Shares in leading travel groups plunged and rose with the London Stock Exchange this week as fears of a downturn grew.

The value of TUI Travel shares fell 9% on Monday before returning to their pre-fall price on Tuesday. However, the fall was greater than the 5.5% overall drop in the London market.

Federation of Tour Operators director-general Andy Cooper said: “The industry can be dragged down by a perception that leisure spending will be softer rather than by anything to do with an individual company.”

A City source said: “The market cannot drop that much without affecting everyone. But there does not appear to be a correlation between a recession and pressure on margins. It is all to do with capacity.”

TUI has already anticipated falling demand by cutting capacity in the short-haul market where Ryanair and EasyJet are strong.

Shares in Thomas Cook also moved in line with the market.