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Ascent from a summit?

The latest Ascent Marketing Intelligence figures for travel trade sales are good - very good in the circumstances.

A 2% year-on-year decline in sales this summer, when TUI Travel and Thomas Cook - the two biggest companies, controlling around half the market - reduced mainstream capacity by more than 10%, is remarkable.

It meant the average rise in prices exceeded the headline rate of inflation. That is not great news for bargain hunters, but late-discount deals have been the bane of the industry for as long as anyone can remember.

The collapse of XL Leisure Group in September removed another 7% of capacity - a body blow for the staff, a shame for the minority of holidaymakers who were unprotected and a headache for agents and tour operators, but no disaster for the industry's outlook as a whole.

Also remarkable, overall bookings for this winter to September were 1% up year on year - and bookings for September itself were up 3%.

In both seasons, it has been the low-price business that has been lost while more costly sales have picked up - suggesting those with less cash are trading down with Ryanair or no longer flying. That conclusion appears borne out by latest UK air traffic figures suggesting a 5% fall in passenger numbers in September compared with a year ago.

Summer 2009 remains too far off to call. Ascent reported a 3% drop in September bookings on a year ago - which would leave demand ahead of capacity in the coming year. But how many people would commit to a holiday next August at the moment? The post-Christmas sales will provide the first real picture of what to expect.

Two notes of caution are in order.

First - many smaller travel businesses will struggle to find airlines seats as a result of XL Airways' collapse and the resulting prices may deter a proportion of clients, hitting next summer's market. Yet this is no time for start-up carriers to jump in. Tour operators would be wise not to pin hopes on such an outcome.

Second - the Ascent figures take us up to the end of September. But the world economy - and the outlook for the UK in particular - took a decisive turn for the worse in October. The recession penny has only really dropped since the government nationalised many of the high-street banks on October 8. We are in a new situation.

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This page contains a single entry from the blog posted on October 30, 2008 11:24 AM.

The previous post in this blog was Hey, big spenders.

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