Simon Calder: Travel peak season, pay peak prices

The man who pays his way

Votes for Women, Free Nelson Mandela and End the Great Half-term Rip-offs: all three look like causes that every right-thinking person should support. After the first and second came to pass, surely the third should be a cinch?

This week, a survey made the shocking revelation that holiday prices respond to supply and demand. They rise at peak times such as half term when more people want to travel. Time for action from the Department for Education, the Office of Fair Trading, or perhaps even Mr Mandela.

What tosh. Prices go up during school holidays because of the cold, unemotional hand of capitalism. Taking a snapshot of package holidays this week, I found dramatic differences that a family of four would pay. An all-inclusive week at the Coral Sea Resort in Egypt, with Thomson from Gatwick to Sharm El Sheikh, leaving tomorrow, costs a total of £2,773. One week later, the price slumps to £1,435. Save £200 a day by taking the children out of school the week after half term – or pay a 93 per cent penalty for sticking to school dates.

Even more dramatic savings are for an August week in Florida with Virgin Holidays, flying Gatwick-Orlando and staying at the Ramada Main Gate West. Fly out on 20 August and you will have little change from £2,000 per person: the total, £7,882, includes Premium Economy – cheaper seats are not available on the return leg. A week later, the cheapest deal with an inbound upgrade to Premium Economy is £4,954; delaying for seven days saves £3,000.

What a cruel world, you may conclude; how dare that Sir Richard Branson demand such extortionate prices from hard-working families? Yet it is not a right nor a privilege, nor even remotely desirable to visit central Florida in August.

The Sunshine State's tourist industry discovered that – along with mad dogs – Englishmen and their families (plus Scots, Welsh and Irish people) would willingly queue in the noonday sun for rides at Walt Disney World and Universal. Orlando is climatically unfit for human habitation between June and September. Along with Santa Special day-trips to Lapland, an August holiday in Florida is as close as the travel industry gets to cruel and unusual punishment.

Go to northern France instead, perhaps using the cheap ferry deal suggested here.

Just suppose the government bowed to pressure and ruled that no holiday company could increase prices by more than, say, 50 per cent during school holidays. The immediate result would be fewer holidays on offer – and higher prices for those that remain. The package-holiday industry runs at a loss for most of the year, selling flights and hotels at below cost. Companies survive only because they can, with a bit of luck, double prices during school holidays. Take away the right to respond to demand and you remove the opportunity to make money. Holiday itineraries that are marginally profitable would start losing money and be axed.

Were Thomson, Thomas Cook and Virgin Holidays making excessive profits, I would be first to protest – and the second principle of capitalism would soon come into play.

Other companies would wade in with additional supply, and prices would fall. The travel market is far from equitable, but it remains the best mechanism that exists to allocate that all-too-scarce resource: the holiday.

Time to brag about costly holidays

The travel industry does itself no favours by getting all defensive and apologetic over raising prices when demand is high. Five years ago, Abta – the travel association representing agents and operators – helped to launch an initiative called "Every Lesson Counts". It purported to offer cheap deals in August, to reduce parents' propensity to take children out of school to save cash. The public was unconvinced, and the project fizzled out.

Instead, the travel industry should be triumphant about the high margins it can command during school holidays. As destinations as diverse as Norway and the Anantara Resort in Bali demonstrate, high prices usually reflect high quality.

Thomson should boast that plenty of people evidently regard its all-inclusive week in Egypt as good value at £700 per person. And if you can travel the following week, those same sensations – warmth, indulgence and exploration – are yours at half price.