The TUI Group is consolidating its retail offer from all five of its tour operator airlines, with Gate Retail Onboard (GRO) in a new five-year contract which is expected to boost sales turnover by 25% by the contract end.

 

This will effectively deliver major synergies and economies of scale from 140 aircraft. carrying around 13m passengers to 180 countries a year. This should create one of the biggest inflight duty free programmes in the world, without considering the F&B component which will also be huge.

 

TRBusiness speculated correctly last month that this exact scenario might be in the pipeline and those with (very) long memories will recall that Thomson’s inflight duty free tender stalled more than a year ago when it is said to have come down to two companies in the final round.

 

 

This also follows the announcement of the ‘five airlines into one’ plan at TUI which TRBusiness covered in detail last month [click here for details: http://www.trbusiness.com/regional-news/international/tui-group-to-leverage-five-airlines-into-one/98995].

 

The transition to GRO also comes just a month after the gategroup Holding AG acquired Inflight Service Group for CHF130m ($126.5m) in a move it predicted would establish it as the ‘leading Buy on Board’ company in the inflight business.

 

GRO will now handle all the retail and F&B onboard all TUI’s five airlines, although the transition will happen ‘gradually’ with these carriers comprising TUIfly (Germany); Thomson Airways (UK); ArkeFly (Netherlands); Jetairfly (Brussels); and TUIfly Nordic (Sweden).

 

DUTY FREE, F&B AND PREORDER

The TUI Group said today that the scope of the new contract includes on-board sales of F&B, duty free goods and pre-order sales in the UK and the Nordics.

 

News of this new arrangement also comes less than a month since LSG Sky Chefs and Thomas Cook Group Airlines extended and broadened their pan-European ‘catering agreement. This covers onboard retail, catering, logistics, equipment and a new expanded pre-order service until 2021. [See more at: http://www.trbusiness.com/regional-news/europe/lsg-and-thomas-cook-extend-europe-contract/99002].

 

In its statement, the TUI Group said that this new cooperation will create even more efficient processes while streamlining procurement and it will not hurt its profit margin from its retail business either, although it did not comment on this.

 

Talking about the streamlining its airline procurement process in general, TUI Group Managing Director Aviation, Henrik Homann said: “Furthermore, customers will be able to choose from a wider range of products at more competitive prices.

 

“Our focus on ‘making travel experiences special’ underpins everything we do.

 

ONE OF THE WORLD’S LARGEST INFLIGHT RETAILERS…

“The consolidation of the services, another milestone of the ‘OneAviation’ programme, will mean better inflight services for our passengers, generate additional profits for the group and make TUI one of the largest inflight retailers in the industry, cementing our competitive position.”

 

The company added that duty free preorder will allow its customers to buy from the comfort of their own home prior to departure, with goods delivered to the aircraft seat on both the outbound or homebound flights.

 

Having said this, the service has already been in existence in the Nordic market for many years, with the undisputed key exponent being the Inflight Service Group which was founded on this very sector.

 

 

Interestingly, this preorder service is now being extended to the UK and Ireland in October 2016. In parallel with this, TUI says it is entering into a partnership with DHL as its lead logistics partner for the five airlines.

 

It also adds that preparations for the implementation of this much expanded business model have been ongoing since July 2015, with the UK and Ireland set to be the first source markets to transition to GRO on 1 March 2016.