Holiday firms give travellers a break

Airlines and agents attempt to boost flagging sales by slashing their prices by up to 40 per cent

Holidaymakers wanting to escape the cold and the recession are being given a break this weekend, as airlines and tour operators slash prices in an attempt to keep the ailing travel industry afloat, amid the biggest slump in sales since the 9/11 terror attacks.

A summer of soaring oil prices and falling passenger numbers contributed to the demise of 30 airlines this year – including XL, the UK's third-largest tour operator – with industry bodies warning that hundreds more British tour operators face collapse.

Travel firms are becoming increasingly concerned. BMI announces today that it will be scrapping fuel surcharges on flights within the UK and Europe in an attempt to give cash-strapped travellers a break.

The airline, which specialises in short-haul flights to destinations such as Dublin, Brussels and Venice, hopes that the reduction of these "hidden charges" will persuade holiday-makers to travel despite the current economic conditions.

Last week British Airways announced that it was slashing fares to more than 70 destinations, with as much as 40 per cent off some flights. Holidaymakers can now head to the Caribbean island of St Kitts for just £499 – saving £256 on the full-price fare.

New figures from Ascent Market Intelligence's Leisure Travel Monitor have revealed that September holiday sales in the UK were down 8 per cent on the same time last year, with cheap European package deals to destinations such as Spain, Greece and Cyprus proving particularly hard for travel agents to shift.

"September was a quiet month for travel agents, but it isn't that bad. The credit crunch has been an issue in the industry for a while now, but in summer 2008 we sold as many holidays as in summer 2007," said a spokesperson from the Association of British Travel Agents (Abta).

Parents are proving particularly reluctant to book expensive holidays in the midst of the credit crunch, with sales of family holidays 16 per cent lower in September than at the same time last year.

Some believe that the fall in sales is due not to reduced demand, but to strategic capacity cuts implemented by the tour operators – which saw travel agents offer around 275,000 fewer holidays this summer.

"If you look at what the industry has been doing over the last few years, companies have been steadily reducing capacity so that they don't have empty seats on planes or empty beds in hotels – each company has probably reduced its capacity by around 4 per cent," said the spokesperson.

"This means that you won't be looking at large numbers of cheap holidays, because they have cut the supply."

The gradual reduction in the number of holidays available was accelerated by the collapse of XL Leisure Group in September. Thousands of passengers were left stranded after the company went into administration – citing rising fuel prices and a weak business model.

While overall holiday sales may have slumped, the research from Ascent shows that sales of more expensive package deals – those priced between £400 and £1,000 – actually rose by 8 per cent this summer.

This buoyancy may be due to the huge discounts that many high-end companies are offering. Virgin Holidays are currently advertising "Halloween" specials, including a £719 discount on a seven-night holiday in Mauritius, reducing the price from £1,668 to £949.