A leading tour operator and organiser of the rescue of stranded XL Airways' passengers last September fears a spate of tour operator collapses this summer followed by deteriorating travel demand next year.
All Leisure Group chairman Roger Allard told an Institute of Travel and Tourism dinner: "The value of the pound has dropped so much we need double-digit increases in prices next year and there is no way the market can take that.
"Next year will be worse than 2009. Holidays have to go up in price so, by definition, demand will go down. We have to cut costs."
Allard was called in by the Civil Aviation Authority to oversee repatriation of 85,000 holidaymakers when XL Leisure Group collapsed - the biggest passenger rescue in the history of the UK trade.
Speaking at a dinner in the House of Commons, Allard said of the XL collapse: "I got a call from the CAA on the Tuesday and we went to the High Court on the Thursday. The bankers had had enough. There was no budget, no planning. The phones at the CAA were not even connected. We were lucky to get away with it in the circumstances."
The rescue proved a triumph, but the cost of the operation - and of refunding up to 80,000 advance bookings - threatens to exhaust the Air Travel Trust fund that underwrites financial protection for package holidaymakers.
The Department for Transport has angered the industry by indicating it intends to increase the financial-protection levy on holiday bookings - the £1 ATOL Protection Contribution - to cover the shortfall in funds
However, Allard defended the current system of protection and divorced himself from demands that the levy be extended to all flights from the UK.
"We want to protect our customers," he said. "Anyone who pays up front for a flight, or ferry, and something else should be protected. But we are going to get just aircraft seats protected - not until a major airline goes bust."
The CAA is poised to launch a six-week consultation on increasing the levy, with trade association ABTA lobbying hard for an alternative proposal of widening the scheme.
Allard said further company failures were inevitable, but suggested they would benefit the industry by cutting capacity.
"There will be mergers and failures. The industry is going to end in totally different shape to now. But we cannot continue at the same size we are," he said.
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