The Lowdown: He wants you to go away with him

TUI's ski-loving boss talks to Abigail Townsend about the rebirth of Thomson, his new budget airline - and why there's still plenty of life in the package deal
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The past few years have been nothing short of disastrous for the travel sector. There have been the terrorist attacks of 11 September 2001 and the subsequent heightened security, the ongoing threat of further terrorism - particularly in tourist destinations such as Turkey - and wars in Afghanistan and Iraq. Add to that a global economic slump and a virus that threatened to become pandemic, and it's no wonder few people have felt like flying off on holiday.

TUI, the German travel giant (formerly Preussag) is a case in point. The owner of Thomson and Lunn Poly reported an interim loss of €98m (£68m) in August. Tour operators usually make a loss in the first half of the year, before revenues from summer bookings arrive, but the figures beat the previous year's €40m loss, and revenues were down 13 per cent at €1.8bn.

Yet, as 2003 progressed - with war in Iraq "officially" over, the Sars virus contained and the world economy picking up - the clouds appeared to be clearing. It was at this point that Peter Rothwell was promoted from chief operating officer to chief executive of TUI's northern European arm. The move made Rothwell one of the most senior figures in the travel industry.

Hanover-based Preussag become Europe's biggest tour operator three years ago by offering £1.8bn for the UK package giant Thomson. The deal was struck and TUI was born. Two years later, Thomson's boss, Charles Gurassa, the architect of the sale, stepped down and Rothwell moved in.

The ongoing consolidation of TUI, together with parlous economic conditions, meant Rothwell spent his first few months as chief executive stripping out costs. TUI clawed back €260m in 2003, around €100m of which was achieved by cutting jobs and tackling back office spend in the UK. Now Rothwell faces an even tougher job: ensuring TUI's dominance in a holiday sector that has changed dramatically in recent years. The huge popularity of the internet and do-it-yourself tourism, as typified by the likes of eBookers, Expedia, Travelocity and Opodo, has left package tour operators in its wake.

Rothwell's first line of attack has been the Thomson brand. There has already been a multi-million pound relaunch with a new smile logo - as worn by Tottenham Hotspur players - linking it to the TUI group. "The world has changed, and the big brand names will dominate," says Rothwell. "People on the internet will trust brands, and that's where the advantage lies."

The second line is the budget sector. Even before 9/11, all operators were feeling the pinch as holidaymakers abandoned inflexible package trips for the joys of cheap and cheerful flights. Under Gurassa, TUI reacted by launching the low-cost scheduled carrier Hapag-Lloyd Express in Germany.

Under Rothwell, another has been launched - Thomsonfly.com. Flights start in March from Coventry airport, and TUI is assisting financially with the expansion this entails. Rothwell is adamant the hub will be a success. "We didn't want to be in a very competitive airport," he explains. "This is about high-frequency, flexible flying from smaller airports. People are ready to fly from a regional airport."

To support his argument, he points to the congestion around Heathrow, and to Coventry's large catchment area (between five and six million people live within an hour's drive). The airline will initially serve 11 destinations, including Rome and Malaga. Yet Rothwell is not about to junk package holidays. He is a great believer in them- bizarrely, given his own habits.

Rothwell flies his own light aircraft, has taken an apartment in the Austrian resort of St Anton for the season and enjoys nothing more than trekking up mountains, wearing skis. He is a skiing fanatic but likes doing it the hard way, without cable cars. So it is unlikely he will ever plump for an all-inclusive.

"The reason the package holiday is not dead is because it's an incredibly efficient model," he argues. But he concedes the old days are gone for ever. "You need to decide how much of the old and new business you want and how to combine them," he says. "Travel is changing fast and there are a lot of different ways of travelling. One of our jobs is to make sure that whatever customers want to do, we're in a position to provide that."

Other energetic pursuits favoured by Rothwell include flying, sailing and squash. ("Golf is for old men," he says, looking faintly horrified at the prospect of a quick nine holes.) His career path has been similarly restless, taking in most corners of the holiday game. Before going up to Oxford to study French and German, he worked on a St Tropez campsite, and while at university he took Americans around Europe during his vacations. After graduating, he joined Thomson Holidays and later Jetset. But Thomson lured him back - he returned in 1993 as first sales and then purchasing director.

Itchy feet then got the better of Rothwell, and he headed for MyTravel (then Airtours). Today he may happily announce he heads a well-run company, but he is modest enough to admit that the demise of MyTravel has benefited Thomson. He still speaks highly of its founder, David Crossland, and is reluctant to ruminate on what went wrong.

However, he concedes: "This business unwinds very quickly if badly run." He returned to Thomson in March 2002, just a couple of months before the first of many profit warnings from MyTravel.

Rothwell takes over at a time when challenges are still facing the industry. The introduction of sky marshals has horrified some - Thomas Cook, for example, has said it will not carry armed persons on its flights - but TUI refuses to discuss security other than to confirm it will follow CAA guidelines.

Conditions might be improving but the terrorist threat in some quarters remains very real. And that means the consumer rush is far from guaranteed.

Rothwell believes the industry is now over the worst and says, so far, January bookings for winter and summer are doing well. But the real test will come not in the first few days of the New Year, but in the weeks and months ahead. No one can predict whether 9/11 will happen again. In the meantime, Rothwell is focusing on getting people off on holiday with the least amount of hassle - and, for TUI, the maximum amount of profit.

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