A silver lining for the major tour operators

Let the bad times roll. With these words the travel industry has been beckoning all those feeling the pinch of the economic storm, telling us there is no better time to enjoy that well-earned break to Ibiza or Lithuania than at a time when utility and household bills are continuing to climb, and when we’ll be paying a premium for basics such as a loaf of bread, butter, milk or even a pint of lager.

“I don’t know why we are trying to avert a recession. We need a recession. I think it would be great for the aviation industry.” So said the great sage Michael O’Leary earlier this year. The maverick budget airline chief said he would welcome a “good deep recession for 12 to 18 months” because during recessions travel does not get cut back but people look for cheaper alternatives – and hopefully Ryanair would be that cheaper choice.

And when in May, the two largest British travel operators TUI Travel and Thomas Cook reported solid results for the past six months while painting a rosy next six months, everything was just about pointing to a good year for the travel industry. As Thomas Cook chief executive Manny Fotenla-Novoa was recently reported to have pointed out: ” Even in years affected by the terror attacks of September 11, 2001, the Tsunami of December 2004 and the advent of SARS the year earlier, a stable average of 19 million people went on package holidays.” So against a backdrop of a deteriorating global economy and the oil crisis of recent months, surely we will collectively refuse to give up our holidays?But recent times do not support the optimists. This ebullient mood took a nasty turn on Friday when one of the country’s largest tour operators, XL, collapsed leaving almost 90,000 holidaymakers stranded abroad; a north London-based tour operator K&S Travel also went bust; and British Airways offered thousands of its managers incentives to quit in order to reduce its employee costs. Seguro Holidays, Travel City and Transatlantic Vacations are among others to have collapsed in the past few weeks.

And things are no better outside the UK. A plan to rescue the Italian Alitalia has only been partially revived this week when it signed a draft deal with a group of Italian investors who plan to take over the insolvent state-owned controlled airline.

But as panic sets in, the industry says it is too early to start blubbering over our lost last-minute holiday deals. Thomas Cook and TUI have already launched reassurance ad campaigns asking us to keep faith in the industry.

Maybe they are right. The 5,000 who have lost their jobs at Lehman Brothers, each earning on average a salary of £350,000, are hardly going to join the other 1.6 million unemployed across the country in the dole queue. O’Leary’s prayers might just come true and they will instead flock to his company for a cheap getaway. And now that oil prices are on their way down, a softening that comes too late for those that have already shut shop, there still might be enough time to dodge the dreary British skies and book that cheap holiday break.

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