Low cost solution to saving cost of holiday sales slump

With over one million summer holidays still unsold in the UK and Germany, tour operators are having to consolidate and look at changing travel trends. Apart from the holiday brochure and hours round the kitchen table pouring over pages and pages of glossy pictures and detailed price grids going out of fashion, teletext and online purchases are becoming increasingly popular. But also, while this year the British market has been hit by September 11, a lack of consumer confidence, job cuts, the World Cup and the Jubilee, the low cost airline industry has not only hit the established scheduled carriers, but also the charter airline market and subsequently package holidays. Travel habits have been changing over recent years with holidaymakers becoming more adventurous and going further afield, but the low cost airlines are fuelling the independent market with more people prefering to book their flights and accommodation separately, bypassing the middleman. The low cost airlines also mean that holidaymakers can be more flexible about their travel arrangements and no longer have to catch flights in the early hours of the morning. In order to limit damage to a minimum, Europe's leading tour operators are launching their own low cost carriers. Europe's thriving low–cost carrier sector could be set for a new entrant, after German travel giant Preussag, which owns the World of Tui and Thomson, revealed plans to expand into budget travel. The firm is considering launching a no-frills airline under the name TUI, the firm's overarching brand, board president Michael Frenzel told German news magazine Focus. “We are looking very seriously at the question,” Mr Frenzel said. “The low-budget airline sector has great potential for the future”. Charles Gurassa, a UK board member at the group, which owns tour giant Thomson in the UK, said: “We have the means to found a new airline company.” The move would add a new name to a sector poised to lose Go, the British Airways-launched carrier which Easyjet has bought from venture capitalists. Go planes are to be repainted in easyJet livery. And it would give Preussag, Europe's largest travel and tourism group, which owns 80 planes, the opportunity to tap into one of the region's most buoyant travel sectors. While longhaul carriers found their takings severely dented by a passenger slump following the 11 September attacks on the US, budget airlines found their takings supported by low fares and a resilient shorthaul market. Existing budget carriers, based in the UK and Ireland, have long recognised the potential of tapping markets in central Europe and tour operators have also seen takings slide.