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TUI / Thomson buy Coventry Airport

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TUI / Thomson buy Coventry Airport

Old 19th Feb 2004, 07:51
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TUI / Thomson buy Coventry Airport

TUI, the German travel giant that owns Thomson Holidays and Lunn Poly, will reveal an unusual departure today when it acquires control of West Midlands International Airport — otherwise known as Coventry airportThe deal, announced to staff last night, is believed to be the first instance of a tour operator taking on ownership and management of an airport.

The acquisition comes just weeks before TUI launches Thomsonfly, a low-cost airline with four aircraft flying out of Coventry to eleven holiday destinations in the Mediterranean and the Channel Islands, starting from March 31.

The company’s website is advertising flights to destinations such as Nice, Venice and Marseille from £8.99 excluding taxes and charges, and for £13.99 to Malaga. The cheapest flights, starting at just £3.99, are to Jersey.

TUI, which entered the UK in 2000 through the £1.8 billion acquisition of Thomson Travel Group, is expected to press ahead with plans by the airport’s owners, Air Atlantique, to update the site and build a £3 million terminal.

Despite its proximity to East Midlands airport, home to bmibaby, the budget offshoot of bmi, TUI is confident of strong bookings from the five million people who live within an hour’s drive.

Air Atlantique, best known as a cargo carrier, took over the airport in 1998 from Coventry City Council with a 150-year lease. But sharp criticism has been directed at its management of the airport and TUI’s arrival should improve the odds on Warwick District Council approving the new terminal.

It is understood that TUI has become increasingly frustrated at the threat to Thomsonfly’s plans posed by the breakdown in relations between Air Atlantique and the local authorities. The company is believed to view taking over the airport as the best way of preserving its position.

A source close to TUI said that the tour operator had no intention of buying any other airports and described the cost of buying and redeveloping the airport as “minimal in the context of the size of the company”.

Last edited by LTNman; 19th Feb 2004 at 08:07.
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Old 19th Feb 2004, 08:32
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Thank you LTNMan.........I have said it in the past - but no-one listened!!!!! This is the silver lining folks....it's all a goer!!!!

The buzz round the Airport has been this very story............the best of British TUI - you might need it!
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Old 19th Feb 2004, 09:11
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Whilst not wishing to be negative...but,

What do TUI know about running airports OR low cost airlines?

There seems to be no planning for the required facilities such as terminal and car park.

There seems to be no major untapped market to sell to with a brand that nobody has heard of flying from an airport nobody knows exists. And up against EMA that's saying something...

A non-daily service strikes of charter instead of schedule. The branding/marketing is anemic in the style of MyTraveLite. A few buses and billboards gets you nowhere. You need to be in all the papers every day, on the radio, on the telly, with a boss in the papers every week saying/doing something daft and preferably have your own prime time ITV series.

And Thompsonfly has to be the most half hearted unmemorable dreary pointless unimaginative name in the history of passenger aviation. It sounds more like an insect or potato blight - than an airline.

If this is the best that a mighty airline group such as TUI can come up with then Ryan and Ezy have nothing to fear on the continent whatsoever.

Good luck to all those involved though.

Cheers

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Old 19th Feb 2004, 09:25
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WWW,

Thomsonfly have sold over 100,000 tix so far, and this is twice their initial expectations, so they can't be doing too bad.

Coventry itself has been plastered with TOM ads on buses, billboards, bus stops etc. This is pretty effective imho, and the ads are very slick. They've been on tv too - EZ already have the "airline" programme, it would be very crowded to try and do anything in their shoes. And a few local nimbys have certainly heard about them!

Air Atlantique are afterall a freight airline company, so I'm sure TUI can do a better job of running a passenger airport than they did.

With WDC having dragged its feet over the terminal for so long, it will be interesting to see if TUI bypass them and go straight to the planning inspectorate.

A fresh start with a large and respected organisation should be good for TOM, good for the airport, and may even open up a more constructive dialogue with some of the anti-lobby.

The very first thing I would be doing if I was TUI is holding a public meeting to explain future plans to local residents. If TUI are going to give priority to TOM, that could mean some of the noisy freighters get moved on.
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Old 19th Feb 2004, 11:42
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WWW,

So long as the seats are the right price, you could call the airline "the most half hearted unmemorable dreary pointless unimaginative name in the history of passenger aviation" and it wouldn't make any difference to the public.

Flightmapping,

Nice to see someone presenting the other side of the argument! Shame the press tend to overlook the positive side to CVT expansion and give coverage to this very vocal minority. I also had a good chuckle over the drug dropping argument


Selling the leasehold to TUI was probably the best move Atlantique could have made. At least now they can distance themselves from any further bad press. I just hope TUI have what it takes to see this through.
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Old 19th Feb 2004, 16:52
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Grrr

I am sure Mr Webster and Mr O Leary will require hospital treatment once they have recovered from a huge laughing session.

Ryanair are removing reclining seats and window blinds to save money and reduce ticket prices, whilst TUI are investing in an airport and its infrastructure. How bizarre!

TUI are going to require mega usage of thier new terminal to make any money form their adventure into UK low cost!

What a mega cock up, TUI state thier intention to use Coventry without the infrastructure being ready, sell tickets, then have to buy into the airport in order to save face.

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Old 19th Feb 2004, 17:14
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As long as TUI fiddle the figures to make sure the acquisition of CVT does not fall into the start-up costs of Thomsonfly.com, then I see it working. If however the costs of buying the airport eventually get passed on to the Thomsonfly.com start-up costs or even heaven forbid get passed on to the passenger tickets then I see it as the most expensive start-up in aviation history.

Sounds to me that TUI have been forced to buy CVT in order to start-up at CVT, surely as wiser move would have been to jump in at LTN where they have their main base and the market can take more traffic from LTN as NOW seem to be foundering and not getting started at LTN. Someone at Thomsonfly.com/TUI hasn't been watching the developments at NOW close enough. What a missed opportunity.

Maybe TUI should invest in NOW at LTN and launch both airlines eventually dumping the one that doesn't work-My bet would be on LTN/NOW working as long as properly funded, which at the moment NOW isn't.
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Old 19th Feb 2004, 17:15
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Buster Have you beed fed today?

I think you are really the most wise, loveable & cuddly, brown bear in all the skies.

Maybe you should run EGBE and lock all them lunatics that call themselves managers up in the zoo!

You get my vote
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Old 19th Feb 2004, 17:49
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A very interesting development, if true (I haven't seen it officially announced anywhere yet).

It would certainly go a long way to reverse the PR problems the airport currently faces. It also shows that TUI is serious about this project.

For the biggest travel and leisure group in the world (airlines, travel agents, hotels & shipping), a small plot of real estate in Warwickshire is pocket change.

Whether they can turn a profit from it and compete with other LOCOs in the area remains to be seen though.
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Old 19th Feb 2004, 17:55
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Buster,

Please explain how removing seats and window blinds saves money?

Many thanks!!

EGBE
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Old 19th Feb 2004, 18:11
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Any fool can sell a 100,000 cheap seats to the sun in January.

The test is what their loads are like on a Wednesday in November. Without a decent domestic and business aspect to the network then the answer will be 20% even if they give them away.

Thats when you go bust.

Here is Cheltenham I've seen didly about this airline. Go had a top London agency running an award winning advertising programme for 4 years at a cost of £25m. Cinemas, TV, every paper, most of the magazines, buses, the tube the whole shooting match. They just managed to be number 4 on the list of airlines people could list off the top of their head in the street.

I really do wish this venture well as I have friends flying for them.

But this is not how one would wish to start up is it?

Cheers

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Old 19th Feb 2004, 18:12
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EGBE:

Ryanair is not talking about removing seats, nor was Buster (who referred to "removing *reclining* seats"). The issue is about fitting simpler seats which don't recline, i.e. are lighter/less prone to break/cheaper to maintain. I assume it's the same argument for window blinds (not that I am defending Mr O'L on this matter).

The only way Ryanair would remove seats would be if they were allowed to carry passengers standing up - that way they could fit a lot more in.
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Old 19th Feb 2004, 19:08
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Cyrano,

I am aware of that, my question was "how is that going to reduce costs?"

Anyway, i suppose I'll answer my own question here by adding the fact that if there are no reclining seats, the reclining 'bits' won't go wrong, therefore less engineering required.

Not sure that would make a huge difference though.

Anyway, on a slightly more on topic note, have just heard on the local news that TUI have bought CVT airport. More info will be aired on the lunch time news.

Interesting stuff!!

EGBE
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Old 19th Feb 2004, 19:59
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Although this does look like a panic measure (and probably is) by TUI to ensure that their Thomsonfly startup goes ahead, in the long run it could turn out to be a good bit of business. O'leary is always banging on about how airports are his biggest headache in terms of their charges, the obvious answer would surely be to buy your own base airport, put in a decent management team and run not only a profitable airline but also a profitable airport - and have complete control from top to bottom. TUI are the first but will they be the last?

CVT is centrally located with probably the best road connections in the country, people would be willing to use CVT from a huge area (100,000 bookings in the first 2 months give us an idea). Instead of the farce which Buster might want to put forward and which still might happen for the first few months as things are getting tight for the start up date, in the long run, TUI may have just put themselves in a very strong position.

The big problem is getting planning permission for the new terminal, the farce caused by Atlantic over the temporary buildings and runway means that the chance of CVT getting the permission for the terminal is diminishing, however with TUI's lobbying power and ability to offer the locals some sweeteners, any planning rejection should hopefully be countered on appeal. (I may be being a bit optimistic there, the planning decision is what it all rests on now)

Cheers
52N
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Old 19th Feb 2004, 20:51
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Exclamation

Why are people getting excited about 100,000 sales?

Three aircraft means 33,333 sales per airframe over a 6 month period.

6 months times 4 weeks times 7 days equals 168 days.

During each day each aircraft will operate 6 sectors so thats 3,024 sectors to fly.

Each sector carries 125 seats so thats a total of 378,000 seats available to sell.

Now. I really really don't want to be Mr Party-Pooper but it does not seem impressive to boast you have sold 27% of your seats at this stage. You've had all the start up media splash. You've had the free publicity from the NIMBY protestations. You've blown a good bit of your advertising and promotional budget and sold many of the seats at low low promotional prices.

And then you boast about selling 27% of your Apples?

Cheers,

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Old 19th Feb 2004, 22:14
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Who says TUI have to keep CVT? Just get it up and running, push pax through and wait for the bids. If Thomsonfly works, CVT works and thus CVT becomes worth buying. Plus TUI unlikely to "gold plate" upgrades the way MOL accuses Aer Rianta of doing at Irish airports...
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Old 19th Feb 2004, 22:54
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Its been no big secret that TUI have been looking into buying into CVT for a few years now. Along with a number of other operators, they were too many complications as I understand it. If gossip serves me correct, part of this was just how much, in terms of responsibility and assets, would be included in the deal. 'Hypothetical' example, if you want to run an airport, you don't want to buy a freight operators undertakings.

The fact that TUI has bought a controlling stake is no great victory. It was simply a last ditch attempt to salvage the start up of their operation after consistant mis-management of the expansion, they needed to take control, and pronto! No suprises there. Hopefully, they should now be able to rescue the problem free launch of the operation by having far more control over policy.

I, personally, from my experience of CVT, have little doubt that they can operate and expand (although limited) a low cost airline. There are no real problems with the airport, the infra-structure, the airspace or the punter availability. But I really do think the keywords are 'limited' and 'appropriate'.

Not sure how much this cost, but the figure I have heard is less than £10 mill. This is small change to TUI, and has most likely saved them money in the long term.

Again, I really hope it works, because apart from anything else, sounds like a job I quite fancy!

Oggie
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Old 19th Feb 2004, 23:06
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Cant help but detect a hint of low cost rivalry in your posts. I am sure that 100,000 seats aint enough to run a low cost airline over summer. But I dont think they have stopped selling seats for the next 6 months have they.
We all know the seats sold closer to departure are the ones that really make the money. So I dont think you can criticise the amount of tickets sold when they arent even operating yet. So lets all hope they are successful enough as we can ill afford any failures in the current industry.

P.S. where the hell is Coventry?
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Old 19th Feb 2004, 23:09
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ot sure how much this cost, but the figure I have heard is less than £10 mill.
For sale 1 airport plus a bucket of trouble, price 1 pound.
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Old 19th Feb 2004, 23:55
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Question

I was under the impression that an airline cannot 'buy' a
UK airport? - TUI have in-house airline - a technicality?

Didn't Easyjet get knocked back from buying LTN a few years back.?
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