Selling holidays has never been tougher, says former Tui Travel UK boss Dermot Blastland.
“This is the toughest time I’ve seen. We had a decade of low inflation when any idiot could sell. There was a rising tide.
“But then the tide goes out and you see who is naked. Some people are suffering. We probably hit a plateau – 2009 saw the biggest-ever reduction in outbound travel. Economically challenged families withdrew from the market. Reality has kicked in. EasyJet and Ryanair have knocked their exponential growth on the head.”
But he adds: “The core market is still going on holiday. People are not poverty stricken. They may go down a star rating, go for a shorter duration or nearer to home, but that is fine.
“There are families who do not care that they can get a holiday £50 cheaper somewhere. It is like shopping at Sainsbury’s or Waitrose. Thomson has the products to appeal to them.”
Blastland points out the major companies are trading profitably and behaving “more prudently”. The consolidation he oversaw between Thomson and First Choice, and that of Thomas Cook and MyTravel, is a major part of the reason.
“You have two very strong holiday companies,” he says. “If there were four, they would all be weaker given the environment of the last two years.”
Room for a third big player
Blastland does see room for a third major player, however. “There is an opportunity for a third force, but not as a smaller version of the top two,” he says.
“It would need a degree of volume. I could see a consortium of companies coming together and using technology to lower costs.
You can’t wait for the good times. It could be easyJet. It could have been The Co-operative Travel.
“There is room for a third brand. A lot of people are looking at easyJet, but you could see an amalgamation of different companies.”
Blastland does not believe easyJet Holidays will take business from the top two; rather, he suggests, it will “re-distribute passengers booking online”. A key question, says Blastland, is: “Will they treat easyJet Holidays’ customers differently to easyJet passengers?
“A holiday is not just about the provision of a flight and a bed. EasyJet has a relatively good image; it could do well. But there is a history of airlines trying to become tour operators and it’s not littered with successes.
“The flight is not the holiday – it’s just transport. The real holiday experience – the product of the holiday company – happens between the plane landing and leaving. It’s not an add-on to the flight.”
Blastland is sceptical about appeals for the industry to speak with one voice. “We talk about the industry,” he says, “but companies act on their own behalf.
“We have been good at moaning, and we all turn up when there is an issue. But you have to establish relationships with civil servants and ministers and put together good arguments.
“The big players co-operate where it is sensible – on ash, on Air Passenger Duty.
“But if you are a large company, it is easier to do it yourself – the message is clearer and you can be more single-minded. And the whole industry benefits if Tui is successful in its lobbying.”
He shares the industry frustration on Atol reform, describing flight-plus as “reminiscent of [deputy prime minister] Nick Clegg’s comment on the coalition government: ‘It’s a miserable little compromise’.
“If there is concern about people being abandoned when a company collapses, why discriminate [between customers],” he says.
“But it’s not high up the list of government priorities. Some protection is better than no protection, and why should the big, well-run businesses have to bail out the others?”
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