Why summer 2024 looks set to be the most competitive for years
Gary NoakesNext year is forecast to be the year when travel finally sheds the pandemic hangover and returns to pre-Covid volumes – and the UK’s three largest operators couldn’t have signalled their intentions more forcibly.
On Monday (2 October), Jet2holidays extended its Atol by more than 850,000 seats to around 6.7 million authorisations, while Tui added another 522,000 to grow its Atol to nearly 5.9 million, rising to nearly 6.2 million with the addition of those authorisations belonging to its Marella Cruises brand.
EasyJet holidays, meanwhile, has added almost one million extra Atol-protected seats, almost doubling the size of its operation from 1.3 million to nearly 2.3 million.
More: Why the emergence of a new-look ’big three’ gives the trade reason for cheer
But while operators are making good profits, are the latest Atol figures a sign the travel industry is seeing the market with rose-tinted vision again?
This optimism is perhaps understandable; in September, a Tui trading update highlighted average summer 2023 prices up 8% compared with summer 2022 and a very healthy +27% versus summer 2019 – an increase big enough to embolden any Atol-holder, and seemingly proof some consumers are shrugging off the cost of living squeeze.
The latest stats do indeed show confident increases in licenced passenger numbers, and in any other industry perhaps, expansion and optimism of this scale would be applauded.
But piling it high can mean selling it cheap when departure dates approach if demand forecasts are wrong, particularly if you have your own airline seats to fill.
Jet2holidays laid down the gauntlet to Tui in the spring when it took over top spot in the UK’s Atol standings for the first time.
Its chief executive Steve Heapy said last November Jet2.com and Jet2holidays “will look to double” over the next five to six years with 98 new aircraft on firm order, and options on another 48.
These will need filling, although a not insignificant number of these will be replacements rather than additions as Jet2 renews its fleet.
Nevertheless, in its latest trading statement, Jet2 gave an indication of what comes next year, confirming a more than 10% hike in capacity for summer 2024, an increase from 15.26 million passengers to 16.94 million.
The update also revealed packages now make up almost 72% of Jet2 sales, up four percentage points on summer 2023. A new Jet2 base is opening at Liverpool, with four aircraft and 20 routes. Jet2 is also adding another aircraft at Edinburgh, its seventh.
Tui’s fightback begins this winter. It said bookings for winter 2023/24 across all markets were up by 15% on 2022/23, with prices up 4%, at its latest results announcement.
It added: “Supported by the current booking trends and strong customer demand, we have expanded our winter programme by 11% against winter 2022/23," with the firm adding this was “in particular the case in the UK”.
Tui is not adding dozens of new aircraft but is using its new focus on dynamic product to regain its crown. It said nothing specifically about summer 2024, but will detail this on 6 December when it reveals annual results.
It has also taken steps to rekindle relations with the travel trade, pulling together a newly expanded trade team to service agents. It remains to be seen whether agents will be receptive.
Best of the rest
Three OTAs are fighting it out below Tui and Jet2, in the mix with easyJet holidays.
In April, loveholidays nudged On the Beach out of third place in the Atol league after only a decade in business.
Loveholidays is now licenced for 2.68 million passengers, a big leap from 1.37 million pre-pandemic. A further jump is envisaged with the launch of long-haul and city breaks.
Behind it is Booking.com (2.39 million), easyJet holidays (2.26 million) and On the Beach (two million).
On the Beach is another optimist. It signalled record annual sales of £1.1 billion shortly before the end of September, up by 26% year-on-year.
It said summer 2024 volumes were “significantly ahead” of this year, with summer 2023 itself up 11% and the coming winter up 26%.
When Thomas Cook collapsed in September 2019, it created the biggest gap in the market for a generation. However, the onset of Covid-19 has so far prevented that gap from being fully exploited. Until now.
Cook's demise was always going to signal the start of a new power struggle in the package market, and ahead of summer 2024, the already fierce competition is hotting up again.
It remains to be seen, though, whether Jet2holidays , Tui and easyJet holidays play nicely should there be sufficient demand in the market – or take chunks out of each other if there isn't.
A price war will provide cash-strapped consumers some welcome respite amid the ongoing cost of living squeeze. But it could spell trouble for travel if this new big three stack it high and sell it cheap.
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Gary Noakes
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