CEO of TUI Travel predicts more airlines will collapse

The chief executive officer of TUI Travel, Peter Long, said he thought more airlines in Europe would collapse.  This follows news that the third largest travel operator in Britain, XL, collapsed under pressures caused by the rising cost of fuel.  K & S Travel also recently announced that it had entered into administration.  In the weeks before Zoom Airlines also collapsed citing the rising cost of fuel as a major hurdle for the company.

Long noted that “The view that I’ve had for some while is with fuel prices at these sort of levels, a lot of the airline business models don’t work.  The economics of an airline at these fuel prices is that fuel is anything between 40 per cent and 50 per cent of their costs. For a tour operator, where we’re selling inclusive holidays, average selling prices are clearly much higher because we’re selling the whole package and for us it’s less than 10 per cent.”  He also added that “XL was more of an airline than it was a tour operation and, therefore, it had a greater exposure to that segment of the market, and that’s probably why it’s found life quite difficult, extremely difficult.”

As the airlines are collapsing thousands of passengers are being stranded all over the world.  TUI Travel, Thomas Cook, and Virgin Atlantic are all helping to bring these passengers back to their homes.  For now TUI Travel said that it is happy with their situation in the industry.

www.tui-group.com