| Journal: TWUK | Section: |
| Title: | Issue Date: 03/07/00 |
| Author: | Page Number: 13 |
| Copyright: Other |
How interesting to see the market leaders moaning about discounting. Smaller operators have been complaining about it for years but the big boys just wouldn’t listen
Noel Josephides
It’s strange that First Choice chief executive Peter Long should come out publicly and condemn discounting (Travel Weekly June 26).Is it hurting them as much as it is those who are at the bottom of the pile?
Whenever I’ve complained about discounting in the company of market leaders and their advisors, I am always told to shut up and respect the leaders of our industry who have more wisdom and who know what they are doing.
“When you are in the big league discounting is offset by the volumes you are able to carry,” I have always been told. Well, if this is true, why is Peter Long complaining?
Now it’s the large companies that are moaning about a culture has been created which encourages customers to book late and to expect a discount. Well, blow me down, what a thing to have realised. Of course, the current management can blame the whiz kids of a few years back who started it all.
At that time, those at Lunn Poly who created the discount culture were applauded for their tactical wizardry and innovative ideas. Now they are blamed, quite rightly, for having destroyed the profitability of the industry. Of course, the people with these bright ‘cut the price and you will sell more’ ideas are no longer there to take the blame. They’ve been offered higher salaries by competitors to implement similar bright ideas for them.
No wonder the regulators are not worried about the lack of cut-throat competition in the travel industry. They know the industry has a collective brain no greater than that of a chicken – headless at that.
So, all in all, I feel quite elated that Peter Long has broken ranks and told all and sundry that not all is well.
I have no doubt shares will now be marked down. The truth is there is gross overcapacity and we all know it.
If Airtours did not have too much to sell it would be announcing price increases (fluid pricing and all that) over the peak season, not discounts. But, of course, Airtours wants to be top dog and is doing a Thomson on us. What was it the former market leader used to do when it felt threatened? Yes, increase capacity and lower the price.
Such a successful formula and guaranteed to work.
So what are we doing next year? Why, we are increasing capacity even more, paying way over the odds for accommodation and hoping that, somehow, someone will go out of business so the excess capacity can be filled.
Well, who will go into liquidation? We need a big operator to collapse not a few small ones who count for very little. But now our market leaders are either owned by Germans or are publicly quoted it is hard to see how, when or where the capacity adjustment will come. We don’t have a Clarksons or an ILG any more.
Neither did we have low- cost carriers in the old days. Airlines used to charge proper amounts then.
Now everyone is dipping their hands into the pot and there is not enough to go round. It’s all very entertaining and predictable and those of us who have been around for a while have seen it all before.
“Now it’s the large companies that are moaning about the culture that has beencreated which encouragescustomers to book late and to expecta discount”