Lowcost Travel Group has won the tussle to partner easyJet in a massive expansion of the budget carrier’s holiday business.

The pair have signed a three-year deal to combine easyJet flights with Lowcost’s accommodation and transfers, to be sold through a single website – easyjet.com/holidays.

The venture will launch in the UK early next year, offering dynamically packaged holidays around the Mediterranean on a scale to rival major tour operators Tui Travel and Thomas Cook.

Lowcost will provide specialist marketing, call centre and customer services, having beaten off fellow online retailer and Abta member On Holiday Group in the battle to partner the airline.

EasyJet has been preparing to expand its holiday business under new chief executive Carolyn McCall after settling a legal row with major shareholder and founder Stelios Haji-Ioannou.

A previous agreement with Haji-Ioannou limited the revenue easyJet could make from selling anything other than airline seats, but the carrier can now extend its business significantly beyond this.

EasyJet chief executive Carolyn McCall said: “We see a significant opportunity to grow our ancillary revenues by offering customers a huge range of flexible and low-cost beach and city holidays, based on our extensive flight schedule and Lowcost Travel Group’s accommodation and transfers.”

Lowcost Travel Group chief executive Paul Evans added: “We are proud to have been selected to work with easyJet to create a new holiday brand. We believe we can create a very significant player in this market.”

The Lowcost Travel Group comprises lowcostholidays.com, lowcostbeds.com and ResortHoppa.