Package holidays have been a cornerstone of British travel for generations, with their popularity surging in the 1960s as air travel to Europe became more affordable. However, recent years saw a decline in package holiday bookings as budget carriers, online travel agents, and Airbnb made independent vacations more prevalent. This shift led to the downfall of some heritage brands that were once well-known. Nonetheless, package holidays are experiencing a resurgence, with airlines like easyJet and British Airways seizing the opportunity to capitalize on this market.
Established in 2019, easyJet Holidays is a relatively new venture for the airline, with the aim of increasing its share of the package holiday market from 5% to 7%. The company’s unique approach of negotiating low overhead deals with hotels during the pandemic allowed it to create a free market for supply, adjusting room prices based on demand. With the potential to make significantly higher profits per booking compared to average flight bookings, easyJet Holidays is looking to expand its offerings with additional elements like car hire and excursions.
British Airways Holidays, on the other hand, has been offering holiday packages since 1955. Recently, ownership of the company was transferred from British Airways to IAG Loyalty, with the goal of supporting ambitious growth strategies, improving profitability, and better serving other IAG airlines. The integration of loyalty programs like Avios into holiday bookings has proven popular with customers, highlighting the potential for increased revenue and brand loyalty in the future.
The pandemic created uncertainty for travelers, making package holidays an attractive and secure option for many. The ability to pay for trips in installments and the consumer protection laws associated with package bookings provide added benefits for budget-conscious travelers. Airlines stand to benefit from the higher profit margins associated with package holidays, despite the logistical complexities involved. While the collapse of Thomas Cook in 2019 had a significant impact on the market, today’s industry leaders are better positioned to cater to modern traveler needs and demands.
In the UK holiday market, Jet2 has emerged as a major player, experiencing substantial growth and profitability. With a focus on providing trustworthy package holidays, Jet2 has positioned itself as the third-largest airline in the UK and the largest tour operator. Additionally, the potential entry of Ryanair into the package holiday market could lead to increased competition, as the Irish low-cost carrier looks to capitalize on high yields and ancillary revenue. The future of package holidays in the airline industry remains promising, with companies exploring new strategies to enhance profitability and customer satisfaction in this lucrative market.
