The On Holiday Group has announced a licensing agreement to take over the operation of www.holiday.co.uk and www.flight.co.uk, which are owned by Travelzest.

The Outsourced Travel Services division of the group will operate the brands in a move which is expected to reduce the operating costs of holiday.co.uk by 40%.

On Holiday Group will extend the marketing of both brands into new distribution channels such as Teletext and Travelsupermarket.

Travelzest chief executive Chris Mottershead said: “It became obvious that considerable economies of scale were available by moving the operation of Travelzest’s core websites to the On Holiday Group, who will also provide marketing management, call centre and administration services.”

On Holiday Group chief executive Steve Endacott added: “In the tough trading market…it is our belief that the successful companies will adopt a policy of cooperation which allows each company to fully utilise its assets and resources to the maximum.”

Travelzest announced plans to outsource operation of the sites in a trading update yesterday, in which it revealed it was also ditching the Holiday Express agency brand, which suffered around £1.2 million in losses this year.

A £28 million offer to buy Travelzest is due to be finalised next month. The buyer is believed to be TUI Travel.