In the first few weeks on 2007 there has been much conjecture in the National and Travel Press on “consolidation” within the four major travel groups. Will it happen? My opinion is that it will and that it will ultimately benefit the entire travel industry. For some years now I, along with a number of other travel commentators, have felt strongly that the UK market place could no longer sustain four majors. Indeed in recent years if it had not been for both Government action and Government in action normal market forces would have ensured this was already the case.
In the late nineties Mytravel and First Choice nearly became one only to have their plans thwarted by the Monopolies and Merges Commission acting under pressure from the European Parliament. More recently Mytravel’s much documented financial difficulties in 2003 would, some say should, have led to their demise if government regulators had taken a firm hand and correctly applied their own published financial criteria! A potential call of £100 million plus on the Air Travel Trust Fund being a very persuasive reason to turn a blind eye and leave to the financial institutions to bail it out!
Comparable markets in other European countries do not sustain four major operators – the UK market in recent years should have sustained only three and I believe is now only capable of sustaining two! There is therefore an inevitability that consolidation will take place. It is a case of sooner rather than later.
I also predict that despite coming off the back of a generally poor trading year in 2006 some successful and hardy travel businesses will tap into some of the sizeable amounts of investment cash that is swilling around the City. Indeed my client feedback on the first
few weeks of trading in January 2007 indicate an upturn in business that can only encourage this. Lowcosttravelgroup have already publicly confirmed they are actively seeking an Aims Listing and I expect others to follow suit during the course of the year.
Hopefully such activity will make more exciting and positive reading than the constant doom and gloom that was 2006. All the benchmark surveys indicate that the UK travelling public want to and will take more holidays and short breaks. With one less major and a positive reaction to investment from the City this should herald a more profitable and buoyant UK market place.