Air Transport

TUI Travel, one of Europe's heavyweight leisure groups, is set to reduce its German and UK fleet capacity following its creation through the merger of the tourism business of TUI and First Choice Holidays.

The newly created company will report in its just-launched 100-day post-merger strategic review in January. Before the merger TUI had seven in-house carriers: Hapagfly, Hapag-Lloyd Express, Thomsonfly, TUIfly Nordic, Arkefly, Corsair and Jetair. These carriers operate fleet of more than 120 aircraft. First Choice Airways operates 34 aircraft.

TUI Travel chief financial officer Paul Bowtell says that in the near term, capacity will be reduced by withdrawing aircraft and discussions are under way over the future of its owned aircraft: "We have concerns about some of the previous decisions that have been made around capacity...there is no question that those have had an adverse impact in 2007."

In 2008 across TUI and the First Choice business some 14 aircraft will be returned off lease, with a further "seven or eight" in 2009 and 18 in 2010. Although the summer 2008 has been fixed, Bowtell does not rule out further capacity cuts.

TUI Travel is aiming to leverage the advantage of its early Boeing 787 deliveries. It has 23 of the type on order, with 18 of these set for delivery by 2012. "We can optimise the use of 787s within the UK and also start to establish long-haul programmes that we control in Germany and particularly out of the Nordics, which has a very strong long-haul programme and indeed in the Netherlands and Belgium," he says.