Operators are sealing their own fates by encouraging the dynamic packaging market through overcapacity.
Longwood Holidays managing director Rafi Caplin said by offering too many package holidays, operators are then putting on too many flights which leaves them with a surplus of seats to sell.
It is these seats, which can account for up to 30% of a flight, which are inevitably sold late at rock-bottom prices that agents are scooping up and combining with pricier properties, so competing with traditional operators.
He said: “Operators can’t stop the continued construction of hotel rooms but if operators cut back on flight capacities they could sell their own packages more successfully and leave room for less dynamic packages.”
He added Longwood’s sales had been flat in January after capacity cut by the operator saw packages sell at higher prices. Speaking about the destinations he sells, Caplin said Egypt was worst affected and suggested an market-wide capacity cut of 10% to 15% would benefit operators.