Europe's major holiday groups TUI Travel and Thomas Cook issued strong trading updates despite the deteriorating economy. But with capacity down and prices up, they promise few bargains for consumers.

TUI Travel UK will offer 21% fewer holidays this winter than a year ago, although most of the reduction is in seat-only scheduled flights. With one-third of the winter programme in the UK sold, TUI reports an average selling price 19% higher than last winter. Average prices for next summer are 12% up on this year.

Thomas Cook reports similarly falling capacity and rising prices - with 8% fewer holidays available from the UK this winter and 6% fewer next summer. The group’s average prices this winter are 3% up on a year ago - below the rate of inflation - but those for next summer are 8% up on the season just ended.

Both groups reported a strong end to this summer. TUI Travel posted revenue from UK mainstream sales up 6% and prices up 18% on summer 2007. Passenger numbers were 10% down, in line with a capacity reduction of 13%.
Rival Thomas Cook saw 9% fewer UK bookings over the summer than in 2007, but with capacity down by 10% it was able to raise the average selling price by 7%.

Thomas Cook chief executive Manny Fontenla-Novoa said: "The reduction in capacity as a result of recent airline failures has improved our outlook."

Despite the healthy figures, TUI Travel’s share price fell on Monday in line with the general decline on the London Stock Exchange. Thomas Cook’s value was unchanged overnight.

Thomas Cook also announced it has pulled out of talks in Germany with Lufthansa and TUI Travel on a potential merger of its airline Condor with TUIfly and Lufthansa's Germanwings.