Why Tui is unlikely to get into a price war with Jet2

Does this challenge mean Tui adding thousands of cheap beach deals this summer or next, effectively trashing the UK market?

Highly unlikely, as Ebel stressed he would go for "profitable" growth. Tui does, though, have room for manoeuvre. It said summer 2023 prices were an unprecedented 25% above 2019, so it could undertake some deep discounting to grab back market share.

But why throw money away when, as Ebel reported, demand is so strong even though prices are high?

Thankfully, his briefing in February generated no lurid consumer press headlines screaming of "Summer Beach Bargains" in anticipation of a price war.

Instead, the sensible approach, as Ebel outlined, is to grow low-risk business – like dynamic packaging using third-party airlines such as easyJet, which Tui is already doing.

The bulk of Tui’s dynamic package sales will almost certainly go direct using its new IT and app platform. Tui will spend royally on technology in this segment because the rewards will be big. 

’We want to be the market leader’

Across all its markets, Tui estimates the total industry share taken by dynamic packaging at about 20%, but puts its own slice at just 1%.

"We are very active to gain profitable market share and that is why we have defined a full range of activities," Ebel said.

"We want to be the market leader not just across passenger numbers but quality. We are taking this challenge and want to grow stronger than our dear competitors."

In Germany, Tui’s second-biggest market after the UK, dynamic packaging is now a quarter of Tui sales, with links to airlines like Lufthansa enabled via New Distribution Capability (NDC) technology.

Ebel promised the UK would have a similar technology platform by the end of 2023.

It is this tactic, rather than bringing in more aircraft to the Tui Airways fleet – which is currently a third smaller than Jet2.com’s – that will likely reap rewards for Tui.

We will probably have to wait until next year to see Tui’s fightback begin in earnest.

So what does Jet2 think? So far, it has chosen to keep its own counsel, but the likelihood is it will "stick to the knitting" – which is what those canny Yorkshire folk do best. After all, it has worked to great effect so far.

Gary Noakes is senior contributor and analyst at TTG.