Thomson warns of rise in holiday costs

Thomson, the UK's largest tour operator and travel agent, warned yesterday that holiday prices could rise by more than 10 per cent, equivalent to at least pounds 60 on a typical summer holiday costing pounds 600, as a results of controversial proposals being considered by the Monopolies and Mergers Commission to overhaul the travel market to make it more competitive.

The changes, which may include forcing tour operators to sell travel agents or rename them and preventing agents tying holiday discounts to travel insurance, could also lead to wide scale redundancies across the industry according to industry insiders.

However, the Association of Independent Tour Operators (AITO) refuted the claims. It said the current structure of the industry was anti-competitive and accused the larger tour operators of acting `dishonesty' by using there monopoly to limit customer choice and squeeze smaller travel groups out of the market.

The MMC has provisionally found that travel companies of the likes of Airtours, which owns the Going Places travel agency chain, and Thomson, which runs Lunn Poly, are guilty of ``certain practices which prevent, restrict or distort competition in the supply of foreign package holidays''.

The MMC has criticised travel groups for failing to make the link between tour operators and travel agents clear. There are concerns that tour operators can restrict customer choice by using its travel agency branches to promote its own products in preference to rivals. The MMC is also worried that travel agents only stock brochures of those other tour operators that offer them large commissions and the practice of tying insurance to discounts misleads customers.

"Large tour operators attract customers by offering discounts. But they are basically pretty dishonest, typically charging a family pounds 117 for travel insurance, compared to pounds 50 at a smaller travel agent," said an AITO spokeswoman said yesterday.

Martin Brakenbury, a director of Thomson Travel said yesterday: "We plan to fight the MMC tooth and nail over this. It could push prices up well over 10 per cent."

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