I had written Tui off as a spent force in the UK. It had not expanded its Atol beyond 5.9 million passengers in the past four years, and had been overtaken by Jet2holidays while being chased by the rapidly expanding Loveholidays and EasyJet holidays.

However, listening to Tui’s newly appointed marketing and sales director Bart Quinton Smith at the recent ITT conference – the first Tui speaker there for 10 years – I was reminded of the mega brand Tui remains, and the expansion opportunities that Tui “smile” offers.

As most readers will know, the dominant Thomson brand was phased out in 2017 and replaced by the group-wide Tui smile branding. Although this transition was executed smoothly, it ironically left many customers under the impression Tui had previously been Thomas Cook.

Cook’s collapse in September 2019 left Tui as the only remaining vertically-integrated tour operator, well-positioned to acquire its market share. However, when Covid arrived, the larger you were, the harder you were hit.

Thomson and then Tui succeeded where Thomas Cook failed by creating exclusive product – it either owned the best-located beach hotels ,or had them tied in on long-term guarantees. This was combined with their own airline seats to provide a high-quality and controllable tour operation, featuring popular products such as Sensatori, Tui Blue and the third-party Rui brand.

However, this heavily leveraged position became a noose around their necks during the pandemic. Tui ultimately survived with intervention from the German government, but was left with a mountain of debt and restricted access to cash.

This meant that Tui could no longer guarantee much of its third-party stock, granting access to the rapidly expanding sector based on low-cost airlines. This situation undermined its “product shield” and exposed it to the impact of operating “commodity products” sold by others, albeit at a lower cost base.

The net impact was that Tui picked up virtually none of the Thomas Cook market share, which was quickly gobbled up by Jet2 and Loveholidays, both of whom have added millions of passengers post-Covid.

But I must admit, I was mistaken to discount them, as they’re now making some intriguing moves.

An unlikely bedfellow

Tui continues to reap the rewards of the early purchase of its Dreamliner fleet, which allows it to dominate the long-haul beach market, facing no competition from low-cost airline rivals.

This, combined with the profitable hotel and cruise divisions its competitors lack, was the primary driver behind their strong rebound in 2024.

More interestingly, Tui has signed a strategic deal with Ryanair to significantly expand its regional access to its remaining exclusive hotel stock and increase city break sales. If Loveholidays can add one million passengers to its Atol this year after gaining permission-based access, with no API fees to Ryanair, why shouldn’t a major brand like Tui do the same?

Some commentators will focus on the negatives of Ryanair’s attitude towards customer service, which is diametrically opposed to Tui’s and could potentially damage the brand. Indeed, there is a risk, but it’s one Tui will monitor closely through its customer service scores and will incorporate provisions into its pricing.

This will enable them, as Atol holders, to replace Ryanair’s amendment fees and cancellation policies with more alternatives that better suit their customer base.

This relationship is in its early stages, but a strategic alliance with the mega-leisure brand Tui offers significant benefits for Ryanair. Ryanair’s brand heritage suggests it’s unlikely customers would trust them with their holidays; however, these same customers clearly accept them as a convenient bus service when packaged within a Tui holiday.

And let’s be honest, there’s little true brand differentiation provided by Tui’s short-haul fleet.

Sleeping giant

Consequently, Tui UK, with its extensive retail shop network and online presence as a package holiday brand, offers a completely new and complementary distribution channel for Ryanair flights that could enhance its initial load factors and overall profits.

Equally important, Tui Group provides this opportunity to Ryanair not only in the UK, but also in the crucial German market, where Ryanair – with 20 million passengers – ranks a distant third behind flag carrier Lufthansa’s 71.4 million outbound passengers. Remember, third is not a position Ryanair enjoys.

It also makes perfect sense for Tui to switch its long-haul customers to short-haul beach or city breaks between their long-haul excursions. I’m also sure Tui’s events, excursions and attractions platform, Musement, is rubbing its hands at the prospect of a greatly expanded rich, experience-led city break offering.

More products under the same branding are always a winner, so long as they do not dilute Tui’s quality positioning. However, Tui is adept at maintaining quality and customer satisfaction, so I don’t foresee this as a concern.

So, with a receding debt mountain and some interesting strategic moves, the leisure giant that is Tui in the UK may finally be awakening, and it was great to be reminded about the brand’s opportunities by Quinton Smith’s eloquent address.

Until Tui reduces its substantial debt, it will remain a relatively unappealing option for potential suitors. However, one could easily envision a future bidding war among profitable and well-financed low-cost carriers lured by their pan-European distribution. One to watch.

Steve Endacott is a former MyTravel executive, who went on to found Holiday Taxis Group and Rock Insurance. He is now chair of the AI incubator Neural River.