Lack of choice put travel agents under scrutiny: The three biggest tour operators in Britain own agencies which sell half the package holidays. The Office of Fair Trading is to investigate

THE Office of Fair Trading's inquiry into the package-holiday industry highlights disturbing changes that have transformed a business once characterised by buccaneering competition.

In the past 20 years, the travel trade has become dominated by fewer and fewer large companies. The OFT, which announced its inquiry yesterday, is concerned that while the lack of choice has not resulted in noticeably higher prices so far - indeed, tour operators are about to embark on their traditional pre- peak-season price war - there are worrying implications.

In 1981, for example, the five biggest operators accounted for just a third of package holidays; now the top five have a combined share of more than two- thirds (the three biggest alone control more than 50 per cent).

The big tour operators have identified 'vertical integration' - the ownership of a charter airline and a travel-agency chain - as fundamental to success. Each of the major companies has its own charter airline: Thomson has Britannia; Owners Abroad has Air 2000; and Airtours has set up Airtours International. But it is the tour operators' activities in the travel-agency business that have particularly caught the attention of the OFT.

Airtours, which has rapidly become Britain's third-biggest operator, consolidated its growth last year by acquiring the 334-branch Pickfords group, and last month bought Hogg Robinson with its 214 agencies. But these two chains combined do not match the 640-strong Thomson Lunn Poly group, which has added 60 new shops this year.

Britain's second biggest tour operator, Owners Abroad, which Airtours attempted, unsuccessfully, to take over earlier this year, has recently established a commercial link with the German-owned Thomas Cook chain.

While the agencies owned by the three biggest operators account for just a fifth of all those in the United Kingdom, they sell half the package

holidays.

If the OFT inquiry results in a referral to the Monopolies and Mergers Commission, the commission could order the tour operators to sell off their travel agencies.

Chris Kirker, of the Association of Independent Tour Operators, welcomes the inquiry and says he hopes for a referral: 'The consumer has a serious problem in knowing whether he is getting sensible advice from a travel agency.'

Noel Josephides, managing director of the specialist operator Sunvil, whose brochures are on the racks of just 1,000 of the 7,000 UK agencies, said he hoped the result of the OFT inquiry would be that the major chains will have to make it 'blatantly clear' what their commerical affiliations are. 'Buying holidays from a travel agency isn't like buying food from a supermarket. In travel agencies consumers aren't being offered a genuine choice.'

Leading article, page 21

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