TUI Travel has insisted the economic downturn is not hitting sales but admitted it will cut capacity next year.

Chairman Dr Michael Frenzel, who was last night inducted into the Travel Industry Hall of Fame, said “I don’t believe it (the credit crunch) will have a big impact.

Customers want to travel and are still spending money on holidays.”

He added: “There is certainly uncertainty in the financial industry but I believe the worst is over.”

But chief executive Peter Long admitted TUI Travel would take a “meaningful” amount of capacity out of the market for 2009.

He said: “We will take out more capacity next year to remove unprofitable businesses.”