UK leisure carrier TUI Airways believes the tour operator model is still relevant, despite the failure of UK rival Thomas Cook, but this relevance rests on digitalization, diversification and adapting to customer needs.
Dawn Wilson became TUI Airways managing director in January 2019, leading TUI Airways in the UK and Scandinavian carrier TUIfly Nordic. In addition, Wilson is also director of airline operations for all five TUI Group airlines in Europe, covering air operator’s certificates (AOCs) in Germany, Belgium, the Netherlands, the Nordics and the UK.
Since taking up this role, Wilson has had to navigate the UK’s Brexit plans, the ongoing grounding of the Boeing 737 MAX and the failure of Thomas Cook’s UK airline. “It’s been quite a challenging nine months,” she said, speaking to ATW on the sidelines of the Airlines 2050 in London on Oct. 17.
She said that next summer TUI will add 2 million leisure destination seats to and from the UK to fill the void created by Thomas Cook’s collapse. This represents “significant” capacity growth for TUI’s UK airline.
“We have to take the opportunity to grow our own business. That’s going to be very much in the [UK] regions, replicating some of those areas Thomas Cook was flying out of and some of those routes they were flying on,” Wilson said.
TUI is also offering 50 Thomas Cook pilots direct-entry captain positions, as part of a drive to hire 100 pilots and 200 cabin crew for summer 2020. “The assessment centers are going on at the moment. Hopefully, we will be able to send out firm offers within the next couple of months.”
Wilson declined to comment on whether TUI is interested in Thomas Cook’s portfolio of Gatwick slots, which averages 15 daily slot pairs through the summer months.
“That is a live situation, so I can’t comment,” she said. “We are looking to grow the business all across the UK. I think there will be lots of interest [in the slots], because Gatwick is a difficult airport to get into.”
TUI is not interested in Thomas Cook’s former fleet, because the group is primarily a Boeing operator and does not operate any Airbus aircraft.
Turning to the tour operator model, Wilson said people still want to go on package holidays and want the convenience of flying direct from UK regional airports. TUI does very little flight-only activity.
“I’ve been in so many meetings where they have said the package holiday is dead; it’s not.” She said. “There’s a lot of people out there that still want that assurance of a package holiday and being taken care of throughout their journey.”
She said TUI Airways’ 6 million passengers per year—widening to 27 million customers across TUI Group—demonstrate the resilience of the model, but she added: “You have to adapt.”
Wilson said TUI has changed its business model over the last five or six years by diversifying more heavily into cruise ships and owned hotels, while digitalizing its tour-operator business and moving to online distribution channels.
“We moved quite a long time ago into the online world. We have really gone omni-channel,” Wilson said. “People do book very expensive holidays, in excess of £10,000 ($13,000), on their mobile phones.”
TUI has digitalized to give customers much greater control over the duration and content of their holidays. Gone are the days of the package holiday welcome meeting, she said. Instead, excursions and activities can be booked by mobile phone and passengers are sent text notifications when their transport arrives. They are also able to choose the exact location of their hotel room.
“It’s really connecting with customers in a digital way, responding to what customers want from their holidays,” she said.
Turning to the group’s airline operations, TUI plans to retain all five AOCs. “What we are trying to do is to harness the benefits from the TUI airlines as a whole, in terms of efficiencies and best practices,” Wilson said, responding to a question from ATW.
The five TUI Group airlines operate a combined fleet of 150 Boeing 787, 767, 757, 737NGs and 737 MAXs. TUI’s Belgian airline also operates Embraer aircraft on routes that are thinner or operationally constrained.
“The long-term strategy of the TUI airlines is to move to 787s and 737s,” she said, adding that the group already has enough aircraft on order. “Eventually the 757 and 767s will go. They would have gone over the next couple of years, but we have extended them out to make sure we have enough capacity.”
By now TUI Group should have been operating 23 737 MAXs, but only 15 of these had been delivered when the worldwide fleet was grounded. Wilson said TUI Group brought in wet-leased aircraft to cover the capacity shortfall and extended some lease returns. No customer holidays have been canceled as a result of the grounding.
“We just got ourselves through the summer. In winter, there is an obvious seasonal imbalance in our program, so we are looking at it on a month-by-month basis. We don’t know when the MAX is going to come back, but we don’t need to take any decisions now for summer  activity.
“We still have a really good relationship with Boeing. We have confidence in Boeing and this aircraft. It will come back to flying only when it is safe to do so,” she said.
Source : atwonline.com