Operators face stark choices

OPERATORS have been left with two stark choices after the war started in Iraq this week – cut capacity further by grounding aircraft or slash prices to the bone.

The big four have warned of an immensely tricky post-war situation depending on capacity left and consolidation in the market.

Sources claim operators would struggle to cut capacity further – the big four have already cut up to 15% from their May and June programmes – without taking aircraft out.

One warned: “You could get to the point where it is cheaper to leave aircraft on the ground but that has its own cost implications and there are still bed guarantees to pay for.”

The alternative view is it is better to sell seats at any cost. This could see a price war as operators drop package prices in the run-up to summer in a desperate bid to sell off their fixed capacity stock for high season. Prices have already come down for the peak Easter period.

Thomson national sales manager retail Jeanne Lally said it had no plans to cut capacity or prices further and it would be business as usual if there is a quick resolution. But she added: “If the war drags on, we may have to reassess the situation.”