How to Reach Ground Handling Service Market in Turkey?
Under the terms of Turkish Civil Aviation Law, the types of airport ground handling services in Turkey are grouped as follows; representation, passenger services, load control and communications, ramp: cargo and mail, aircraft cleaning, unit load device control, aircraft line maintenance: aircraft line maintenance, fuel and oil, flight operations, transport, catering services, supervision and administration, aircraft private security service and audit.
Ground handling companies are entitled to perform the services, either fully or partially, mentioned above for scheduled or non-scheduled flights. In order to do so, they are required to obtain a license of A, B or C from the Ministry of Transport. But the question is who can obtain the license for ground handling services and can a foreigner set up a ground handling company in Turkey?
Regarding the terms of Turkish Civil Aviation legislation, foreigners are not allowed to set up a ground handling company 100% foreign ownership. It is required by law that, minimum 51% of the shares should belong to Turkish citizens. In addition, majority of the officials authorized to manage and represent the ground handling companies which will obtain Working License Group A or C must be Turkish citizens and Turkish shareholders must have the majority of votes according to the articles of association of the company.
As it is mentioned earlier, there are three types of licenses for ground handling services in Turkey. In this context, License A is given for each type of service to corporate bodies authorized to render ground handling services to air carriers by being organized at least at three airports open to international traffic for all of the service type or for at least passenger services, load control and communications, ramp, cargo and mail, aircraft cleaning, unit load device control. License B is given for each type of service to air carriers which will perform all or a part of the service types for themselves at airports. License C is given for each service type to private legal entities who are authorized to deliver representation, supervision and administration, Aircraft Private Security Service and Audit, catering service and flight operation service among the types of services. The validity period of working licenses for international flights is two years and for domestic flights is five years.
Paid capitals of ground handling companies having a Working License Group A cannot be less than 3.000.000 US dollars in equivalent Turkish Liras and paid capitals of those having a Working License Group C cannot be less than 200.000 US dollars in equivalent Turkish Liras. Equivalent US dollars for the capital in Turkish Liras is calculated based on the selling rate of the Turkish Central Bank on the payment date of the capital instalments. Companies demanding to obtain a Working License Group A or C must have their trade registrations, prepare and publish their articles of association and submit a notary certified copy of these to the Ministry in accordance with Turkish Commercial Code No.6762. Any field of work, other than the ground handling service types, will not be given place as the field of business of the company in the articles of association and trade registrations of ground handling companies, which will obtain Working License Group A and minimum 51% of the shares must be in the name of the holder.
Ground handling companies which will obtain Working License Group A must provide the Directorate General of State Airports Administration with a final bank letter of guarantee for an indefinite period, the content and form of which will be determined by the Directorate General of State Airports Administration, at an amount of 1.000.000 US dollars for “Royalty Fess” to be paid to DHMI and for their obligations that may arise from the “Service Agreement” that they will execute, and ground handling companies which will obtain Working License Group B or C must provide Directorate General of State Airports Administration with the same type of bank letter of guarantee at an amount of 100.000 US dollars.
Although foreign companies are not authorized to set up a ground handling company in Turkey by themselves, there is specific regulatory for foreign air carriers operating scheduled or non-scheduled flights that are authorized to perform, for themselves, all or a part of representation, supervision and administration, passenger services, load control and communications, aircraft line maintenance, fuel and oil service types. In addition, foreign air carriers operating non-scheduled flights are authorized to perform, for themselves, all or a part of only aircraft line maintenance, fuel and oil service types.
In consequence of the recent developments in Turkish aviation sector, more precisely its growing capacity, increasing number of flight points and third airport project in Istanbul, all attention of the whole aviation sector in the world attracted to Turkey. Private equity funds are started to buy shares from Turkey based ground handling companies in order to enter into the ground handling market in Turkey. Considering the current circumstances of Turkish ground handling services, a gap can be seen in the market that only three major companies are leading the ground handling sector for the whole country and a significant opportunity arising from that gap accordingly for foreign investors to who wants to be a part of.