BUSINESS NEWS COMMENT Ryanair tie-up is evolutionary Tui’s distribution deal marks new chapter for outbound market, says Steve Endacott


Tui won the battle of the vertically integrated tour operators with the collapse of Thomas Cook in September 2019 but had the spoils stolen from it by the Covid-19 outbreak shortly thereafter which brought the travel industry to a halt. Unlike Thomas Cook, Tui had


protected itself from the growth of online travel agents and expansion of low-cost airlines by securing exclusive access to the best-located, large beach hotels in the Mediterranean, allowing it to create holiday ‘concepts’ such as Holiday Villages and Sensatori Hotels. This exclusive hotel stock, combined with a fleet of 13 Boeing 787 Dreamliners, created a high-quality


package holiday product that built brand loyalty and relatively high margins. However, ‘the bigger you were, the


harder you fell’ during the pandemic. Tui’s high level of hotel commitments and empty aircraft quickly created a debt mountain that required a major intervention by the German government. Now, with a new fleet of short-haul


B737 Max aircraft, Tui is attacking Jet2holidays’ market leadership by adding a whopping 12% or 1.1 million Atol-protected packages to its short-haul programme. It will have its hands full to fill this capacity in a summer 2024 lates market that has seen an increase of millions of holidays to sell. Whether


the lates market becomes a bloodbath or not remains to be seen, but the timing of Tui’s deal with Ryanair to add even more capacity seems odd and probably indicates it is based more on the PR timing for Ryanair than a major new strategic alliance. Tui will protect itself from Ryanair’s


poor customer-service ethos by selling its flights under its secondary First Choice holidays brand, keeping the Tui brand based on its in-house flying. Tui intends to increase its relatively


low mix of dynamically packaged holidays from the current 2.5 million passengers and could easily sell one million Ryanair seats. Out of small dynamic packaging ‘acorns’,


major strategic alliances can grow, and competitors will rightly fear the coming together of Europe’s strongest tour operating brand and Ryanair. Although the relationship will


be more huff than puff in the short term, in the longer term we could see the evolution of the Tui brand. This could keep Tui in the fight for UK market leadership. However, the future will be dominated by easyJet holidays, as most partnership deals with Ryanair fall away due to the airline’s excessive demands. The evolution of the UK holiday


market is happening fast. O Steve Endacott is chairman of AI incubator Neural River


Tui criticises German government Ian Taylor


Tui Group chief executive Sebastian Ebel hit out at the German government over its policies toward aviation and demanded EU regulators “get a grip” on online travel platforms when he addressed Tui’s annual general meeting last week. Ebel lashed out at “regulatory


madness and bureaucracy”, saying they “rob companies of growth”, and told shareholders: “Nobody can be satisfied with the regulatory framework in Germany and in Europe.” He slammed the German


government’s decision in January to increase the tax on air tickets, describing it as “rash” and suggesting: “What characterised Germany for decades was stability and reliability.”


travelweekly.co.uk Ebel noted “the recovery in air


traffic in Germany is lagging many countries” and said the increase in air tax “was announced when air tickets are already booked”. The tax on short-haul flights,


including to the UK, is due to rise from €13 per passenger to €15.50 from May and the long-haul rate from €58 to €71, with the mid-haul rate of €32 also rising. Like UK Air Passenger Duty, the tax is levied on departure and added to fares. Ebel also criticised the government


for “turning away” from support for sustainable aviation fuel (SAF). He noted the government had pledged €2 billion to support SAF development but had reduced the aid to €17 million and suggested: “It would be more honest just to cancel this support.” The Tui chief also urged the


Sebastian Ebel


EC to switch the focus of its proposed changes to the Package Travel Directive, saying: “Instead of regulating highly regulated tour operators even further, regulators should get a grip on intermediary platforms. They do not support customers. Pure intermediaries do not offer the support of package operators and travel agencies.” He demanded “clarity and a level playing field”, arguing: “Platforms


that only act as intermediaries have an advantage.” Tui shareholders voted


overwhelmingly (98%) to delist the company from the London Stock Exchange, ending the dual listing in London and Frankfurt it has had since 2014. Tui shares will in future be traded solely on Frankfurt’s mid- size company index. Chief financial officer Mathias Kiep


said: “Trading in Tui shares had already shifted to Germany to a large extent. The advantages of a main listing in Frankfurt are obvious. The structures are simplified, liquidity is centralised in one trading venue and the simplified structure supports EU requirements for ownership and control of our airlines. Nevertheless, the UK market remains one of our core activities and this has no impact on our strategy.”


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PICTURE: Rüdiger Nehmzow


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