The fall of the XL Leisure Group has pulled the rug out from under the dynamic packaging sector – but the effect could be short-lived.

On Holiday Group chief executive Steve Endacott said travel agents who sell dynamic packages had been hit hard by the loss of two million seats from the market.

This could result in agents moving away from dynamic packaging because of the confusion around financial protection, and returning to traditional packages, he suggested.

“Many travel agents still do not understand ATOL. It could go one way or the other in terms of whether travel agents go off dynamic packaging,” he said.

Rival bed bank Lowcost Travel Group chief executive Paul Evans agreed the collapse would benefit package tour operators and lead to bed banks fighting each other for business.

He said: “It means we will become more aggressive and take business from other people. There is no doubt seat rates will go up because of fuel and less capacity and that will play into the hands of the package tour operators.”

However, bed banks remained confident capacity would come back into the market. “Low-cost carriers will continue to expand and new airlines from abroad will enter the UK market,” said Endacott.

Agents backed up fears of a dynamic packaging downturn. Anthony Goord, proprietor of Peter Goord Travel in Plymouth, said: “As an agent it makes you think – if a package deal is a similar price to a dynamic package we would book the package. There is more commission to be made on dynamic packages but you have got to put the client’s interest at heart rather than make a quick buck.”

Goord said XL’s demise had severely affected flight choice out of Bristol airport. “There is now a big gap and we need someone to fill it,” he added.