Gloves come off in bust-up of holiday traders

A fierce row between Thomson and Thomas Cook, two of the best-known high street names in holidays, may spill over into the courts. Thomson has already disconnected Thomas Cook from its holiday booking system. Without access to the computer network, Thomas Cook has had no choice but to remove Thomson's brochures from the shelves across a network of 385 shops.

All communications between the two companies fell silent a fortnight ago following a disagreement over how much commission Thomas Cook would earn on selling Thomson holidays. The two companies were negotiating new contracts, but Thomas Cook refused a "take-it or leave-it" deadline which Thomson imposed.

Thomson, which sells one in three of the 10 million overseas package holidays taken by the British public, is now considering re-igniting a separate dispute. The wrangle concerns instructions given from within the Thomas Cook empire to shop managers to offer alternative but higher- commission holidays to customers inquiring about certain destinations in Thomson brochures.

"They are in breach of contract terms. They issued a list of Thomson hotels to staff to divert customers to other operators. We are consulting our solicitors about damages," said Paul Brett, chairman of the Thomson Travel Group.

Representatives at Thomas Cook were reluctant to discuss this particular issue, although a spokeswoman admitted: "We have apologised for that. It happened a while ago now." The spokeswoman declined to go into what she called " the nitty gritty" of the dispute. "We don't want to go into details. We really don't want to talk about what they are."

It has been established, however, that the instructions to offer alternative packages to customers trying to book Thomson holidays were stopped once the practice was uncovered. The identity and management position of the person or people responsible for giving the instructions to shop staff is not being revealed by Thomas Cook. No one has been fired as a consequence.

The dispute, even if it does not go to court, will financially hurt Thomas Cook, which has a 13 per cent share of the overseas holiday tours sold in this country. At least one in 10 of Thomas Cook's customers books a Thomson holiday.

Moreover, the industry has been hard hit this year due to its own over- optimistic forecasts about how many people would flock abroad in the summer.

The scars were openly displayed in last week's announcement of annual results from Airtours, the second-biggest operator. Profits from UK tour operations plunged by pounds 29m to pounds 33.4m. The "give-away" of holidays at below cost was amply highlighted by a crash in the operating profit per passenger from pounds 18 to pounds 9.72.