[1]: 114 Air Europe was the main supplier of charter seats to Intasun Leisure,[2] which grew during the 1980s to become the UK's second-largest package tour operator (after the market leader Thomson).

[1]: 9–10 After failed attempts to convince Fred Newman of their plan's merits, Errol Cossey, Martin O'Regan and Alan Snudden decided to leave Dan-Air.

[4]: 174 )[1]: 9–10 The fact that the charter airline industry—Dan-Air in particular—were shunned by some travel companies meant broad appeal was needed at the outset, especially in terms of on-board service, including the in-flight catering.

This seemed to be a low-cost way of minimal catering on inclusive tours but was labour-intensive especially when taking into account that these meals needed to be prepared freshly several hours before departure.

[4]: 119 [7] A typical example of Dan-Air's opportunistic diversification into activities was its long-term commitment to start a comprehensive network of regional scheduled services linking secondary airports across Europe, many of which operated on a seasonal basis only.

[1]: 76 Their long-term strategic plan was to penetrate the market for: A particular financial strength was: Air Europe became the first British charter airline to use new equipment from the outset and provide food and service that were reviewed to be comparable to established scheduled carriers.

In the late 1970s major financiers were reluctant to provide start-up capital to newly constituted airlines (dubbed 'paper') unless part of or enjoyed the backing of well-financed organisations.

Ultimately, C. ITOH and the Marubeni Corporation, two Japanese conglomerates, whose commercial activities included purchasing brand-new aircraft from the United States and leasing them on to non-US airlines as part of Japan's effort to reduce the then huge trade imbalance with the US, were prepared to lend Air Europe the required amount, following complex and lengthy negotiations.

[1]: 69 During the early 1980s the Federal Aviation Administration (FAA) began rethinking its policy on the minimum number of engines an aircraft needed to be permitted to fly long distances non-stop over water.

[1]: 71–2, 170 The charter airline business was highly seasonal, with most of the annual commercial activity taking place over a relatively short period of barely four months between the end of May and the beginning of September.

Another important factor leading to this decision was to ensure the widest possible UK coverage for its package tour operations to enable Intasun to compete better with market leader Thomson.

[1]: 157 Air Europe prepared to enter the scheduled service market as early as April 1980 when it applied to the Civil Aviation Authority (CAA) for a licence to begin a year-round scheduled operation between London Gatwick and Miami, challenging Laker Airways' rival application to become the UK's second designated flag carrier on the route in direct competition with Air Florida[13] as well as in indirect competition with British Airways' and Pan Am's services from Heathrow.

The new strategy centred on Air Europe providing competitively priced and timed scheduled services on the eleven busiest international European trunk routes from its Gatwick base.

This automatically accorded it the highest priority among all the flights listed on the agent's screen and, therefore, made it more likely to be booked in a typical travel agency's high-pressured work environment.

[1]: 93–4 Air Europe submitted its application to launch scheduled services from Gatwick to Paris, Amsterdam, Brussels, Frankfurt, Munich, Zürich, Geneva, Rome, Oslo, Stockholm and Copenhagen to the CAA in November 1986.

[1]: 123 ILG's decision to purchase Connectair was part of Air Europe's corporate strategy at the time to establish itself as a major short-haul scheduled operator at its Gatwick base.

ILG's acquisition of Connectair therefore represented a golden opportunity to substantially increase the number of slots the group's airlines controlled at Gatwick, thereby strengthening Air Europe's competitive position at that airport.

[1]: 135 Air Europe decided to become the launch customer for the Rolls-Royce Trent-powered version of the McDonnell-Douglas MD-11 in late 1989 when it announced its intention to place a firm order for six aircraft and to take an option on a further twelve.

Work on licence applications to launch new, long-haul scheduled routes from London Gatwick to New York City, the Caribbean, Australia and New Zealand to be operated with the new MD-11s commenced during the autumn of 1989.

At the time BCal's senior management dismissed ILG's bid as "derisory" because it valued the entire British Caledonian Group's assets far below their minimum expectations.

[1]: 102–3 Air Europe was concerned that a new entity combining BA and BCal had the power to destroy the UK's remaining independent airlines, especially with regard to their ability to compete with such a behemoth.

[18] Given a combined BA-BCal's superior financial strength, considerably lower borrowing costs and far greater economies of scale, Air Europe's management felt that it would be imprudent to launch these new routes if it had to compete with BA out of Heathrow and Gatwick as well.

Therefore, its parent ILG had decided to make a counter bid, which it hoped would either kill off BA's proposal to take over BCal lock, stock and barrel or result in it being referred to the MMC.

Dan-Air's large-scale presence at Gatwick, the airport's increasing scarcity of early morning peak time slots, and the fact that Dan-Air had already been licensed to operate scheduled services to some of the destinations Air Europe wanted to serve as well while only a quarter of London's and a third of the entire Southeast's population lived in Gatwick's catchment area also meant that attaining the "critical mass" to make its scheduled operation viable became an uphill struggle for Air Europe.

[1]: 157  As a result of this decision, Air Europe was excluded from the two main London—Scotland trunk routes and it was forced to compete head-on with Dan-Air to Paris Charles de Gaulle and Jersey.

Dan-Air's growing financial problems at the time provided the impetus for ILG's high-profile publicity campaign not to miss an opportunity to run down its ailing competitor in the press, accusing it of operating old, "gas-guzzling" aircraft.

Air Europe's massive expansion into high-profile scheduled services plying trunk routes between major European cities towards the end of the 1980s, the airline's huge aircraft commitments lasting well into the 1990s, and ILG's increasing reliance on profits arising from its interest in the US dollar-denominated residual values of the aircraft operated by its airline subsidiaries for the group's overall profitability from 1989 represented a high-risk strategy for an undercapitalised company.

Not only did Davies and Newman/Dan-Air actually own many of the aircraft in the ailing airline's fleet, which were mainly older, less efficient planes with a generally low re-sale value, but it also held the title to the freehold of a number of commercial properties, including prime real estate in the City of London.

Air Europe and Intasun were used as a template for many aspiring British tour operators, such as Cardiff-based Aspro Holidays, which launched its own in-house airline, Inter European Airways, in 1987, as well as Airtours (later rebranded as MyTravel), which merged with Aspro in 1993, to create the second largest tour operator in the UK and which was widely recognised as the direct successor to Intasun and Air Europe.

[1]: 37 Air Europe's application to the CAA requesting permission to carry mail and newspapers on its regular charter services from London Gatwick to Gibraltar on days when there were no scheduled flights was approved on 7 November 1980.