I just do not feel the industry is in a healthy state. The weekend press reported reduced profits at Virgin due to cut-throat competition across the Atlantic.
No matter how slick or popular Virgin may be, the market rules all of us. When there are so many aircraft crossing the pond then everyone suffers. Many passengers will not care if Virgin is better if they can buy cheaper. The article said the airline is now looking at all angles in order to cut overheads. Contrary to what Virgin has led us to believe, the company has not ‘bucked the market’.
The ski market isn’t performing either, with Crystal reported to be more than 40% down and other companies cutting capacity. The millennium seems to be a disaster wherever you look. With the poor results from Thomson and British Airways and the collapse of Debonair, one feels the industry is out of control.
Companies are reporting falling profits. And I do believe no-one really knows what to do about it.
Should you sell through independent agents? Should you push volume through your own retail outlets? Should you sell through Teletext or spend a fortune developing Internet sites? We have no frills tour operating from Thomson and, at the same time, desperate attempts from Thomas Cook to convince us that JMC is somehow different – when we all know it isn’t.
Those of us who have been at this game for years – and I think that the majors could do with one or two older fogies to tell the youngsters how the industry works – know that none of these efforts to increase market share along with profitability will work.
What we need now is a good old-fashioned collapse on a big scale in order to clear the market. Too much capacity is killing everyone. Prices for flights over the winter are suicidal and, low cost or otherwise, this winter will hurt the most efficient of airlines.
There is a lot of brave talk at the moment but the current loads, perhaps acceptable on paper, are not good enough when seat rates are so low.
Thomson, like Sainsbury’s and Marks and Spencer, is floundering and the latest travel awards, this time from the Telegraph, could not have pleased them or Airtours. Public survey after public survey is hammering home the point that the market leaders are just not doing their job properly.
They will have to concentrate on what they are here to do – organise package holidays. Share price, share options and market share will look after themselves once they get their product right. Or do they think all middle-class Observer, Guardian and Telegraph readers are wrong?
It’s interesting to note that Telegraph readers voted Airtours the worst ski company but voted their subsidiary, Swiss Travel Service (which the Telegraph described as a ‘small independent’) the best ski company. When even the travel press cannot keep track of who owns what, then what chance do the public have of finding out what sort of tour operator they have booked with.
I wonder whether the executives of the companies can remember what they own?
And yes, we still wait to hear what the Government is to do about the transparency issue.