BUSINESS NEWS Tui outlines 30 million passenger target and reveals cost of B737 Max grounding. By Ian Taylor
Grounding of the Boeing 737 Max to cost Tui €650m
The grounding of the Boeing 737 Max required Tui to lease 34 aircraft, with chief executive Fritz Joussen confirming it cost the group €300 million in 2019 and will cost €350 million this year. Joussen said: “There will be
compensation from Boeing, that is clear. But it will be a matter of mutual agreement – how much in cash, how much in future agreements, how much in credit agreements.” The US Federal Aviation
Administration (FAA) confirmed last week that the Max is “approaching” a recertification flight. But there is still no date for
Cruise division’s environmental and labour standards criticised
Tui came under fire over its cruise operations at its annual general meeting in Hanover last week. German environmental group
the flight, no clarity on how long the aircraft will remain grounded and no indication of how soon other regulators, including those in Europe, might follow the FAA’s lead. The 737 Max has been grounded
since March 2019 following two fatal crashes.
Nabu accused Tui of relying “heavily on heavy fuel oil without effective exhaust technology”. The group claimed in a statement: “Tui’s business activities are currently not compatible with the goals of the Paris climate agreement.” An investors’ group, the
Association of Ethical Shareholders Germany, also accused the group of breaching European labour standards on its cruise ships. Markus Dufner, the association’s
managing director, told the AGM: “Record sales at Tui Cruises are
based on low wages, long working hours, many overtime hours and social dumping by mostly Asian employees.” He claimed the wages on Tui cruise ships “are far below central European standards”. Tui said it operated “the most
modern cruise fleets” and planned to launch a new sustainability strategy this year. The International Maritime
Organisation set new global limits on emissions from January 1. These slashed the permissible sulphur content in ship fuel from 3.5% to 0.5% outside of designated emissions control areas, where 0.1% is the limit. Most cruise ships have met the limits by using exhaust gas cleaning systems.
Tui targets 50% rise in carryings
Tui plans to expand its operations by almost 50% to carry up to 30 million passengers annually in the next few years, with chief executive Fritz Joussen pledging the growth will “primarily be organic”. Joussen outlined four “strategic
areas of action” in an address to shareholders last week, spelling out his plans in Tui’s major source markets, hotels and cruises, destination experiences and emerging markets. The group currently carries
21 million customers a year and Joussen reported last week: “Our business is booming following the insolvency of Thomas Cook.” Tui plans a technology
transformation across its traditional markets, including the UK, as it harmonises systems and processes in a ‘Market and Domain
travelweekly.co.uk
Transformation’ programme due to be implemented by mid-2021. This should enable the group “to tailor offerings to each individual” customer, adapting the same technology to every market. Second, Tui aims “to significantly
expand the number of hotels” in its portfolio by opening to third-party hoteliers, for example, through the Tui Blue brand, which will set quality and service standards. Third, the group aims to establish a
global distribution network for hotels, or what it calls an ‘Amadeus for hotels’, starting with a focus on China, India, Brazil, Malaysia, Spain and Portugal. Joussen said: “Originally, our goal
was to generate a million additional customers per year [in these markets] from 2022. We are now seeking to achieve that goal sooner.”
Tui is also working on a ‘new-
generation’ property management system for hotels “allowing differentiated marketing at the level of one single bednight”, as opposed to “conventional systems still based on room categories”. The system will offer customers ‘select your room’ options such as “a sea view, morning-sun room within range of a baby monitor”. The fourth area of expansion will
be destination experiences, which Joussen described as “the gem in our portfolio in terms of growth”. Tui sold 10 million excursions
and activities last year and Joussen said: “With 10,000 employees in 50 countries, we benefit from a significant advantage . . . [with a second] enormous advantage that we know four to six months ahead when customers are going to travel where.”
Fritz Joussen 20 FEBRUARY 2020 63
PICTURE: Rüdiger Nehmzow
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