Ryanair Holdings Plc is on the brink of finalizing an agreement to partner with package holiday giant TUI AG, according to insiders familiar with the matter. This potential collaboration would deal a fresh blow to online travel agents as Ryanair continues its battle against them. An official announcement of the partnership could come as early as Thursday, with talks between the two companies having progressed positively. The agreement follows Ryanair's previous deal with Loveholidays in January, which stipulated that no added fees were allowed on the Irish carrier's flights.
TUI, a major player in the travel industry, primarily caters to customers from the UK and Germany. Therefore, a partnership with Ryanair, one of the most active carriers in both countries, could prove highly beneficial. Ryanair CEO Michael O'Leary has long criticized online agents like Booking.com and Lastminute.com, labeling them as "pirates" and urging regulators to prevent them from charging additional fees for services such as itinerary changes.
The potential collaboration between Ryanair and TUI would offer travelers an alternative method to bypass online agents and directly arrange holidays using Ryanair flights. This move follows Ryanair's recent efforts to strike deals with individual travel sites after numerous platforms unexpectedly dropped the airline's flights from their listings, causing a dip in demand. In addition to Loveholidays, Ryanair has already partnered with Kiwi.com, with TUI being the latest potential addition to its list of alliances.
As Europe's largest discount airline, Ryanair has faced accusations from online aggregators that it has abused its market dominance by disrupting their services. The aggregators act as intermediaries, coordinating flights, hotels, car rentals, and other travel services. The potential alliance between Ryanair and TUI could enable the latter to tap into Ryanair's extensive network, offering more flight options to its customers. While TUI currently operates its own flights and allows customers to choose flights from other carriers like EasyJet and Norwegian Air Shuttle, partnering with Ryanair would broaden its offerings.
In terms of market reach, Ryanair ranked third in terms of passenger flights originating from the UK during the fourth quarter of last year. It came just behind EasyJet and British Airways. In Germany, Ryanair trailed only Deutsche Lufthansa AG and Eurowings in terms of flight numbers. Given Ryanair's strong presence in both countries, a partnership with TUI would significantly enhance the holiday giant's competitive edge.
Ryanair shares initially dipped on the news but reversed losses following the Bloomberg report, ending with a 0.2% gain in Dublin. In contrast, TUI, which is in the process of switching its main listing to Frankfurt, saw a 6.3% drop in London. The potential collaboration represents an intriguing development that may disrupt the dynamics of the travel industry, potentially strengthening Ryanair's position and presenting a challenge to online agents' market dominance.