The spring sunshine reflected the mood when two travel industry heavyweights spread their wings that little bit further as the summer season got under way.
The cheery atmosphere at the ceremonies to mark the launch of Jet2’s new Luton base and easyJet’s at Southend – days before Donald Trump started his global trade war – highlighted the cautious optimism travel is taking into summer.
And as if to underline this, the same week brought confirmation of a record 34.2 million Atol authorisations for the coming year – up another 3% year-on-year and far in excess of the pre-Covid high of 28 million.
However, with or without a trade war, no one is predicting the heady heights of the post-Covid travel boom this year.
And while the Travel Trade Consultancy (TTC) says the stage is set “for what could be a record-breaking summer 2025”, it reports growth slowing, the 3% increase in Atol capacity being the same as in April 2024.
TTC’s director of strategy consulting, Sarah Winship, described this as a “noticeable deceleration compared with the sharp rebound seen in the years since the pandemic”.
Industry indicators
Atol is one measure of the industry’s health and hopes for the year. Although most licensees renew in September, March saw Loveholidays – the third largest Atol holder – extend its licence by a million passengers to just over five million for the next 12 months.
“Demand from our customers, as well as broader consumer demand for travel, is there,” insisted chief executive Donat Retif, who pointed to an increase in the OTA’s first-quarter sales of a third.
Retif stressed the dynamic packaging “marketplace” model was low-risk, allaying fears of discounting and dumping in the lates market.
“It means we can easily pivot should consumer demand or external events, such as natural disasters, affect the destinations we sell. As we don’t have pre-purchased inventory, we are reliant on selling.”
Retif added he was confident Loveholidays would “continue to break the mould of tour operators being the biggest players in the package holiday market this year and beyond”.
Gains by Loveholidays and On the Beach, which increased the size of its Atol by about 10% to 2.36 million, were offset by the rest of the market, which had 7% fewer licensed packages at the March renewal than a year ago.
This figure emphasises how bigger companies are growing capacity while others are flat or cutting back.
Big players’ plans
Indeed, the three biggest Atol holders – Jet2holidays, Tui and Loveholidays – now account for more than half of the package market, 52%, for the first time.
Trying to catch them is easyJet holidays, backed by its airline parent. Speaking at its Southend base launch, easyJet chief executive Kenton Jarvis said the airline and operator would run its “biggest-ever programme out of the UK this summer” with more than 33 million seats – half a million more than last year.
He added: “EasyJet is responsible for a third of all UK leisure travel growth this summer.”
EasyJet holidays chief executive Garry Wilson expects sales to grow by 25% this year to three million passengers, but stressed this would not be at all costs.
“When we put in for the Atol, we look at the most optimistic case, but we won’t slavishly work to that number,” he said. “If there isn’t demand there, we will sell them into flights.”
However, Wilson added: “We are well on track where we will still fulfil that number and do so very profitably.” He also praised agents for their contribution to the success of its Southend launch.
EasyJet will issue its half-year results and outlook next Thursday (22 May).
Tui, now the UK’s second-biggest operator behind Jet2holidays, has decided 2025 is not the year to try to regain its crown, having said it will wait until app sales and partnerships with other airlines are more developed.
This will be the first year Tui has sold dynamic packages with Ryanair. Tui began working with the low-cost carrier in December and by 20 March had sold 123,000 packages using Ryanair flights. Of these, 40% were new customers and 82% were beach holidays.
Tui also pairs accommodation with easyJet flights, and wants more partnerships like this to minimise risk; it currently flies 51% of its 14.4 million total global passengers on its own airline, with 34% travelling with other carriers. This latter proportion is set to soar with the Ryanair deal.
Jet2holidays, by contrast, keeps things in-house. At first glance, with seven million authorised passengers, Jet2 must hope its new bases at Luton and Bournemouth fulfil expectations.
However, capacity is only 5% ahead of summer 2024, and perhaps bears out Jet2 chief executive Steve Heapy’s assertion – when he opened Luton – that the size of the mainstream package industry is “about right”.
“I think we’re in a good place as an industry and as a company,” he added. Jet2 has already pledged to go up from two to three based aircraft at both Bournemouth and Luton airports next summer.
Risk and reward
To sum up, there is an OTA and an airline-owned operator planning huge growth, but at little risk, while Tui will wait until next year when it targets more app based dynamic packages.
Jet2, meanwhile, has taken less of a leap than it has before, and opened more bases in which to place aircraft.
Consequently it looks like the winners this summer will be regional airports, where much new capacity is destined.
EasyJet’s Jarvis has confirmed “Gatwick is full” and Luton “near to capacity”, opting to place more aircraft at Birmingham and opening Southend where, for the first time, each seat sold has a holiday option.
