Turkey will start the tender process to build a third airport in Istanbul as the government seeks to transform the country's biggest city into a regional hub and aid its flagship carrier in its efforts to join the top airlines of the world.

The groundwork for the project is completed and the government will start advertising it in preparation for the bidding process within a week, Transportation Minister Binali Yildirim said in Ankara, according to Turkey's state-run Anatolia news agency.

The minister previously said the first phase of the third airport will open in 2016.

Turkey more than tripled the number of passengers in its airports to more than 130 million in the past decade, official data show. Meanwhile, Istanbul's first and Turkey's busiest Ataturk airport is already over capacity, with chronic delays just more than a decade after Turkey's biggest airport operator, TAV Airports Holding Co., expanded the facility with a modern international terminal.

The need for a third airport is also driven by Turkey's flag carrier, Turk Hava Yollari AO (THYAO.IS). The world's fastest growing large carrier, better known as Turkish Airlines, is currently in talks with Boeing Co. (BA) and its European rival Airbus to expand its growing fleet of 200 jets, an Istanbul-based spokesman said Wednesday. The airline, which uses Ataturk airport as its main hub, plans to have 350 planes by 2015 and is in talks with Lufthansa AG (LHA.XE) to deepen its partnership with Germany's flagship airline. The third airport would make a deal attractive for Lufthansa as Istanbul boosts its passenger capacity to help Turkish Airlines rival carriers from the Gulf, such as Dubai-based airline Emirates, analysts say.

Istanbul's third airport will be close to the Black Sea coast on the city's European side. The government wants construction to start next year at the latest, and anticipates that the project will cost about 10 billion liras ($5.6 billion) when all three phases are completed. At full capacity, the airport is expected to handle 150 million passengers annually.

TAV Airports, which sold a 38% stake to France's Aeroports de Paris (ADP.FR) for $874 billion in May, has said that it will bid for the project. Other companies that expressed interest include Limak Holding AS, which operates Istanbul's newer Sabiha Gokcen airport on the city's Asian side, and Alarko Holding AS (ALARK.IS), among others.

Write to Emre Peker at emre.peker@dowjones.com

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