Airtours Plc History

Address:

Wavell House
Holcombe Road
Helmshore Rossendale
Lancashire
BB4 4NB
England

Telephone: (44) 1 706 240 033
Fax: (44) 1 706 232 089

Public Company
Incorporated: 1972 as Pendle Travel Services Ltd.
Employees: 14,000
Sales: £3.05 billion (US $ )(1997)
Stock Exchanges: London
Ticker Symbol: Airtours
SICs: 4724 Travel Agencies; 4725 Tour Operators

Company History:

Airtours Plc is one of the largest integrated tour operators and travel agents in the European and North American markets. Based in England, where the group is the second largest holiday package vendor after Thomson Travel Group, Airtours has been expanding rapidly in the late 1990s, achieving leading tour and travel positions in the Scandinavian, German, Dutch, French, and Belgian markets, while also building a strong position in the United States and Canada.

Airtours' operations are divided into three areas. The first is the company's holiday tour package sales, represented by the Airtours and other brand names, including Spies in Scandinavia; Sunquest Vacations in Canada; Suntrips in California; Sun International SA in Belgium; Direct Holidays, a direct sales package seller in the United Kingdom; and others, such as the company's 1998 additions of Frosch Touristik in Germany, Panorama Holidays in Ireland, and Vacation Express, based in Atlanta, Georgia. Added to the company's tour operations is Airtours' own network of nearly 800 travel agencies under the Going Places brand name in the United Kingdom. Since the mid-1990s Airtours has been building operations in a new area: cruise lines. In 1998 the company counted three cruise ships in its possession, carrying more than 90,000 vacationers to more than 40 ports. A fourth cruise ship was expected to be added in 1999. Supporting Airtours' activities is a solid infrastructure that includes not only company-owned resort and other hotels, but also the company's own charter airline. The company operates a fleet of some 20 airplanes, ranging from Airbus A320s to Boeing 767s.

Airtours continues to be led by founder David Crossland. A public company listed on the London stock exchange, Airtours is partly owned by the United States' Carnival Cruise Lines, the world's leading cruise line operator, which bought up nearly 30 percent of Airtours in 1996. After rising to the top of the British tour market in the 1990s, Airtours has been actively participating in the ongoing consolidation of the international tour and travel industry, as well as expanding into new markets. Already boasting a string of acquisitions, in December 1998 the company floated a convertible bonds issue, boosting its war chest by more than £250 million.

From Travel to Tours in the 1970s

David Crossland entered the travel business by a side road in the early 1960s. After leaving a self-described "mediocre" school career at the age of 16, Crossland sought work in hospital management. Crossland's lack of qualifications, however, prevented him from finding work in this field. Instead, Crossland found a job stamping brochures for a local travel agent. That job turned out to be an eye-opener for Crossland. As he told the Financial Times: "It was super leaving school and this was a marvelous opportunity, lots of colorful brochures and different places. It was like someone had opened the door and there was this big, shining light."

The shining light proved to be Crossland himself. After only three months, he added salesman's duties, selling holidays for the agent. Crossland turned out to be a natural salesman, with a knack for recognizing his customers' needs--a quality that would come into play strongly in his later career. Crossland's career received its next boost in 1971, when he met a couple preparing their retirement who were looking to sell their two Lancashire travel agencies. The couple offered to sell to Crossland, who jumped at the opportunity. "To this day, I don't know why I didn't say I had no money," Crossland told the Financial Times.

Buying the travel business would cost Crossland some £11,000. The agencies' owners themselves loaned Crossland £4,000, and Crossland sold a one-third share to his sister for £3,000. The remaining £4,000 came from Barclays Bank. Crossland quickly began earning back that loan--by the time he had signed the papers, he had sold a holiday package to the bank's manager. In 1972 Crossland took over Pendle Travel Services Ltd. It would take Crossland only nine months to pay off his company's debts.

Crossland proved to be not merely a good salesman, but a good manager as well. Over the next decade, Crossland sought out more travel agents who were looking to sell their agencies to retire. By the end of the 1970s he had built a chain of 12 travel agencies. Yet Crossland's ambitions would lead him into a vast expansion over the decade to come.

"Serious Business" in the 1980s

Despite Crossland's success, Pendle remained a relatively small company. A new inspiration in 1980, however, would lead the company into a new era. In that year Crossland recognized an opening in the tour packages industry. "I could see that passengers were coming in and asking for products that the tour operators weren't manufacturing," Crossland told the Daily Telegraph. "They weren't listening to the customers so in the 1980s we started a tour operation."

The opening Crossland spotted was in holiday packages for his working class customers. Whereas most tour packages at the time were being offered on a Wednesday-to-Wednesday basis and, therefore, were not easily adapted to customers' vacation schedules, Crossland began designing Saturday-to-Saturday tours. The shift to the weekend made all the difference. In 1980 Pendle would take some 900 customers on holidays to Malta. By the following year, that number would grow to more than 23,000, and the company began offering a choice of destinations. By 1983 Crossland's tour operation--created as a separate division dubbed Pendle Air Tours--had expanded the company to 23 agencies and more than 200,000 tour customers per year.

Until then, Crossland had led Pendle Travel Services as an entrepreneurial concern. But in the mid-1980s Crossland recognized his own limits and the limits of entrepreneurship. As he told the Financial Times: "I can remember thinking, 'I haven't got the capability to work any more hours, so if I want to expand the company, I'll have to find people with business disciplines I don't have.' In my own mind that was one of the turning points for the group, changing from a one-man entrepreneur into a serious business."

Crossland began recruiting a management staff, bringing in former executives from such firms as Marks & Spencers, Kellogg's, and Granada. The new team began reshaping Pendle from its former travel agent business to a full-fledged tour operator. By 1986 the company's tour business had become the primary source of revenues and growth. In that year Pendle sold off its 25 Pendle travel agency chain stores, and renamed itself Airtours, concentrating solely on its booming tour package operations.

Airtours continued to expand rapidly in the late 1980s. Fueling this expansion was the company's listing on the London stock exchange in 1987. The public company, and Crossland in particular, would be credited with bringing a new level of professionalism to the traditionally volatile travel business. Airtours also would prove adept at discovering new travel niches. In 1990, for example, Airtours launched its EuroSites brand of self-drive camping holidays. In keeping with the popular European-style camping holiday--where a "camping" often resembles a small resort more than a simple campground, complete with restaurants and recreational facilities--a EuroSites holiday offered a tent or mobile home rentals, as well as a choice of location in England, Holland, Germany, Denmark, and other European continent countries. The EuroSites concept proved to be a hit, bringing Airtours to one of the leading positions in that segment.

Vertically Integrated Travel Giant in the 1990s

The 1990s would see Airtours transform itself from tour package operator to a vertically integrated holiday provider. The company took an important step toward this transition in March 1991, when the company launched a new division, Airtours International, offering charter flights on the first of a soon-to-expand company-owned fleet of airplanes. The addition of Airtours International would help propel Airtours to the U.K. lead in the air-inclusive tour operators segment.

The following year Airtours reentered the travel agency business with the acquisition of Pickford Travel Agencies and that company's 330 travel agencies in the United Kingdom. The return to retail travel sales enabled the company to move closer toward vertical integration--a move that would be completed as the company began to acquire its own resort and hotel locations.

The troubled travel industry of the early 1990s--hit by the triple blow of overcapacity, traveler fears arising from the Persian Gulf War, and the recessionary economic climate&mdash′ovided fresh opportunities for growth for Airtours, as the company began seeking out more acquisitions. In 1993 Airtours bought Aspro, Ireland's largest tour operator and the number seven ranking tour operator in the United Kingdom as a whole. The Aspro acquisition also extended Airtours' airline activities, as it included Aspro's Inter European Airways subsidiary.

At the time that the Aspro acquisition was made, Airtours also purchased the Hogg Robinson Travel Agency and its chain of 214 retail stores. At the end of 1993 Airtours combined the Hogg Robinson and Pickford travel agent chains into a single operation, renamed Going Places. Further acquisitions would build the Going Places chain to more than 700 stores before the end of the decade.

These acquisitions would prove to be only the first of many more to come, as Airtours began seeking expansion beyond its U.K. base, as well as a diversification of its product offerings. After buying up Tradewinds, the leading long-haul tour operator in the United Kingdom, in December 1993, Airtours turned to a new market opportunity. With the purchase of the MS Seawing, Airtours entered the growing cruise ship market. By 1995 the company had added a second liner, the MS Carousel, and had launched its fly-cruise holiday packages.

The company's international expansion began in earnest in 1994 with the acquisition of Sweden's Scandinavian Leisure Group AB (SLG), which included not only that company's Ving, Saga, and Always tour brands, but also SLG's 50 percent ownership of Premier airlines, the largest charter airline operator in the Scandinavian countries. In addition to giving Airtours SLG's tour and airline operations, the acquisition placed SLG's Sunwing Hotel Group under Airtours' wing, giving the company a number of resort hotels in popular holiday destinations such as Majorca, Spain. Capping 1994, Airtours acquired a new retail operation in the form of Late Escapes, a teletext-based direct sales holiday provider.

After launching its cruise line operations in 1995, Airtours turned its attention to North America, purchasing Sunquest Vacations and Silverwing Holidays, two prominent Canadian-based holiday providers. These would be followed in 1996 with a move to consolidate Airtours' position as the leading tour operator in Scandinavia with the acquisition of the tour operators Spies and Tjaereborg, the hotel group Stella Polaris, and the acquisition of full control of Premier airlines.

Airtours' strong growth and its rapidly expanding cruise ship division, which was reaching more than 75,000 passengers per year, caught the eye of others in the travel industry, in particular the United States' Royal Caribbean Cruises, the largest cruise line operator in the world. In April 1996 Royal Caribbean became Airtours' leading shareholder with the purchase of 29.54 percent of the company's stock. The purchase sparked rumors of a possible takeover bid by Royal Caribbean; a possibility that neither side could discount completely for the future. Meanwhile, the shareholding position provided the basis for a partnership between the two companies, including the sale of one of Royal Caribbean's cruise ships to Airtours, which renamed the ship MS Sundream.

If the mid-1990s presented a difficult market, with increasingly consolidated, global competition sparking a price war that cut deeply into the company's profits, the second half of the decade would show impressive growth in Airtours. From revenues of £1.7 billion in 1995, the company would reach more than £3 billion by 1997.

Among the company's acquisitions during the period were the joint venture purchase with Royal Caribbean of Italy's Costa Cruises, which held the lead in the Mediterranean market and the number five spot worldwide; the acquisition of Northern California's Suntrips tour operator; and the 1998 acquisition of Sun International SA, bringing the company into the Benelux and French markets, as well as strengthening Airtours' short-break holiday business in the United Kingdom.

Airtours would show no sign of slowing down its expansion through 1998. After the Sun International purchase in February of 1998, the company would add a new cruise ship to support its booming cruise division, before moving into the German market with the purchase of a 30 percent stake in Frosch Touristik. By the end of September, Airtours had further strengthened both its U.K. and U.S. presence, with the acquisitions of Panorama Holidays in Ireland and Vacation Express in Atlanta, Georgia.

Under Crossland, Airtours promised continued growth for the future. After moves in December 1998 to move into the Polish market, under the Ving brand name, and the extension of the company's U.K. travel agency division with the purchase of the 116-outlet Travelworld, Airtours showed its hand with the launch of a £250 million bond issue. As the worldwide travel market entered a new phase of consolidation, Airtours appeared likely to take its place among the upper ranks of travel's global leaders.

Airtours Plc History

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