Thomson cuts pounds 60m off cost of 1994 programme: Package holiday price war looming

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BRITAIN'S biggest package holiday company Thomson Holidays has made the first move in what looks likely to be the most ferocious fight for market share since its battles with Intasun almost a decade ago.

In a carefully timed strike against its rivals Airtours and Owners Abroad, Thomson yesterday rushed out its Summer '94 programme with price cuts totalling pounds 60m.

Thomson says there will be savings of up to pounds 144 per person or pounds 440 for a family of four. Holidays in Spain, the number one destination, will be 10 per cent cheaper next year and Florida prices will drop by 5 per cent.

Thomas Cook, the travel agency chain, which warns that 'blood will be spilt' in the fight for business, is supporting the Thomson initiative by announcing that from tomorrow it will be offering an early booking discount of 10 per cent on all brochured holidays, cruises and flights - as well as allowing customers to secure their booking with a pounds 1 deposit. Pickfords and Hogg Robinson followed suit, while Lunn Poly is expected to match the Thomas Cook offer today.

Thomson's decision to launch early with dramatic price cuts - up to 6 per cent cheaper than the rates offered 12 months ago - is due to the fact that the company was beaten to the punch last year by its rivals, and was forced to relaunch its programmes in January with cheaper prices.

This summer the package holiday market is expected to amount to 8 million holidays sold through travel agencies, 6 per cent more than last year. Next summer the market is expected to grow by about 5 per cent, to 8.5 million. While package holiday sales have been increasing over the past couple of years, if the market climbs to 8.5 million it will still only have matched 1988, the peak year for sales.

The increase, however, coincides with growing commercial tensions in the industry. Thomson's number one position, which it has held unchallenged since the collapse of Intasun two years ago, is being threatened by the number two company, Airtours. Airtours failed to take over Owners Abroad earlier this year but it succeeded in acquiring the travel agency chains Pickfords and Hogg Robinson and the tour operator Aspro.

The Office of Fair Trading recently revealed that it was examining the close commercial relationships between the three big tour operators and the major travel agency chains: Thomson owns Lunn Poly, Airtours owns Pickfords and Hogg Robinson, while Owners Abroad has a commercial tie-up with Thomas Cook.

Two million people are expected to buy summer '94 packages between now and the end of the year; yesterday Charles Newbold, Thomson managing director, said Thomson planned to take a million of these bookings.

'I wouldn't say I'd be happy with a price war but sometimes you can't stay out of these things,' he said.

Thomson said that it would not suspend holidays to Egypt, despite concern about safety following an attack on a Nile cruise boat on Monday. The shooting, in which nobody was hurt, was the latest in a series of attacks by Islamic fundamentalists.

Despite cancelling its holidays to Russia at the weekend following concern about diphtheria, Thomson said it would follow Foreign Office safety guidance on Egypt. A Foreign Office spokesman said that travel advice for Egypt was 'still under review'.