Holiday price war intensifies: Travel agents join in fierce competition

HOSTILITIES in the fiercest package holiday price war broke out again yesterday when Thomson, the biggest operator, slashed the cost of one quarter of its 1995 programme.

Although such competition has now become an annual event, this year's price war is particularly intense and involves travel agencies, many of which are now owned by tour operators, more than ever before.

Yesterday, Thomson cut the price of 750,000 of the 3 million holidays it is offering in 1995. The reductions vary from 3 per cent on some holidays in Florida to 20 per cent on some packages to Thailand.

The price of a week's self- catering holiday in Ibiza for a family of four is reduced from pounds 336 this summer to pounds 299 next year. Many packages allow children to go free, and when children do pay, the lowest price is pounds 19 next year compared with pounds 49 this summer.

The move followed some frenzied price cutting by the main tour operators and their high street retail outlets last week. Thomson published a sample brochure of some 1995 holidays and the travel agent Lunn Poly, which it owns, offered 11 per cent off.

Airtours, the second biggest tour operator, promptly sent travel agents 1,600 pages of holidays, denying that it had been forced into an early launch by Thomson. Going Places, its travel agency chain, offered discounts of up to 12 per cent on holidays.

The big two carried on increasing their discounts until they reached 15 per cent with Thomas Cook, the other large chain, reluctantly following suit.

Kim Winter of Holiday Which, said: 'The reason for all this is paranoia about market share . . . It is not improving service to consumers at all.'

The Office of Fair Trading is expected to announce this week that it will not refer the package holiday industry to the Monopolies and Mergers Commission.