Independent operators are faced with the possibility of significant reductions in capacity if the new Thomas Cook-Co-operative Travel retail joint venture does not support them.
Platon Loizou, managing director of Jewel in the Nile, said many small operators were hoping to strike renewed deals with the new venture but remained unsure whether they would be able to.
He said smaller operators, including his own, that were heavily reliant on Cook distribution, could be left to work with what is left of the independent trade, going direct or cutting back on guaranteed seats.
It is estimated some firms might have to cut back by as much as 25%. Loizou said 20% of Jewel in the Nile’s business was through the Co-op.
“The biggest worry going forward is how much volume are we going to take,” he said.
“This is the time of year we do the deals going forward on the amount of seats, and those seats are guaranteed.
“At this stage I do not know which way it is going to go; we have to wait and see how it’s all going to pan out. There are many other operators waiting to see what will happen.”
Thomas Cook chief executive Manny Fontenla-Novoa, in a meeting last week with Co-op retail managers, insisted the Co-op ethos would be protected.
But at the heart of the deal is the intention to increase distribution of Cook’s own product, which Travel Weekly understands currently accounts for about 20% of Co-op Travel business.
One option for independent operators would be to move to flight-only, but Loizou said it was possible to make money with this model for only five weeks of the year.
And he said the Co-op merger could be bad news for start-up operators. “Historically, the Co-ops have always worked with newer tour operators,” he added.
“They were the first port of call for any tour operator starting a new business, especially regionally.”
Loizou also highlighted the trend for small tour operators being snapped up by larger players.
“A lot of tour operators are disappearing from the industry because they can’t make it work,” he said. “Why did the Co-op do the deal? Because their margins were disappearing.
“We have all got the same issues, we are all under pressure on margin.”
- More from the Travel Convention at travelweekly.co.uk/tc2010
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