Long-held assumptions that the rise of the European low-cost carriers would lead to the death of the package charter business look ever less convincing these days.
In August, low-cost carrier Norwegian struck deals with UK tour operators Nielson Travel, Balkan Holidays and Skiworld to operate charter flights from London Gatwick to ski destinations in France, Spain and Bulgaria during the winter season.
Norwegian will also operate charter flights to the Canary Islands on behalf of TUI, Thomas Cook and Vitaltours as part of the new agreement.
Like many European airlines, Norwegian has its own tour operator division – Norwegian Holidays – which allows customers to combine flights with hotel bookings and car rentals. Working with companies such as Expedia, Hotelbeds and Tourico, Norwegian Holidays has access to more than 300,000 hotels worldwide.
"Norwegian is one of the fastest-growing airlines in Europe, with Norwegian Holidays contributing to that growth," Norwegian's commercial director Thomas Ramdahl tells Flightglobal.
"Charter flights are beneficial for airlines and the tour operator. Some destinations aren't suited to year-round services so charter flights allow us to offer seats to tour operators throughout the entire season, which covers our operational cost," he adds.
Norwegian does not disclose specific figures but does say Norwegian Holidays "played a role" in contributing to the 24 million passengers it carried over the past year.
Since October 2013, Hungary-based low-cost carrier Wizz Air has offered flight and hotel packages through its online Wizz Tours division.
Flights are operated by Wizz Air and over 30,000 hotels are provided by the company's partner Expedia Affiliate Network. The flight and hotel packages marketed under the Wizz Tours brand are sold by Travellink, which also provides customer service as well as the booking services for the Wizz Tours website.
As noted in the case of Norwegian, in many cases low-cost carriers are actually working with traditional tour operators and travel agents to provide package products they compete with through their scheduled services.
EasyJet's tour operator arm – EasyJet Holidays – is a joint partnership with Hotelopia, itself a division of tour giant TUI. Hotelopia provides the accommodation while the UK carrier contributes seats across its scheduled network.
Last year, EasyJet Holidays transitioned from being an online travel agent to become a fully fledged tour operator. At the time, Travel Weekly quoted general manager Mandy Round as saying she wanted the business to become "a strong number three" tour operator across Europe.
So will the close relationship with rival TUI continue? Carl Denton, managing director of SvenCarlson Aviation Consulting, says it is "certainly possible" that the low-cost carrier could go it alone and set up a dedicated business but notes that "they, like Ryanair, follow more of a mixed leisure/city model which may weaken their position".
He adds: "Those airlines who have focused more on leisure only, such as Jet2, have prospered in this market, but only in the UK. There are mutual dependencies being created by bed providers and seat providers, but this also exposes both the risk of restricted supply.
"As such, it is essential that in the longer term airlines need to have access to bed stock, and as they grow they will look to source this independently. I see the Hotelopia relation[ship] is a marriage of convenience for the time being."
Denton believes all LCCs that operate leisure routes must diversify into packages lest distribution be taken out of their control and into that of online travel agencies and "bed-banks", but notes that "this should not materially affect the big vertically integrated tour operators who already control large parts of their product and distribution and do this very effectively within their sector".
But there is one low-cost carrier that, for the moment, remains steadfastly a scheduled operator: Ryanair. While customers can book hotels and car hire through partnerships with booking.com and Car Trawler respectively, the airline does not offer its own packaged products and does not charter its flights.
But marketing chief Kenny Jacobs hints that this could change in the future.
"I would say we are open to it," he says. "It's probably on the list of things that, before, we said we would never do... I would say now it's gone off that list onto the 'That could be interesting at the right point in time' [list], but not any time soon.
"The charter business works mostly at the peak season, and if you look at the traffic and the load factors that we've got we don't have a need to do it. We are able to fill our own planes without having to do it, so there is a bit of 'Why would we do it?' Everything is working perfectly in the key summer months and there is a bit of: 'If it ain't broke, don't fix it.'
"If we do have more of a need in the coming years or, we think, in a particular market – and charter is a bigger deal in particular markets in Europe than others – we might look at it at some point in time," he adds.
Meanwhile, the traditional tour operator giants TUI and Thomas Cook continue with restructuring plans to make their businesses profitable and sustainable in the long term.
Germany-based TUI Group has decided to drop its Arkefly, Jetairfly and Thomson Airways brands as part of a merger of its airlines into one division.
The tour operator is working to complete transition of Dutch and French divisions, which include Arkefly, to the TUI.com brand, with Jetairfly to rebrand next year and Thomson at a later date.
Through these efforts, the company hopes to achieve savings of €50 million ($55 million) by 2018-19 via common purchasing for its five carriers
The future of French airline brand Corsair, of which TUI is seeking to dispose, remains unclear.
Chris Browne, who is stepping down from her position as TUI's chief operating officer for aviation, told Flightglobal in June that the travel company was seeking to identify the "best practice" strengths of each carrier, which could then be used as the basis for a series of benchmarks for the whole airline group.
In the third quarter ending 30 June, the travel operator posted an EBITDA of €194 million ($217 million), a 19% improvement on the same period a year before.
Rival leisure carrier Thomas Cook, which has also combined its airlines into one division, has continued to expand its operations as its financial state improves.
As part of its summer 2016 schedule, the UK-based carrier will add services from Manchester to Los Angeles and Boston and will boost frequencies to Cancun and New York.
From London Gatwick, the carrier will add a new route to Cuba's Cayo Coco. It will also increase services from London Stansted to Orlando.
Analysis by Flightglobal shows that Thomas Cook added almost 89% more seats on its UK-US flights this year. New services include Belfast-Las Vegas, Gatwick-Las Vegas, Gatwick-Orlando, Manchester-Miami and Manchester-New York JFK.
For its second quarter ended 31 July, the leisure operator posted a £3 million EBIT, compared with a £42 million loss in the same period a year before. Aircraft related costs fell £9 million during the three months.
However, both TUI and Thomas Cook noted in their latest financial results the impact of the recent terrorist attack on holidaymakers in Tunisia.
Despite that event and continued turmoil in North Africa, Denton is confident the market will recover quickly.
"It has only taken until last summer for Tunisia to see a recovery close to pre-Arab Spring volumes and recent events have taken them back to square one. Despite this, the market and destination has shown great resilience and tour operators are committed to the destination and the value-for-money product on offer.
"Furthermore, from a tour-operator perspective it is relatively free from the low-cost operators who only recently began to show interest once the market had recovered. Furthermore, regulatory restrictions currently prevent a full open-skies operation to Tunisia... Airlines [can] operate only from their registered country to Tunisia. Egypt and Tunisia are similar in many ways, in particular their resilience and support by tour operators who diversified into these destinations as they were initially pushed out of the traditional short-haul destinations offered by the LCCs."
Charter operations are not just the preserve of tour operators and, increasingly, low-cost operators, but remain a popular model for the traditional network carrier.
SunExpress – a joint venture between Lufthansa and Turkish Airlines which provides both scheduled and leisure charter flights, primarily between Germany, Turkey and Egypt – continues to grow its business.
The Antalya-based carrier says passenger numbers increased 18% to 3.6 million during the first half of the year, although it posted a net loss of $14.6 million for the last six months of its financial year.
Commercial director Andreas Thams says charter operations make up 40% of the carrier's total traffic and adds that "we are constantly contracting new business in this field", giving the example of a new full charter operation to Ras al-Khaimah from seven airports in Germany.
"SunExpress passenger numbers are rising – that includes also the numbers of the tour operator guests," says Thams.
So does the SunExpress executive see charter flights as a dying business that will be swept away by the low-cost carriers? "Definitely not. If you have a look at the tour-operator share of SunExpress business and our growth in the past years, the answer appears obvious."
Source: Cirium Dashboard