Bath launches attack on January price cuts

Bath launches attack on January price cuts

EXCLUSIVE by Jeremy skidmore

ABTA president Stephen Bath has condemned the policy of discounting and pleaded with the industry to stop throwing away its profits.

In his opening speech at the ABTAconvention, Bath said price cuts during January were unnecessary.

His comments echo those of First Choice chief executive Peter Long, who said widespread discounting was destroying the industry (Travel Weekly, June 26).

“What other business – in the busiest month – slashes profits by offering the biggest discounts to people who are fighting to get through the door?” asked Bath.

He said there was a strong case for sensible pricing this January because the economy is strong, inflation low and European air passenger duty is being slashed from £10 to £5 on holiday flights from April 1.

Bath said discounting hits independents hardest because they are struggling to compete with the multiples’ discounts.

“In vertically integrated companies, the profits are made by the operator and the airline. The retail chain is working for next to nothing,” said Bath.

“If travel agents could increase their margins by 1%, they’d be doubling their profit, as 1% is all that most of them have got left.”

Bath called for the big companies to use the ABTAconvention to talk to each other and adopt a different policy from widespread discounting.

“Inflating the price of a package by 50% to offer a 35% retail discount is not a sensible policy. Perhaps big companies can use this convention to talk through the issues with each other.”