15% OF MOROCCAN AVIATION MARKET

Morocco 2020 | TRANSPORT | VIP INTERVIEW

TBY talks to Hans van de Velde, Managing Director of TUI fly Morocco, on vertical integration, the changing airlines sector, and sustainability.

What are your current operations in Morocco?

TUI Group is with 70,000 employees the largest travel company in Western Europe. We are a vertically integrated business. It is in our DNA to take care of the customer from A to Z. Morocco is a special country for TUI, not only because it is one of the main destinations in our portfolio, but also because it's the only destination where we have an airline. The other five airlines of TUI Group -located in Western Europe- create economies of scale that are very helpful when running these relatively small outfits, like we have in Morocco. In Morocco we have seen strong growth, between 5-8% a year, from Western Europe, where we have most of our operations. Our market share on the Europe-Morocco routes is stable at around 15%. Historically, we have been among the top three airlines in Morocco with Royal Air Maroc and Air Arabia. Now, actors like Ryanair and Transavia are growing while Royal Air Maroc is declining on these Western Europe routes. There is fierce competition in the Moroccan market: Royal Air Maroc still holds 35% market share on routes from Europe to Morocco. Ryanair and Transavia both have 15%, like us. Vueling and Easyjet are also active in Morocco, which is an interesting market for leisure airlines since it can be exploited the whole year through. If we compare this to i.e. the Greek market which completely shuts down between November and March (save Athens), it is more interesting. This is one of the reasons why TUI fly continues to increase flight frequencies to and from Morocco. In the last five years, the amount of flights has substantially increased. New routes are open and capacities are expanded. Some places here are now turning into major touristic places, for example Agadir. These places represent an opportunity for leisure airlines. Other airlines, with a focus on a hub-and-spoke model like Royal Air Maroc, logically have less focus on these typical point-to-point leisure routes. Consolidation and partnerships are key in aviation. Thanks to travel agents and tour operators selling our packages and seats in Morocco, our market share in Agadir is now 40 %. Tourism is of the utmost importance for several other destinations in Morocco, including Fez and Marrakesh, where TUI plays an important role.

When flying to Morocco, what makes TUI fly stand out?

First, as part of a major touristic group, we barely cancel any flights. It is in our DNA to always keep operations running as our customers are often booking an accommodation and a transfer in addition to the flights. Second, TUI played an important role in personalizing the flight experience by giving the client choice for what service he is willing to pay for. For example, if a passenger does not want a meal during his flight, he doesn't have to pay for it. With TUI fly you can pay for your luggage and meals separately. I am surprised that it is still seen as a low-value product. The majority of customers are not willing to pay for an all-inclusive flight. They prefer to tailor their flight to meet their needs, so for the price the clients pay, it's a tailored, high-value product.

Key challenges for growth in the sector?

The current situation in Morocco cannot last: it will become a battlefield. I do not know many markets where so many airlines are competing to gain market share. While the market is growing strongly, this can continue for a while, but this environment cannot last over time. Also, we will be following closely the government's approach to developing tourism. Infrastructure development in Morocco is good, although Casablanca is a good example of a city with huge potential that is underutilized, with regards to sun-and-beach tourism. Developments take place in some regions, such as Taghazout in the south. In the leisure segment, hotels and flights go hand in hand. Infrastructure development in Morocco is good. It would be helpful for Morocco to also focus on outgoing tourism in addition to the incoming aspect. There is good amount of Moroccans with the means and will to travel. By investing in outgoing tourism (for example, looking at visa procedures) more dynamism around traveling is created. This will also reinforce Morocco as a destination.

What role does sustainability play in your business model?

We should distinguish two things: on the one hand, we benefit from being a part of TUI airlines, which has a very young fleet. The technology we use to operate our flights has less impact by being more fuel efficient. TUI group is carrying out tests to become even more environment-friendly, for example by separating waste on board, by removing all unnecessary plastic items on board. On the other hand, we have several initiatives in Morocco. We are helping a company in Marrakesh to develop cycling tourism, offering guided bike tours of the city; it is called the Pikala Project. We have another project in Agadir tackling education, environment, and sustainability problems. Tourism brings a lot of wealth to the world as well as a lot of value for individuals, but tourism is a tricky subject at the moment. Morocco is a good example that without tourism the economy would be in a much different state and the population would be affected. A well-developed country can spend a bigger budget on sustainability. As an airline, we try to be as environment friendly as possible.