Thomas Cook's half-year trading figures were sound and its forecasts upbeat, with this summer's trading strong and average UK selling prices 5% ahead of the same time last year.
Indeed, the company reported prices over the previous six weeks 14% ahead, far better than might be expected.
The good health of the second-biggest travel group in Europe and the UK has to be good news for the sector in general and follows a similarly upbeat picture from rival TUI Travel. The key to chief executive Manny Fontenla-Novoa's smile lies in two factors.
First, Cook has clearly got its UK capacity right this year. The overall 9% reduction in summer 2007 capacity conceals a 22% cutback in available short-haul holidays and a mere 2% fall in medium haul, with long-haul reduced by 13%. That has cut the competition with Ryanair and EasyJet and left Thomas Cook with a smaller proportion of holidays left to sell, ensuring prices have held up.
Cook has made a similar 9% reduction in airline capacity in Germany, its other major market.
Second, the group is hedged more thoroughly than Hampton Court Maze. The group has locked in the price of 93% of its jet fuel and 100% of its crude oil requirements for the remainder of this financial year and has options to hedge 89% of its fuel for 2008-09.
It is also 100% hedged against changes in the exchange rates of the euro and the dollar for the next six months, and 75% hedged for the dollar and 67% for the euro next year. That means Cook can set prices with reasonable confidence.
Prices for summer 2009 holidays will be 7% higher than this year, which is a hefty increase but in line with the current oil price and a Retail-Price-Index inflation rate of 4.3% and rising. A further 5% cut in capacity next summer should go close to matching any drop in demand.
The ability of the two major operators to manage capacity has rarely been sharper, at least since the boom in low-cost flights smashed the former trading model in the late 1990s. Both Thomas Cook and TUI Travel have substantially reduced capacity since their respective mergers with MyTravel and First Choice last year - a process made easier by elimination of two of the former Big Four.
The flies in the ointment remain the low-cost carriers Ryanair and EasyJet. The tour operators score big plus-points in their traditional markets - with family friendly packages, consumer protection, transfers, onboard catering and so on - and have cut some of the head-to-head competition by pulling flights.
But price will be a bigger consideration than ever at the lower-end of the market next year and significant numbers of people may postpone holiday decisions due to financial pressures.
That need not be a problem so long as the companies get their capacity right and sell it at the right price. In other words, it will all come down to tour operating. The real pressure could be on hotels.