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TOUR OPERATORS UNDER PRESSURE

The last time the charter carriers had to endure a winter season worse than that of 2001/2002 was ten years ago. External factors such as the general economic situation, the political situation in the holiday areas of the Middle East and high fuel prices are nothing new to the tourist industry. But on top of this, the terrorist attacks of 11 September 2001 have resulted in a dramatic collapse in bookings.

As if this were not bad enough already, factors internal to the industry have contributed to a situation in which some charter operators are having to fight for their survival - and not all of them will emerge victorious. Swissair had all but dragged LTU down with it into bankruptcy. Only financial assistance from the state has enabled the Düsseldorf-based carrier to soldier on.

The industry continues to suffer from overcapacity accumulated over the years as a result of overoptimistic assessments of the market. In addition, the fierce price war has led to a decline in yields which is difficult to reverse. Consumers have become accustomed to flying to the sun without having to dig deep into their pockets.

Another factor which has often contributed to the plight of the tour operators is an inappropriate fleet mix. Longhaul aircraft like the MD-11 are not particularly well suited for use as mass transporters in shuttle operations between Germany and the Balearic Islands. They are simply uneconomic to deploy on shorthaul routes, and even good utilisation cannot compensate for this.

It will be some time before the industry settles down again. The fall in bookings and the associated financial pressure on carriers will accelerate a restructuring process. The companies are responding in different ways. Germania is expanding its scheduled services and entering the ring as a low-cost carrier rival to Lufthansa on the Frankfurt-Berlin route. Others, like Aero Lloyd, are relying on a hub system, while still others, like Thomas Cook, are moving parts of their fleets abroad. The current situation shows that size alone is no guarantee of success in the tourist travel industry.

The drop in holiday-making passengers is also affecting the airports. While the major airports close to heavily populated areas are losing out, new opportunities are arising for smaller airfields. This is borne out by the latest figures. In 2001, Berlin Tegel handled 16.9% fewer passengers on package holidays than in 2000, and Schönefeld 20.3% fewer. Smaller airports have experienced relatively low losses of tourist traffic or have actually seen passenger volumes increase, against the trend. Paderborn/Lippstadt, for example, reports a decline of only 1.5% for 2001, which, with around one million passengers in this segment, can be absorbed without too much hardship. Other airfields like Rostock-Laage have even notched up sizeable increases in passenger traffic, even if overall volumes were significantly lower to start with.

One can only conjecture at the reasons for this. In a price-sensitive market such as chartered operations, the customer has clearly in focus not just the price of the flight but also the incidental costs of the journey, such as parking at the airport.

The extra services also available in a given geographic area are taking market share away from the big airports. Why should passengers fly from Berlin or Frankfurt if they can get to their destination non-stop from Neubrandenburg, Rostock or Altenburg? The course adopted years ago of moving towards the customer with tourist flights from regional airports seems to have been the right one and has protected the charter carriers from the worst of crisis year 2001.

From page 4 of FLUG REVUE 3/2002