It was another year of massive change for the travel industry. The consolidation continued with further acquisitions by the top operators and a raft of travel agency purchases as the focus turned to controlling distribution. Meanwhile, Airtours’ attempt to swallow up First Choice was prevented by theEuropean Commission. Here we review the year’s biggeststories brought to you by Travel WeeklyÉ
January
l Advantage Travel Centres scrapped targets and low-value transaction fees in a further watering down of its demands to allow members to sign up to the franchise with Airtours.
l The latest Gulf crisis caused Destination Red Sea to cease trading. Ticketshop USA and Hotelshop USA also went under.
l Thomson continued down the acquisition trail by snapping up 34-shop chain Callers-Pegasus for £17m.
EXCLUSIVE: Travel Weekly puts Watchdog editor Helen O’Rahilly on the spot after a raft of complaints from holiday firms.
February
l Airtours and Advantage Travel Centres celebrate as 333 branches sign up to the controversial franchise scheme. The result splits Advantage as two-thirds of members are left as ordinary members.
l British Airways scraps its unpopular Performance Reward Scheme to leave most agents with a basic 7% commission. Lufthansa quickly follows BA and announces it will cut commission from 9% to 7% in April.
l The European Commission turned to the Association of Independent Tour Operators for its views on the proposed Thomas Cook/Carlson merger.
EXCLUSIVE: Travel Weekly begins the regular lunchtime discussion meetings with the industry’s top people. First up were Thomas Cook’s Andrew Windsor, First Choice retail’s Gerry Reilly and Going Places’ Paul Evans.
March
l Travel Weekly switches to a Monday publication date instead of Wednesdays to remain the agents’ first for news, features and jobs.
l British Airways director of sales Dale Moss claims the airline will adopt a more friendly attitude to agents following a marked decline in relationships with retailers.
l Lunn Poly celebrates as a court upholds a decision that the differential between Insurance Premuim Tax charged to agents, 17.5%, and that charged to direct suppliers, 4%, is illegal. Meanwhile, the Office of Fair Trading launches fresh investigations into the way retailers sell insurance.
l First Choice and Kuoni revealed talks for a £1.5bn merger were at an advanced stage. First Choice also unveiled a plan to build a 1,200-strong chain of shops called Travel Choice.
EXCLUSIVE: Going Places demands operators increase commission to 18% from 15% and provide across-the-board credit facilities to all of its shops.
April
l The Office of Fair Trading looked to have buckled under pressure from multiples over how fascias should show ownership links.
l Thomson starts to woo hundreds of independent agents with offers to buy up their businesses or enter into partnerships.
l Agents run the risk of being barred from selling lucrative insurance if they are not licensed by a new body called the General Insurance Standards Council.
EXCLUSIVE: Thomson, with the backing of First Choice and Airtours, consider holding back summer 2000 launches to at least June following many complaints to Travel Weekly that new brochures were coming out too early.
May
l Dominated by the bid by Airtours for First Choice.
l Thomson vows to flood the market to keep its number one position in retaliation to Airtours’ £825m hostile bid for First Choice. Meanwhile, First Choice and Kuoni send out an offer document to shareholders as their merger came under pressure from the Airtours bid.
l In mid-May, the market leader said it would not enter a price war as shareholders reacted angrily to suggestions Thomson is prepared to dump capacity to fend off an Airtours/First Choice challenge. Some 75% of Lunn Poly’s business would be with Thomson, at the expense of First Choice, if the Airtours deal goes through.
l Cadogan Holidays managing director Gary David launches the strangely named TIPTO, the Truly Independent Professional Travel Organisation.
l The travel industry pays tribute to Holiday programme presenter, and Travel Weekly Globe Awards co-presenter, Jill Dando after she was murdered on the doorstep of her home in Fulham, southwest London.
EXCLUSIVE: Star Alliance airlines, including Lufthansa and SAS, hit out at the high cost of commission and target agents with widespread cuts.
June
l Airtours’ hopes for a swift decision from the EC on its First Choice deal are dashed as Brussels launches a full investigation. The operator reveals the bid was subject to investigation as the EC fears the major players will conspire to push up prices.
l First Choice repackages its deal with Kuoni in the hope this will convince shareholders to back the move and spurn the Airtours offer.
l ABTA looks to outside consultants in a bid to to trim some of its £4m running costs.
l Confusion reigns as the European Union fails to come up with alternatives to replace duty free sales.
EXCLUSIVE: Travel Weekly interviews Airtours chairman David Crossland as he waits for the European Commission decision on the bid for First Choice.
July
l First Choice and Airtours are at each other’s throats after the former’s proposed deal with Kuoni collapsed when only a third of shareholders supported it.
l BA is fined £4.4m and forced to rip up contracts with agents after the EC rules that they are illegal because the airline is abusing its dominant position.
l Operators report a flat peak season as economic recession is threatened and eastern Mediterranean holidays remain unsold due to the Kosovo crisis.
l Thomson chief executive Paul Brett leaves the company as the market leader issues a profits warning.
EXCLUSIVE: Travel Weekly reveals that Thomas Cook has drawn up lans to reduce the number of seats available for summer 2000 by 500,000. Specialist operators criticise the move as it will mean more in-house flying by Thomas Cook.
August
l Operators warned of court cases in 2000 as the scope for official bodies to complain about the industry is widened.
l Thomson’s front-runner for the position of chief executive Roger Burnell is thought unlikely to get the job.
l BA caves in to agent power and agrees to pay up to 10% commission under the Interim Bonus Agreement if retailers undertake training.
l KLM UK looks to unveil a low-cost airline. Buzz launches in January.
l Lunn Poly angered other agents with direct approaches to customers in Majorca offering discounts on summer 2000 holidays.
EXCLUSIVE: Travel Weekly reveals operators are vying for a stake in Harry Goodman’s £100m TVTravel Shop.
September
l Advantage Travel Centres delays the introduction of the Matchmaker multi-media reservation system as supplier Going Places cannot tailor it to independent agents.
l Thomas Cook Group launches the £200m JMC brand to mixed reactions. Caledonian Airways, Flying Colours Airlines, Sunset and Sunworld are all axed.
l ABTAchief executive Ian Reynolds exclusively predicts to Travel Weekly there will be failures in the independent agent sector after poor summer sales.
l ABAirlines calls in administrators.
l Thomson plans a 9% cut to summer 2000 capacity to improve margins as it issues a second profits warning. The market leader also scraps plans to buy independents and puts retail expansion on hold, but finds time to unveil new low-cost product Just.
l The ECblocks the Airtours acquisition of First Choice.
EXCLUSIVE: City analysts tell Travel Weekly that BA is on course to lose £124m this financial year due to poor loads and pressure on high-yield passengers. The airline makes 1,000 staff, including 300 managers redundant.
October
l Debonair becomes the first low-cost airline to collapse. It blamed intense competition from BA’s Go and EasyJet.
l The Institute of Travel and Tourism suspends chief executive Linda Gibson after anemployment tribunal found her guilty of racial discrimination, branding her behaviour as’dictatorial’.
EXCLUSIVE: Travel Weekly reveals Airtours is to promote group finance director Tim Byrne to group managing director role.
EXCLUSIVE: Lunn Poly embarks on a major cost-cutting drive as parent Thomson sees its profit forecasts drop. The market leader shuts regional direct sales offices in Birmingham and Manchester.
EXCLUSIVE: Going Places appoints Terry Fisher as managing director and reveals the scale of redundancies needed to make the retailer more efficient.
November
l Thomson appoints former BA director of passenger and cargo business Charles Gurassa to the position of chief executive, after City analysts exclusively revealed to Travel Weekly that the market leader would struggle for backing if it appointed Roger Burnell.
l Airtours admits the franchise deal with Advantage Travel Centres is not working.
l BA draws up radical proposals to scrap or cap commission once its Interim Bonus Agreement ends in March, while its low-cost subsidiary Go does a U-turn and agrees to pay agents for bookings.
l Going Places plans a round of new redundancies under the guidance of consultant Julie Morosco.
l ABTA wins the Passenger Service Charge case against airlines and puts agents in line for £60m in compensation.
EXCLUSIVE: Airtours Holidays managing director Chris Mottershead prepares to move to Toronto to take over the group’s North American Leisure Group.
December
l BA outlines a £500m savings plan, involving a reported 6,000 job losses in two years, as its fortunes fail to rise.
l Travel agents are paid as much as 22% less than the national average wage, while senior managers earn 10% above it, according to the results of asurvey commissioned by ABTA.
EXCLUSIVE: The top names in the industry slam the ABTA Convention in Cairns as being tame, poorly presented and tired.
EXCLUSIVE: First Choice plans to take full control of Holiday Hypermarkets in a £45m deal with United Norwest and West Midlands Co-ops.
EXCLUSIVE: Airtours launches last-minute appeal against the EC’s decision to block a buyout of First Choice.