TUI UK is considering hiving off its seat-only
operation of Britannia Airways from its ATOL coverage to soften the impact of
rising bonding costs.

Chief financial officer Will Waggott said TUI lawyers
were looking at ways to avoid bonding products where possible and are
considering removing seat-only charter flights from the “bonding regime”.

This would not amount to fundamental changes in the
way the seat-only operation is run but would mean a huge saving on the premium
on its bond, said Waggott.

“It’s a nonsense. We’re not changing anything
practically but it saves a bunch of money,” he added.

A separate company would be established for a reservations
and ticketing set-up and could be in place within six to nine months, he added.

This would mean Britannia Airways’ seat-only operation
would effectively operate in the same way as rival carriers such as EasyJet and
MyTravelLite. TUI is already committed to developing its seat-only business
which grew by 10%-15% in 2002, with growth of up to 10% expected this year.