THE EUROPEAN Commission’s decision to block Airtours’ takeover of First Choice seems like a political move. Although the deal would have made life tougher for some companies, you can’t argue that competition would dry up or that three operators can collude any better than four. Still, the only people upset about the EC’s decision are the shareholders of both companies and Airtours’ advisors.
Everyone else in the trade and any consumers who are interested in the industry will be pleased that the status quo of intense competition, cheap holiday prices and charter seats for independent operators is to continue.
And the majority of First Choice staff, who don’t have a hefty number of shares, will be relieved that their jobs are not under threat from a consolidation.
But the downside is that the travel industry is unlikely to be seen as an attractive investment for some time.
There may be deals with foreign operators but the EC has effectively blocked any further major consolidation in the UK market and the City will be predicting in-fighting and discounting, which will in turn hit profits, as the big guys slug it out.
In addition, Thomson’s new Just brand has sparked fear of a price war and everyone can see the damage the low-cost carriers have done to British Airways.
Analysts will be advising clients that there are safer sectors to invest in.
Jeremy Skidmore – editor