EXCLUSIVE: TUI to sell millions more dynamic packages

TUI is to restructure its business to sell millions more unbonded dynamic packages following this week’s ground breaking Court of Appeal ruling.

The market leader described the judgement, which found that companies putting together their own trips do not need a bond, as a “watershed”.

Currently, around two thirds of its 5.5 million holidays and flights are bonded, but this will shrink to around half in the next few years.

TUI chief executive Peter Rothwell said the judgement provided the company with a huge opportunity to heavily promote independent trips, both long-haul and short-haul, from next year.

“We have been nervous about selling flights and accommodation together, because of being liable if something goes wrong, but this judgement changes that,” said Rothwell. “On dynamic packages, we would no longer be liable, for example, for the behaviour of Pedro the waiter or a dodgy car hire firm in resort.”

Fully-bonded packages will still be available and Thomson will make it clear that there are differences in the level of coverage between the different types of holidays.

TUI spends around £8 million a year on bonding with the Civil Aviation Authority, but expects this figure to drop by hundreds of thousands of pounds a year as it cuts back on the number of packages sold.

Rothwell admitted that a two-tier level of service could be given to customers on the same flight who had bought different trips.

“This could well happen because we have a duty of care to people who buy packages,” he said. “We are a company that looks after people and does the decent thing, so we don’t leave people abandoned in a hurricane or cancel flights on a whim.

“But the important thing is that we don’t have a legal obligation towards people who buy independent trips.

“I don’t think that’s going to stop people travelling. They go long haul on scheduled airlines and know they have to fend for themselves in resort.”

The change in policy follows one of the worst summers on record for tour operators, with Thomas Cook famously describing it as the most difficult market for 15 years.

“I don’t think that’s far wrong,” said Rothwell. “It’s been a difficult summer for lots of reasons that have been well documented. We are adapting but we are not abandoning tour operators.

“Are traditional tour operators dinosaurs? The ones that adapt are the ones that survive.

“If you look at a Laskarina or Tapestry Holidays [one of which has gone out of business, the other is being closed down] then you would say there isn’t a great future for them, but with the changes we have made I’m very optimistic about the future.”

The shift of emphasis towards independent travel, sold largely through the internet, is likely to require less staff and Rothwell refused to rule out redundancies in the future.

“It’s true that as you move to independent travel, you need less staff at the front and back ends. We have a responsibility to shareholders and it would be crazy for me to say there would be no redundancies in the future.”

TUI still has 725 shops throughout the UK and Thomson Holidays commercial director Derek Jones said the numbers were constantly reviewed.

by Jeremy Skidmore (www.jeremyskidmore.com)