Typically, each winter in Europe, the tourism business recedes for a few months as many of the short-haul destinations in the Mediterranean lose their summer sun and the business operates what’s known as its low season. There is of course an impressive programme of winter season flying for people escaping long or medium-haul for some winter sun, or those taking a well-earned skiing holiday. However the number of tourists, and therefore the number of aircraft required, is reduced compared to the peak summer season. In contrast, in North America, there is an increase of holidaymakers flying between November and April. The airlines and tour operators operating here therefore experience a peak winter high season and require an increased number of aircraft.
This cyclical seasonality provides both a challenge and an opportunity. The TUI source markets in Germany, the Netherlands, Belgium and the UK and Ireland all have a peak summer season, so there is an overcapacity to be managed in the winter. If the aircraft fleet is to provide optimal capacity, the challenge is how to maximise the flying time of the fleet, to ensure that if the aircraft is not flying or having any required maintenance, the aircraft isn’t costing money. And the opportunity is to find synergies and support any fleet resourcing requirements across the Group.
In looking for a solution, a clear synergy was identified with Sunwing Travel Group (SWG). Established in 2002, SWG is a family business, and has grown to become Canada’s number one, providing more holiday packages to the Caribbean, Mexico and Central America than any other travel company in Canada. SWG is one of Canada’s fastest growing and most successful companies, and is owned and operated by the Hunter family headquartered in Toronto. SWG operates an airline, three tour operators, a retail chain and destination management company.
The industry has two main leasing types: wet- and dry-leasing. A wet lease is a leasing arrangement whereby one airline (the lessor) provides an aircraft, complete crew, maintenance and insurance (ACMI) to another airline or other type of business acting as a broker of air travel (the lessee), which pays by hours operated. A dry lease is a leasing arrangement whereby an aircraft is provided without crew.
For the 2016/17 season, 12 of the aircraft are dry-leased and two of the aircraft are on a wet lease from Thomson Airways, together with eight flight crews per aircraft. On a dry lease, once the airline in Europe hands over the aircraft, it becomes an SWG aircraft.
Chris explains: “The dry-leased aircraft are fully integrated with SWG’s own aircraft. The wet-leased aircraft remain under the operation and maintenance control of Thomson. There is far more involvement and Thomson is responsible for the aircraft in accordance with the Civil Aviation Authority’s rules, regulations and standards. The dedicated team in Luton in the UK keep a watchful eye on the aircraft and manage all of the maintenance conditions around it.”
As the businesses approach the delivery dates, SWG and the TUI airlines have regular meetings to exchange the necessary technical information on the current status of the aircraft and each engine.
SWG takes this information and builds each dry-leased aircraft into their maintenance and commercial systems so it’s integrated as part of their fleet. Chris explains: “This is a significant and in-depth process to exchange information. SWG then builds the aircraft in their own system so that when they collect it, it is instantly one of their own. This is called a bridging process between one airline and the other. SWG may have different regulations because they are governed by the Canadian authorities. This bridging process ensures that SWG does everything required under these regulations. The reverse happens before the re-delivery back to Europe.”
In a reciprocal leasing arrangement, seven of SWG’s aircraft will be leased to Thomson and TUI Netherlands for the Summer 17 programme.
Tom Chandler comments: “This method of leasing is truly beneficial for both companies, enabling us to future proof for changing demands. The real beauty of how it works, it’s a counter cyclical arrangement; it deals with our need to decrease in the winter and flex our capacity in the summer months. With a similar specification for the Boeing 737s and the same inte-rior standards, it allows this strategy to be effective and successful with a trusted business partner.”