Jens Flottau Istanbul and Frankfurt

Europe's legacy airlines are quick to complain about the new competition from the big three Persian Gulf carriers. But they are facing what could be an even more serious threat much closer to home: Turkish Airlines.

Star Alliance member Turkish Airlines is, at least in some respects, in an even better position than that of Emirates, Etihad Airways or Qatar Airways in that it enjoys a significant home market with a main base in Istanbul—the center of Turkey's fast-growing economy. From there, Turkish Airlines can reach all key destinations in Europe, Central Asia, the Middle East and even most of Africa using narrowbodies, whereas Emirates does not even own a narrowbody. Etihad and Qatar predominantly operate widebodies, which are much more expensive to purchase and difficult to fill.

Trip-cost containment is only one of Turkish's advantages; the ability to serve much smaller markets is another. Emirates flies to four destinations in Germany, Turkish serves 12. From the point of view of European airlines such as Lufthansa, Turkish is siphoning the traffic that the German flag carrier needs to feed its hubs in Munich and Frankfurt. The feed not only supplies the long-haul services, it also sustains Lufthansa's European network. As competitors move into increasingly more of its final destinations, its business case becomes even tougher. The fact that Lufthansa also is a Star Alliance partner does not seem to stop what it perceives as Turkish's encroachment into partner territory.

The only weakness now hampering Turkish Airlines is Istanbul Ataturk Airport, which it is outgrowing. But the Turkish government has plans in place to build relatively soon what will become one of the world's largest airports near to the city center.

Temel Kotil, Turkish Airlines' CEO, is the key person behind the turn-around of the once struggling airline. Kotil was appointed in 2003, when the carrier was still fully state-owned and more of public authority than a private entity. But the airline's partial privatization (Turkish is still 49% state-owned) led to a changed corporate culture over time.

Both Turkish and its CEO have long been underestimated by peers in Europe, but it is no coincidence that it is Kotil who will be leading the Association of European Airlines (AEA) as its next chairman for a one-year term.

The airline's strategy is clear: “We are trying to change the flows,” says Kotil. Traffic that has historically been routed through other hubs is to be increasingly channeled through Istanbul. The aim is to expand the airline's network to around 300 destinations before leveling off.