| Journal: TWUK | Section: |
| Title: | Issue Date: 17/04/00 |
| Author: | Page Number: 13 |
| Copyright: Other |
C&N’s bid to take over Thomson has left us in fear of price wars but, with the EC ruling on Airtours’ bid for First Choice still fresh, we can rest easy that the big four travel companies will not become the big three
JOHN BENNETT
As C&N swoops on Thomson Travel Group, the world in which small operators do business seems set for more change.The prospect of two global travel groups battling it out for market share on home territory must cause us all some concern as thoughts of price wars, discounting and battles for every niche market resume with even greater intensity.
The good news is that with the European Commissionruling on the Airtours bid for First Choice still fresh in people’s minds, there is little likelihood of our big four travel groups being reduced to three and that alone will help by providing choice, even if it is of a limited nature.
Providing the City with profits is essential for these big operators; Lufthansa with a 50% stake in C&N will always be looking for greater returns and so we must hope that while the drive for profits may create a need for volume, it is also critical for these players to keep margins high.
Yes, they can cut costs but only so far and product quality, as they know and understand it, must be maintained. Is this new world going to threaten every segment of the independent market?It just depends.
Thomson and C&Noperate a diverse range of products under different brand names and one must assume that this strategy will continue.
Certainly a purchase of Thomson by C&Nwill cause the Association of Independent Tour Operators to redouble its efforts to have the Government rule on the transparency issue, especially as over the past year, we have witnessed the way in which the major operators have grown their newly purchased brands, squeezing the traditional suppliers.
So who is threatened if competition in the UKmarket takes another lunge forward?
The few remaining middle-sized players must be pretty worried, especially when competing in the Mediterranean beach markets. There is no doubt the big operators are intent on establishing control of the available beds.
But a fear we have at AITO is that any deal could tie up seats out of Gatwick, squeezing out smaller operators. For these operators buying seats, the pressure will remain intense unless we can somehow persuade the Government that seat and slot availability is an area that needs action.
For those working in more specialised parts of the market, the threat is less intense. There will always be demand for quality specialist products and I doubt the big operators’ ability to deliver quality in this segment in the longer term. We have already seen Thomson making dramatic changes to the way its specialist products are run. Deep down, it is wondering if it can cope with operating a raft of specialist operators profitably.
“The few remaining middle-sized players must be prettyworried.”