is of a larger base.
So, I will come to Çelebi-specific questions. Çelebi is aiming to be a global brand, and how are you going to achieve it?
How we are going to do that. Okay. Well, this is not something that's going to happen overnight of course. Yeah? So we have set ourselves a plan for five years. And we’ve broken it down into a couple of components, three components. First component is how do we grow our business. Yeah? And that means growing our current business in our permanent locations and it also means how can we grow through acquisition, where the opportunities to acquire the businesses that we can develop local or global. Another part of it is developing new services, new business lines that generate new income that support our current revenue development. So, some of this, gives us good organic and inorganic growth.
Second part is, we invest in our infrastructure, in our assets, equipment, buildings and largely focus at enabling technology. Our business is a very labour-intense business. So, it requires a lot of people. Technology can help make it more efficient. So we'd like to be the best quality provider and the most efficient service provider. So that's our second part of strategy.
The third part of our strategy is actually the most important. And that is all about how do we organize ourselves as Çelebi around those strategic goals. What are the competencies and skills that we require to deliver our vision in the next five years, so we would be looking in to recruit fresh new talents to join Çelebi. Secondly, we will invest in our people, which we believe, are the greatest assets of our business. And, I'd like to specifically address this because the DNA of Çelebi apart from being entrepreneurs is a high degree of passion and dedication and loyalty to the company. And we should retain that because that is the value that our customers appreciate a lot. And here at the IGHC (International Ground Handling Conference) conference, people have continuously expressed that our people truly make a difference. So we will invest into training our people, not just standard training but we'll develop them to develop the company. Because at the end of the day I believe that the next layer of management after my management team is going to be the future leadership with this company. And we need to ensure that they come up through the ranks. So as we move these people up, we will also have room for new talents in the back field.
Another part of it is, today we are a Turkish company with entities outside of Turkey. What we aim to become is a global business that is headquartered in Turkey. For that we also need to develop international talents. So do multinational organizations.
They are very beautiful strategies really. But how much? What is the cost of those investments? There is a five year plan, an infrastructure but it has got a cost.
Yes, yes. Okay. If you project Çelebi forth for five years from now, we aim to become an organization that is roughly the size, let's say between 600 and 800 million dollars. So that's a very substantial, large business..
So what is the budget that you are planning to spend in order to reach to these figures?
(Yes I will come to that, I will come to that). As you know, Çelebi today, is a profitable company. We make good profits. We reinvest those profits immediately into our growth. Yeah? So, we make roughly about 22% return in our business, and we reinvest that over the coming years into the business, into growing. Okay? So, you can work out the maths yourself. If you take roughly about 25% margin on roughly let's say 280 million Euros, what is it is today; you know how much investment capability I have. Now that's half of the answer. Because that is financing my business out of my current growth. The other half is, I told you before, among our shareholders of company, roughly about 23% is listed in the stock exchange in Turkey. The remaining shares are fifty-fifty divided between the family, the original founders of the company, and Actera, the largest Turkish private equity firm.
Ok so, I told you our shareholders are both family, and the founders, entrepreneurs and Actera private equity firm. And of course, that's the finance part of achieving the future mission. So in terms of coming back to your question how much, we will reinvest profits we are making into our growing business, so that's roughly a double digit return on sales that we flow back into business...
So every year you are going to have profits, right?
Yes.
Really?
Yes.
Hopefully
No we will! We will!, yeah .
Because cargo services are minimized nowadays and the competition is very high, that's the reason I am saying. Like you are speaking about 25%...
No, I understand. My background is in cargo, is in supply chains. And what we are looking at is developing Çelebi's value proposition in cargo and expanding them into all kinds of news services that generate new incomes
So every year you are speaking of a 25% growth?
Yes, yes, yes.
Every year 25% growth?
Yeah, yeah. For next year, for this year actually, we are on track to achieve roughly about a revenue growth of about 15% because this is the transition year. Last year, our growth was roughly about 25%.
Very big.
Yeah. We must grow to increase our footprint and build scale. quickly.
Now, one of those growing strategies, there are some targets in the surrounding countries, neighbourhood countries. You are looking at the neighbourhood countries of Turkey. What type of structuring do you see, what type of opportunities do you see in the countries surrounding Turkey?
I have read it in one of your interviews you mentioned about your targets in neighbourhood countries. What type of expectancies you have in those surrounding countries?
Ok if you look at it a bit broader around Turkey, particularly towards the north, you have a lot of Former Russian states with Turkish history and Turkish connections. So, Çelebi is a company which was founded in 1958. So, Çelebi inherently knows how to develop business from the scratch, how to transfer the knowledge, how to implement and how to execute it. When you look at our neighbouring countries, they are all at a relatively immature state. So clearly, Çelebi has a lot to contribute developing the infrastructure particularly in airports for ground handling in those countries. So it is a very natural fit. Therefore, it is a natural region for us to focus.
So they are your target countries. They provide advantages, some opportunities for you.
Correct.
When you look at the ground handling services, how is the competition ground, where does it focus, quality, price, speed.? Where does the competitiveness focus regarding ground handling services companies?
Well, you know, the easiest thing would be to say, that we focus on quality and service, etc. But I think the numbers should speak for themselves. Because the numbers never lie. And so, looking at the market in general, we have TGS that provides almost exclusive service to Turkish Airlines. Yeah? And that's getting bigger, - that is growing very fast. So, that is one part of the market. Then you have HAVAŞ and ÇELEBİ. So, our focus is on both international carriers and domestic carriers. The international carriers are focused around creating a network at multiple places. Obviously Çelebi has a larger presence outside of Turkey than our competition. So that's where Çelebi differentiates. But from its founding, Çelebi has always focused on having the best people, the best equipment and the highest quality in the industry. And until today that still remains. That means Çelebi can demand a slightly higher premium because we are known for our quality.
At the point of giving service, is it possible to offer some different services. What is Çelebi, do you provide different as service. What is your difference compared to others?
I mentioned one thing that we are very straightforward focused on quality. And quality always pays off. So I think that's one point. We also talked about the people. And to be very honest, anyone in our industry can buy equipment, can buy buildings, can buy hardware and technology but it still has to be operated by people. And so we believe in Çelebi that people are the greatest assets and through our people we differentiate. I mentioned before, the DNA of Çelebi staff is loyal, dedicated and passionate. Yeah? And customers like to see that and respond to that. So, that's kind of how I see we differentiate. Now, apart from that, we are also in a process now of developing new lines of business, new services. One of those services is for example the platinum services where we take a process of meeting a customer off the plane, and delivering him door to door where he needs to be, and everything in between is provided. All his needs are being served. We keep his luggage, we provide limo services, taxi services, we provide him a door to door drop to his hotel. And any other needs that he might have, we can serve. We do that for arriving and departing passengers. The same concept is now we are also developing for cargo. For example, if there is an urgent package that needs special treatment, we take it off the aircraft, we have it cleared in an expedited manner and take it door to door anywhere where it is required. Those services generate new revenue and they generate higher average profits than our standard business. So that's why the mix is a profitable mix.
I have a question at this point. You have changed the centre. I mean the headquarters changed. So the profile of the passengers changed, The cargo profile changed. And the planes are renewed. And are the ground services handling companies able to coping with those changes? Changes of the passengers, changes of the cargo? Are they enough to cope with these changes? I mean the airlines, new emerging acquisitions. How about ground handling services? Are they also transforming them to adapt to those changing circumstances?
Yes. You know, in any industry that matures, you need to reinvent yourself. So, twenty, thirty year old business models need to be looked at in a different way. So, and I think that's an advantage I personally have of not coming from the ground handling industry. I look at the business as an outsider looking in. And I see new areas of growth, new areas of invention, and obviously what we do in Çelebi is actually very simple. We follow our customers. Where our customers, we grow. And so, that means we stay very close to our customers. Even closer than we are today, we understand where they are developing their infrastructure, and anticipate on those needs. So we develop them as well. This is all part of our strategy.
That's all about my questions. Anything that you'd like contribute, comment and add? I mean...
No, I think we have covered most of it. I am very happy to be here, working in Çelebi and working in Turkey has been very easy. And from a personal prospective...
What do you like most? Kebab?
The food is excellent. And this is the same in Asia. Asians like food, Turkish people like food. Lots of different foods. So it has been easy for me to settle here. But I think one thing that people outside of Turkey should probably appreciate more than they do today is that the profound sincere hospitality of Turkish people and friendliness and helpfulness of Turkish people. It is clearly setting you apart from many countries I have been to. Even though a lot of people do not speak very well English, they are very willing to help you. And I think that's a very unique aspect of you.
The world would be very uncomfortable place if Turkish people weren't there.
Thank you very much.
Ok, thank you.
