TUI Trains Eye on Transition to Boeing 737 Max and 787 Fleets

 - January 17, 2023, 4:00 AM
TUI's narrowbody fleet is entirely based on the Boeing 737 Max 8 airliner. (Photo: TUI)

TUI continues to plan for a full roll-over of its widebody fleet to Boeing 787s and its narrowbody fleet to Boeing 737 Max jetliners, though the progress of the Germany-based tourism group’s fleet renewal has slowed due to the Max grounding, Covid-19, and Boeing’s struggle to deliver a steady stream of new aircraft.  “For us, right now, it is important that the Max 10 gets certified and enters into service,” Marco Ciomperlik, chief airline officer of TUI Group, told AIN. “But our main focus is of course to make further progress on the Max 8 deliveries.” 

The Max 8 and Max 10 will constitute the group’s narrowbody fleet across its five airline subsidiaries, consisting of TUI Airways in the UK, TUI fly Belgium, TUI fly Netherlands, TUI fly Germany, and Sweden-based TUI fly Nordic. The carriers operate from around 30 bases in Europe and fly customers to the group’s more than 400 hotels and 16 cruise ships in all major holiday destinations around the globe. Only a small part of capacity is sold on a seat-only basis, mainly by TUI fly Belgium. The TUI Group served 16.7 million customers in the financial year ending September 30, 2022, up 212 percent year-on-year, of which most flew on TUI Airline’s own airplanes. Load factor averaged well above 90 percent.

The TUI Group has acquired 72 Max jetliners and in 2018 converted 18 of the orders for 737-8s to the Max 10s, becoming the first European operator to select the largest Max variant, which can seat up to 230 passengers in a single-class layout.

TUI Group has taken delivery of 37 Max 8s to replace its less fuel-efficient Next-Generation 737s. Ten Max 8s arrived during its latest financial year, slightly fewer than specified by its agreement with Boeing—following a compensation deal with the OEM for the temporary grounding of its 15 Max aircraft—in 2020. Supply chain strains at the airframer also affected the spare parts supply for the overhaul of the TUI fleet last year, Ciomperlik affirmed. “Maintenance downtime has been far longer than it was pre-Covid,” he said.

“Are we currently Boeing’s most happy customer? Certainly not,” he emphasized. “Yet, we are not the only airline facing delivery issues and Boeing is not the only aircraft manufacturer with supply chain problems.”

Speaking with AIN late last year on the sidelines of an Airlines for Europe CEO meeting in Brussels, Lufthansa Group boss Carsten Spohr conceded that the average delivery delay amounted to about 100 days for an Airbus A320neo family aircraft. Michael O’Leary, CEO of Ryanair Group, reckoned that the low-cost carrier would “be lucky” if it gets 40 of the contracted 51 Max 8-200s from Boeing ahead of the peak summer schedule.  And while Air France KLM did not experience major aircraft delivery delays in 2022 and does not foresee major problems this year, it expects 2024 and 2025 to prove “difficult,” according to its CEO, Ben Smith.

TUI does not intend to change its strategy to source all its aircraft from Boeing despite the several problems that have beset the U.S. airframer over recent years. “I think that for an airline our size a single provider and a one-type narrowbody and widebody fleet has its advantages, in terms of licensing, spare parts, commonality, pricing, and so on,” said Ciomperlik. “We know they have issues, but we have a long-standing relationship with them, of more than 50 years. We have been global or regional launch customers of every aircraft type since the 757.” But, he added, “we always discuss fleet plans with both providers [of medium and long-haul aircraft].”

To supplement its medium-haul flying from restricted airports, TUI has placed four Embraer regional jets operating with the Belgian airline. It plans to upgrade the E190s to three E195-E2s in the first half of this year.

On the widebody side, the TUI Group plans for a uniform 787 fleet. “We have already phased out all out 757s and the four last 767-300ERs are slated to leave the fleet in the next two years,” noted Ciomperlik. The company has ordered 19 GEnx-1B-powered Dreamliners, a mix of -8s and the larger -9s fit with 300 and 345 seats, respectively, and has taken delivery of all of them.

The fleet harmonization supports the group’s strategy to combine the five airlines into what it calls a “virtual TUI Airline” aimed at using scale to create more operational and economic efficiency. Only the functions tied into the air operators’ certificate (such as the accountable manager, flight operations, and crew) remain locally managed, while the group has consolidated aircraft purchasing and financing, engineering and maintenance, IT, in-flight service, ground handling contracts, and the operations control center. The process started about five years ago with a rebranding of the airlines to TUI and has generated “a three-digit million-euro amount in synergies,” said Ciomperlik, admitting that the establishment of the virtual TUI Airline was a “long process and culturally a challenge” and still ongoing.

TUI's management has ruled out a full consolidation of the five airlines and air operator's certificate (AOC)—one in the UK and four in the EU. This is because traffic rights for flights out of both the UK and the EU remain bilaterally regulated in the post-Brexit environment.

One example of a tangible benefit resulting from the TUI Airline structure is the pooling of spare aircraft. “We now have 10 stand-by aircraft that can be deployed by each AOC,” explained Ciomperlik.

The group has also “rightsized” TUI Airline to align capacity with the winter program. The fleet now consists of about 130 aircraft, compared with some 150 units pre-Covid. While it leased out surplus capacity in winter, the TUI Airline now leases in third-party ACMI and ad-hoc charter contracts during the peak summer period, when demand is higher. “We believe that leasing in 20 to 30 aircraft, which represents about 20 percent of our own flight capacity, is controllable,” he said, pointing out that the new approach engenders flexibility and a better cost structure.

The complete renewal and modernization of its Europe-wide fleet started before Covid and shows that TUI Group and its airlines stand at the forefront of addressing CO2 emissions and environmental sustainability, Ciomperlik maintained.  Unlike most scheduled carriers, TUI’s leisure airlines do not offer customers the ability to compensate for their CO2 emissions. “We focus on real reductions rather than offsetting emissions,” he stressed. “We have the latest technology widebodies and we are moving into the latest technology engines—the CFM Leap—on our new narrowbodies.”

Meanwhile, TUI’s airlines improved their carbon efficiency through operational measures such as single-engine taxing in and out, wind uplinks, and optimized climb speeds and profiles. It is also stepping up investments in sustainable aviation fuel.