TUI Travel will avoid a price war in the lates market this summer.
Speaking as he discussed the interim results for the six months ending March 31, chief executive Peter Long said he was pleased with the vertically integrated tour operator’s trading figures.
He was further buoyed by a recent GfK NOP Survey of Consumer Confidence, which revealed consumer confidence had recovered for the third month in a row, leaving confidence levels at the same height as this time last year.
Long said: “There definitely won’t be a price war from our perspective. We’re happy with our rate of sale and deals we’re giving the customer, and we’re comfortable in terms of current trading.
“I’m quite optimistic because of the general consumer sentiment, which is positive.
“We’ve got an open mind at the moment; we’re not going to be all doom and gloom.”
He added the decision to cut the UK market’s capacity by 17% had also helped, although he refused to rule out further capacity cuts.
Long said: “We’re happy in terms of the capacity we’ve taken out. We will have significantly less to sell than last year.
“Can we reduce capacity further? If we need to.”
He added the most popular destinations for this summer are Greece, Turkey, Egypt and the Dominican Republic.
While Long admitted prices will have to rise next year by about 3% to 4%, he said he did not expect the increase to be as much as Thomas Cook chief executive Manny Fontenla-Novoa’s prediction of up to 4.5%, due to current exchange rates.
He added: “We haven’t finalised our pricing, but [the increases] will be less than last year.”
Long also admitted TUI was hoping to increase the margins on its holidays as it targets a 4.7% return.
He added: “The margins for last year were 2.9%; they’re not where we would want them to be, and that’s an opportunity.”