Air Transport World

Unwrapping the package.(U.K. charter airlines)

European charter carriers fret as vacationers move away from inclusive tours or turn to late bookings for fare savings

LONDON--The U.K. is credited with inventing the packaged vacation well over a century ago, when Thomas Cook led a group of travelers by rail to Switzerland. The business has blossomed to the extent that today, 17 million people take inclusive-tour (IT) flights to sun and snow resorts each year.

But the modern successors to those intrepid Alpinists are increasingly fickle, with the result that tour operators, and charter airlines are seriously mulling over their industry's future shape, economics and profitability.

This is not to say that the charter sector is in the red, although profitability vs. turnover is hardly dynamic. According to U.K. CAA figures, Britons, still the most enthusiastic package vacationers in Europe, paid an average of 358 pounds ($540) per trip in 1994-95, and the top 30 holders of CAA Air Travel Organizers' Licenses (ATOLs) took a profit of 136.5 million pounds ($207 million) on turnover of 4.43 billion pounds.

But planners in tour-operating companies and in the airlines that fly for them are grappling with a number of significant trends that are starting to impact their business.

* Economic uncertainty. As job losses mount and property values stagnate, potential customers are holding onto their money.

* Charter travelers are increasingly canny and are booking later, in the expectation of price discounting, as tour operators compete for the business.

* Relaxed regulations by the aviation authorities are resulting in the "unbundling" of the traditional inclusive tour, which had to include a flight/hotel package. The big scheduled carriers are eying the "seat only" business and preparing to move in.

* Aviation liberalization is opening chartering to airlines operating aging equipment and offering rock-bottom rates. "Some do not even have uniforms for cabin crew," one executive complained. Transport Ministers have set up a group to examine safety standards of foreign airlines operating into EU countries. …

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