Following the insolvency of the tour operator FTI, the market is being reorganized. The first competitors want to increase their offerings and take over customers. But the first priority is to limit the damage.
After the bankruptcy of Europe’s third-largest tour operator FTI, the industry is expecting a reorganization of the market. “People will travel despite the FTI insolvency and the billion-dollar pie will be divided among the other tour operators,” says tourism expert Torsten Kirstges from the Jade University of Applied Sciences in Wilhelmshaven. Competitors such as Tui and DER Touristik could benefit from this. Because overall, the travel market is doing well.
The first competitors are already positioning themselves: Europe’s largest tour operator Tui has announced that it will be expanding its own offering and is advertising discounts and a temporary waiver of deposits to attract customers from its competitor. “We will increase our quotas,” reports a Tui spokesman. The company wants to increase its supply of both hotel beds and airline seats and take over capacity from its insolvent competitor. “The capacity will now be freed up.” The first hoteliers who were previously under contract with FTI have already enquired with Tui, said the spokesman.
Industry is working to limit the damage
Europe’s third-largest travel group filed for insolvency at the Munich District Court on Monday. For the industry, this is the biggest setback since the bankruptcy of Thomas Cook in 2019. “It is important that the other providers now ensure that trust is restored,” stressed the Tui spokesman. Unlike Thomas Cook, however, there is now the German Travel Insurance Fund, which covers losses. Holidaymakers can therefore expect their payments for package holidays to be refunded.
Unlike FTI, Tui and the industry’s second-largest company, DER Touristik, have now digested the Corona pandemic and are benefiting from the Germans’ renewed desire to travel. In the past financial year, both companies reported significantly increasing booking numbers and increases in sales and profits. Tui CEO Sebastian Ebel was confident that they would be able to continue to grow this year. Bookings for the summer are already well above the previous year’s level. “Holiday travel is still a high priority for our customers. This is more stable than we had thought,” said Ebel.
New FTI customers could now provide a further boost. “Even though we have already had a promising start to the summer, we will be putting together additional attractive offers with hoteliers in the destination areas in the next few days,” stresses Tui Germany boss Stefan Baumert. The program will specifically include regions in which FTI has been strong so far, namely Egypt, Turkey and the United Arab Emirates.
Travel Insurance Fund guarantees payments to hotels
The German Travel Insurance Fund (DRSF) has already taken the first steps to protect vacations. The fund has already “sent letters of reimbursement to hoteliers so that travelers can continue their vacation without worry,” it said. It will contact the affected customers as soon as it has the necessary data from the travel provider.
The travel security fund is working with FTI, the Foreign Office and in contact with airlines, bus companies and hotels to help affected holidaymakers on site. “Due to the large number of countries and travellers, this is a major task.” The legal situation cannot be easily assessed in every individual case. However, the focus is on quickly finding good solutions for the holidaymakers directly affected.
Customers whose vacation has not yet begun will be contacted as soon as the DRSF has the necessary data. “It is currently not possible to estimate when eligible FTI Touristik package tour customers will be able to get their deposits refunded.” However, the fund will ensure that payments made are refunded. There is enough capital available, even for an insolvency on the scale of FTI Touristik.
Cruises are booming
Overall, experts believe the industry is doing well again. Debts and bank loans from the Corona crisis are a burden, says expert Kirstges. “But people are traveling a lot, high-priced trips are in vogue, and cruises are booming again.” Tui recently reported that its own ships were almost fully booked for the summer. Customers are also spending more money on vacations in other areas.
The fact that FTI is now at the end of its rope is also due to its business model. “FTI was rather price-aggressive and earned relatively little per trip with a comparatively weak equity base,” explains Kirstges. In particular, the travel bans during the Corona pandemic ultimately got the company into great difficulties.
The travel restrictions during the pandemic had a severe impact on the entire industry. Tui and FTI had to be rescued by the state with billions. Unlike FTI, the listed Tui Group has now been able to repay the state aid thanks to a capital increase. The travel group DER Touristik, which is backed by the financially strong retail giant Rewe, managed without state aid. At FTI, the repayment of the majority of the almost 600 million euros of state aid was still outstanding.
FTI bankruptcy hits Lufthansa subsidiary Discover
The bankruptcy of the travel group FTI also affects the Lufthansa holiday airline Discover Airlines. Discover CEO Bernd Bauer said in Munich: “FTI is a very important partner for Discover.”
The consequences of the insolvency for the holiday airline and for the Lufthansa Group as a whole are currently being examined. He cannot yet provide any figures.
65,000 holidaymakers affected
It was said in the industry that around 65,000 holidaymakers are currently travelling abroad with FTI. “It is now clear that we have learned the right lessons from the bankruptcy of Thomas Cook in 2019 and created a sensible instrument with the travel security fund,” says Stefan Schmidt, tourism policy spokesman for the Alliance 90/The Greens parliamentary group. “I am therefore confident that we will manage the bankruptcy better than the last major bankruptcy in the tourism industry in 2019.”
On Monday, the federal government rejected further state aid for FTI. “From a taxpayer’s perspective, it is right that FTI is not being rescued,” stressed FDP Bundestag member Tim Wagner, who is a member of the tourism committee. “The company had been struggling for a long time.” Other tour operators had managed it on their own. “The fact that FTI has not managed to recover despite high sales and a good order situation is also an indication of a poor concept with questionable pricing policies.”
Many FTI holidaymakers in Greece are affected. “According to FTI, there are currently 7,500 tourists in around 250 hotels in the country,” reports Yannis Hatzis, President of the Greek Hotel Association, on the X platform (formerly Twitter). According to Greek media reports, FTI owes the hotels around 1.8 million euros in payments. That’s nothing compared to the bankruptcy of Thomas Cook in 2019 – at that time, the outstanding payments to the hotels amounted to around 200 million euros.
Source: Stern
